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A  TREATISE  01^  THE  LAW 


OF 


NEGOTIABLE  INSIlUMENTS, 


BILLS  OF  EXCHANGE;     PROMISSORY  KJ^TES;     NEGOTIABLE  BONDS 

AND  COUPONS;     CHEC;<:S;     BANI^OTES;     CERTIFICATES  OF 

DEPOSIT;    CERTIFICATES  IdFhSTOCK;   BILLS  OF  CREDIT; 

BILLS   OF   LADING;      (m^ANTIES;     LETTERS   OF 

CREDIT;     AND  pIRCULAR  NOTES, 

By  Jokj^V.  DANIEL, 


)f  the  old  fieldes, 
ipWieth  al  this  new  corne." — Chaucer. 

Noneritalia  lex  RotnJ^,  ajlia  Athenis,  alia  nunc,  alia  posthac,  sed  et  a'pud  omnes  gentes,  et 
omni  tempore,  una  eademquWex  obtinebit." — Cicero. 


IN  TWO  VOLUMES. 
VOL.  I. 

SECOND  EDITION. 


NEW  YOKK: 
BAKER,  YOORHIS  &  CO.,  PUBLISHERS, 

66  NASSAU  STREET, 

1879. 


Entered,  according  to  the  Act  of  Congress,  in  the  year  eighteen  hundred  and  seventy-six,  by 

JOHN  W.  DANIEL, 
In  the  office  of  the  Librarian  of  Congress,  at  Washington. 


Copyright  by  John  W.  Daniel,  1879. 


•zyC- 


BAKER  &  GODWIN,  PRINTERS, 
No.  25  Park  Row,  New  York. 


^ 


^ 


TO 

CHARLES    0'COJ^^OR,    Esq. 

WHO,    AS    A    LAWYER, 
HAS   DIGNIFIED   HIS   PROFESSION   BY   HIS    UPKIGHT   CHARACTER, 

AND 

ILLUSTRATED    IT    WITH    THE    TRIUMPHS    OF    HIS    GENIUS; 

AND 

WHO,    AS    A    PATRIOT, 

HAS   NEYER   FAILED    IN    FIDELITY    TO   THE   PRINCIPLES   OF 

LIBERTY   PROTECTED    BY    LAAV, 

THIS    WORK 
IS    WITH    HIS    PERMISSION 

RESPECTFULLY    INSCRIBED 

BY   THE   AUTHOR. 


PREFACE  TO  THE  SECOND  EDITION. 


The  rapid  sale  of  the  first  edition  of  this  work  has  demonstrated 
the  correctness  of  the  opinion  expressed  by  its  author,  that  a  treatise 
on  the  subject  of  "  Negotiable  Instrnments  "  was  a  desideratum  to 
the  legal  profession  ;  and  the  flattering  utterances  with  which  it  has 
been  received  by  the  bench  and  bar  induce  him  to  hope  that  he 
has  not  altogether  failed  in  his  effort  to  supply  it. 

In  response  to  continuous  demands,  a  second  edition  is  now  put 
forth,  containing  one  hundred  and  four  pages  of  new  matter,  and 
citations  of  over  a  thousand  cases  not  embraced  in  the  first  edition. 
The  important  adjudications  of  the  English  and  American  courts 
since  the  spring  of  1876  have  been  carefully  collated,  and  tlie  text 
presents,  as  tlie  author  hopes,  a  faithful  record  of  "  The  Law  of 
Negotiable  Instruments,"  as  it  is  now  interpreted  and  practiced. 

To  those  who  have  so  generously  encouraged  and  favored  his 
work  the  author  returns  his  thanks,  and  to  his  publishers,  Messrs. 
Bakee,  Voorhis  &  Co.,  he  begs  leave  to  renew  the  assurances  of 

his  highest  consideration. 

^  J.  W.  D. 

Lynchburg,  Va.,  June,  1879. 


PREFACE  TO  FIRST  EDITION. 


"WiiE.v  LoKD  IloLT,  in  the  year  seventeen  hundred  and  three, 
indignantly  denied  that  promissory  notes  payable  to  bearer  were 
negotiable  and  inveighed  against  the  "obstinacy  and  opinionative- 
ness  of*  the  merchants  who  were  endeavoring  to  set  the  law  of 
Lombard  street  above  the  law  of  Westminster  Hall,"  he  had  no 
prophetic  vision  of  the  great  ])art  which  negotiable  instruments  were 
to  play  in  the  transactions  of  commerce,  and  little  dreamed  that 
the  struggling  idea  of  Lombard  street  was  destined  to  develop, 
expand,  and  diversify  itself,  until  it  overspread  the  civilized  globe. 
From  that  day  to  this,  negotialjle  instruments  have  been  a  subject 
of  such  rapid  and  continuous  growth  that  the  sheets  of  the  various 
compilations  on  the  subject  have  scarcely  dried  from  the  printer's 
hand,  ere  they  have  successively  become  historic  records  rather  than 
mirrors  of  existing  things.  It  is  true  that  certain  general  principles 
permeate  the  law  affecting  every  variety  of  negotiable  instruments, 
and  that  in  Malynes,  Marius,  Molloy,  and  Beawes,  we  may  yet  find 
the  rudiments  of  that  system  which  in  our  own  day  has  received 
ample  illustration  from  the  hands  of  Story  and  Parsons;  but  the 
pioneer  who  stood  on  the  borders  of  our  western  civilization  thirty 
y«ars  ago,  and  who  to-day  sees  the  same  landscape,  then  covered  with 
primeval  forests,- or  stretching  wide  in  solitary  prairies,  now  brilliant 
with  gorgeous  cities,  and  teeming  with  the  industries  of  crowded 
millions,  recognizes  a  change  not  more  marked  than  that  which  has 
been  exhibited  in  the  rapid  and  diversified  development  of  the 
subject  of  our  treatise.  And  the  development  was  scarcely  more 
marked  in  the  long  period  elapsing  between  the  days  of  the  first 
connnentators  to  whom  we  have  referred  and  the  last,  than  it  has 
been  since  the  latter  put  forth  their  admirable  works.  Chancellor 
Kent  remarks,  with  an  evident  spirit  of  congratulation,  that  "the 
law  of  negotiable  paper  has  at  length  become  a  science  which  can  be 
studied  witli  infinite  advantage  in  the  various  codes,  treatises,  and 
judicial  decisions,  for  in  them  every  possible  view  of  the  doctrine 
in  all  its  branches  has  been  considered,  its  rules  established,  and  its 
limitations  accurately  defined.''     13ut   when   Chancellor  Kent  wrote. 


PREFACE.  Vii 

ins  Commentaries,  sucli  a  tiling  as  a  coupon  bond  was  nnloiowii  in 
the  United  States.  \Ylien  Storj  sent  forth  his  treatises  on  Bills  and 
on  Notes  from  Cambridge,  it  was  yet  a  feeble  adventurer,  timidly 
feehng  its  way  on  the  stock  exchange.  And  although  when  Pro- 
fessor Parsons  published  his  work  in  1S62,  it  had  been  recognized 
as  a  negotiable  instrument,  and  was  becoming  familiar  to  the  public 
eye,  the  law  concerning  it  M-as  yet  in  such  an  inchoate  state  that  a 
few  pages  comprehended  all  that  he  saw  fit  to  say  about  it.  Now 
there  is  no  more  important  figure  in  financial  circles  than  a  coupon 
bond.  There  is  scarcely  a  town  or  county  in  the  United  States  that 
has  not  become  interested  in  it,  and  the  law  relating  to  it  has  grown 
into  an  important  title,  which  would  fully  justify  its  embodiment  in 
a  separate  and  independent  work.  We  find,  also,  an  increasing  dis- 
jDOsition  to  impart  certain  negotiable  qualities  to  instruments  and 
documentary  evidences  of  title,  which,  by  the  common  law,  are  as 
devoid  of  such  qualities  as  any  chattel  sold  behind  the  counter  of  a 
merchant.  In  some  of  the  States,  bonds  are  placed  on  the  same 
footing  as  promissory  notes.  In  some  of  them  deeds  to  real  estate 
and  docketed  judgments,  are  just  as  negotiable  as  bills  of  exchange; 
and  in  all  of  them,  so  to  speak,  the  sj)irit  of  negotiability  is  enlarging 
its  bounds,  extending  its  influence,  and  impressing  itself  upon 
mercantile  transactions. 

These  reflections  have  led  to  the  production  of  this  work.  It 
is  the  first  eff'ort  to  embrace  in  one  treatise  a  classification  of  all 
negotiable  instruments,  with  an  exposition  of  the  law  touching  each 
variety  of  them.  And  this  has  seemed  to  us  the  most  convenient 
and  philosophical  mode  of  presenting  and  expounding  the  law,  not- 
withstanding the  views  expressed  by  that  great  jurist  and  author. 
Justice  Story,  who  followed,  as  he  favored,  a  different  plan.  To 
him  it  seemed  (as  he  states  in  the  preface  to  his  work  on  Bills  of 
Exchange),  that  "great  practical  inconvenience"  would  result  "from 
uniting  and  intermixing  the  doctrines  respecting  bills  of  exchange 
and  promissory  notes  in  one  and  the  same  treatise ; "  and  if  his  idea 
be  accepted,  still  greater  practical  inconvenience  would  result  from 
gathering  under  one  roof  all  the  members  of  the  negotiable  family. 
But  his  own  learned  productions,  to  our  mind,  rebut  his  theory. 
Whole  sections  and  pages — and,  indeed,  we  may  almost  say  chapters 
— of  his  treatise  on  Bills  are  literally  transcribed  in  the  succeeding 
one  on  Notes.  And  while-there  are  certain  distinctions  always  to  be 
observed  between  the  two  classes  of  papers,  there  are  more  identities 
m,  than  differences  hetween,  them ;  and  the  differences  can  always  be 
readily  recognized  and  defined.     To  use  Tennyson's  phrase,  they  are 


Vlll  PREFACE. 

"alike  in  difference."  Indeed,  not  only  may  bills  and  notes  be  con- 
veniently treated  in  conjunction  with  eacb  other  (as  in  fact  they 
have  been  most  successfully  treated  by  Bay  ley,  Byles,  Thomson,  and 
Parsons) ;  but  their  kindred  which  are  "  bone  of  the  same  bone  and 
flesh  of  the  same  flesh,"  are  like  the  sciences,  which.  Lord  Bacon  says, 
"dwell  sociably  together."  Checks,  so  closely  assimilated  to  bills  of 
exchange  that  they  are  sometimes  called  "peculiar  kind  of  bills," 
may  be  fully  treated  imder  the  same  cover  with  bills,  by  simply 
pointing  out  their  peculiar  differences  and  uses. 

Coupon  bonds,  so  nearly  identical  with  promissory  notes  that  they 
might  be  fitly  termed  "  peculiar  kinds  of  notes,"  may  be  thoroughly 
explained  by  exhibiting  their  peculiar  variations  from  them  in  form, 
and  in  the  functions  which  they  fulfill.  And  every  species  of  instru- 
ment, really  or  quasi  negotiable,  may  be  either  thoroughly  expounded 
or,  at  least,  a])tly  illustrated  by  a  delineation  of  its  lines  of  departure 
from  the  general  principles  which  apply  to  these  two  great  species  of 
the  negotiable  genus,  bills  of  exchange  and  promissory  notes. 

Such,  at  least,  have  been  the  considerations  which  inspired  the 
undertaking,  the  fruit  of  which  is  now  with  diffidence  submitted  to 
a  practical  and  critical,  but  liberal  profession.  Composed  in  hours 
snatched  from  other  exacting  labors  of  the  ofiice  and  the  bar,  the 
author  cannot  hope  that  it  will  be  found  free  from  many  crudities  of 
style  and  other  more  serious  imperfections ;  but  if  it  contain  aught 
of  merit,  he  feels  assured  that  an  enlightened  profession  will  not 
fail  to  discern  it,  nor  to  apply  it  as  equitable  offset  to  those  defects 
which  only  the  amplest  resources  of  leisure  and  learning  could 
avoid. 

To  Mr.  P.  C.  Nicholas,  Librarian  of  the  Supreme  Court  of 
Appeals  of  Virginia,  the  author  is  much  indebted  for  many  courtesies 
extended  and  many  facilities  afforded  him,  while  pursuing  his  in- 
vestigations in  the  ample  collection  of  books  under  his  charge  ;  and 
he  begs  leave  here  to  acknowledge  his  obligation  and  record  his 
thanks.  lie  would  be  lacking  in  appreciation  and  gratitude,  did  he 
not  also  here  express  to  his  publishers,  Messrs.  Baker,  Yoorhis  & 
Co.,  of  iSTew  York,  his  sense  of  the  liberal  and  unremitting  kindness 
with  which  they  have  aided  and  encouraged  his  work.  They  have 
been  lacking  in  nothing  that  fairness  could  ask  of  them,  or  that  an 
accommodating  spirit  could  suggest  to  them  ;  and  he  only  trusts  that 
the  result  may  leave  them  no  cause  to  regret  their  own  generous 
course. 

J.  W.  D. 
Ltxchbcrg,  Va.,  April,  1876. 


TABLE  OF  CONTENTS  OF  VOLUME  L 


BOOK  I. 

THE  MAKING  OF  THE  INSTRUMENT. 


CHAPTER  I. 

PAGE 

Nature,  History  and  Uses  of  Negotiable  Instruments,  .  1 

Section  I.     Nature,  origin  and  history  of  bills  and  notes,      .  .  1 

II.  Foreign  and  inland  bills,        ....  "7 

III.  The  effect  of  a  bill  of  exchange.      Whether  or  not  it  is 

an  assignment,  .  .  .  ■  • 

IV.  Donatio  mortis  causa,  .... 


CHAPTER  III 

Formal  Requisites  of  Bills  and  Notes, 

Section  I.     Formality  in  respect  to  style  and  material, 


12 


CHAPTER  II. 

Definition  and  Essential  Requisites  of  Bills  and  Notes,  .         ''-^ 

Section  I.  The  bill  or  note  must  be  open,  that  is,  unsealed,        .               28 

II.  Certainty  as  to  the  engagement  to  pay,  .             .             '           _ 

III.  Certainty  as  to  the  fact  of  payment,  .             •               ^5 

IV.  Certainty  as  to  the  amount  to  be  paid,   . 
V.  Certainty  as  to  the  medium  of  payment,  which  must  be 

money,  ...••• 

VI.     The  contract  must  be  only  for  the  payment  of  money, 
VII.     Delivery,  ...•••         ^^ 


44 

46 

50 


64 

64 


II.     Formal  elements  and  phrases  of  bills  and  notes,  •  '^ 

III.     The  several  parts  of  a  foreign  bill  called  a  set,  .  ^'^ 


X  TABLE   OF   CONTENTS. 

CHAPTER   IV. 

I'AOE 

Stamps  upon  NEt;oTi.\iii.K  IssTra'MENTs,  ....       101 

CHxVPTEll   v. 

Irregular,  AMniGUors,  and  Fictitious  Instruments;    and  Instru- 
ments E.XECUTED  IN  ULANK,        .  .  .  .  .  109 

Section  I.     Irregular  and  ambiguous  instruments,     .  .  .109 

II.     Bills  and  notes  to  which  there  are  fictitious  or  non  exist- 
ing parties,  .  .  .  .  .  H^ 
III.     Negotiable  instruments  executed  in  blank,           .             .       120 

OHxVPTER   VI. 

Memoranda  upus  Bills  and  Notes,  and  Collateral  Agreements,         129 

Section  I.     Memoranda  upon  bills  and  notes,  .  .  .       129 

II.     Collateral  agreements  respecting  bills  and  notes,       .  134 

CHAPTER  VII. 

Consideration  of  Negotiable  Instruments,  .  .  .137 

Section  I.     What  instruments  import  a  consideration,    .  .             137 
II.     By   what  laws  the  legality  of  consideration  is  deter- 
mined.    Confederate  obligations,      .             .  .143 

III.  Between  what  parties  the  consideration   is  open  to  in- 

quiry,      .      . 

IV.  What  are  sufficient  and  legal  considerations,  .  153 
V.     What  are  illegal  considerations,               .             .             .166 

VI,  Partial  want,  fixilure,  and  illegality  of  consideration,  175 

VII.  Renewal  bills  and  notes.    How  illegality  may  be  purged,       179 


BOOK  II. 

WHO   MAY   BE   PARTIES. 


146 


CHAPTER  VIII. 

Persons  Pautially  ok  Wholly  Disqualified,          .             .  .       183 

Section  I.     Lunatics,  imV;eciles,  and  drunkards,    .              .              .  183 

II.     Aliens  and  alien  enemies,             .              .              .  .188 

III.  Infants,            ......  194 

IV.  Married  women,                .....       205 
V.     Persons  under  guardianship,  and  in  bankruptcy,         .  207 


TABLE   OF   CONTENTS.  XI 

CHAPTEE    IX. 

PAGE 

Fiduciaries  as  Parties  to  Bills  and  Notes.  .  .  .       221 

CHAPTER   X. 

Agents  as  Parties  to  Bills  and  Notes,        ....       228 
Section  I.     Competency  and  authority  of  the  agent.      Express  au- 
thority and  general  principles  of  liability,    .  .       228 
II.     Implied  authority  of  the  agent,          .             .             .  239 
III.     How  agent  should  sign  ;    and  how  instrument  construed 

and  parties'  liabilities  determined,     .  .  .       244 

JV.     Liability  of  agent  who  draws  on  account  of   his  prin- 
cipal, or  indorses  to  him,       ....       254 
V.     Ratification  by  principal  of  agent's  unauthorized  acts,  259 

CHAPTER  XI. 

Banks  and  other  Agents  for  Negotiation  or  Collection  of  Ne- 
gotiable Instruments,    ......       263 

Section  J.     Banks  as  collecting  agents.     What  constitutes  agency, 

and  of  whom  they  are  agents,  .  .  .       263 

II.     Rights   and  duties  of  banks    or    other    agents    for    col- 
lection, ....••       267 

III.  The  manner  of  placing  commercial  paper  in  bank  for 

collection,  and  the  rights  of  the  collecting  bank,       .       274 

IV.  How  far  a  bank  is  liable  for  default  of  a  notary,  sub- 

agent,  or  correspondent  bank,  .  .  .       '^11 

V.     Remedy  of  the  holder  of  the  paper  against  collecting 

agents,  ...■••       "^^ 

CHAPTER   XII. 

Partners  as  Parties  to  Bills  and  Notes,     .             .  •             •       284 

Section  I.     Nature  and  varieties  of  copartnership,           .  •             284 

II.     The  authority  of  a  copartner  to  bind  the  firm,  .             .       287 

III.  Formal  signature  of  the  firm's  name,             .  .             290 

IV.  Accommodation,— private,— and  prohibited  transactions 

of  copartner,              .              .             .  •             •       '"-9t» 

V.     The  effect  of  a  dissolution  of  the  firm,           .  •             302 

CHAPTER  XIII. 

Private  Corporations  as  Parties  to  Negotiable  Instruments,  308 

Section  I.     Authority  of  the  corporation  to  execute  the  instruments,       308 

II.     Authority  of  the  agent  in  law  and  in  fact  to  bind  the  cor- 

oil' 

poration,        .  .  •  •  •  .       o    > 

III.     Interpretation  of  the  instrument,        .  •  •  '^-^ 


xii  TABLE   OF   CONTENTJ<. 

CHAPTER  XIV. 

FACT? 

Musicii'AL  Cduporations  as  Parties  to  Negotiable  Instruments,  345 

CHAPTER  XV. 

r)KAFTs  OR  Warrants  ok  one  Corporate  Officer  upon  Another,  350 

Section  I.     Dratls  or  warrants  of  private  corporations,  .  ,       350 

|[.     UratYs  or  warrants  of  municipal  corporations,  .  352 

CHAPTER  XVI. 

The  Federal  and  State  Governments  as  Parties   to   Negotiable 

Instruments,        .......       358 

Section  I.     General  principles  of  governmental  liability,  and  liabil- 
ity of  agents,  .....       358 
II.     State  securities  made  receivable  for  taxes,     .  .  36G 


BOOK  Til. 

THE  NEGOTIATION   OF  THE   INSTRUMENT. 


CHAPTER  XVn. 

Presentment  for  Acceptance,           .....  360 

Section  I.     Nature  of,  and  necessity  for  presentment  for  acceptance,  369 

If.     Formality  of  presentment  for  acceptance,            .              .  372 

III.     Time  of  presentment  for  acceptance,               .              .  378 

CHAPTER   XYIU. 

Acceptance  of  Bills  of  Exchange,               ....  380 

Section  I.     The  nature  of  acceptance,      ....  380 

II.     What  bills  require  acceptance,  and  by  whom  and  when 

they  should  be  accepted,       .  .  .  .391 

III.     Form  and  varieties  of  acceptance.     Express  and  implied 

acceptance,    ......  400 

[V.     Verbal  and  written  acceptance,          .             .             .  400 

V.     Absolute,  conditional  and  qualified  acceptance,  .              .  409 

VI.     Acceptance  for  honor,  or  supra  protest,         .              .  418 

\'n.     The  effect  of  acceptance,              ....  426 

\'lll.     Extinguishment  of  acceptor's  obligation,      .              .  431 


TABLE   OF   CONTENTS.  xiii 

CHAPTER   XIX. 

PAGE 

Promises  to  Accept  Bills  of  Exchange.      How  Affected  bv  the 

Statute  of  Frauds,         ......  430 

Section  I.     "Written  and  verbal  promises  to  accept  existing  and  non- 
existing  bills,             .....  4.39 

II.     How  parol  acceptance  is  affected  by  the  Statute  of  Frauds,  4.50 

CHAPTER  XX. 

Presentment  for  Payment,  ......  453 

Section  I.     By  whom  presentment  for  payment  must  be  made,  45(3 

II.     To  whom  presentment  for  payment  must  be  made,         .  470 

III.  Time  of  presentment  for  payment,    .             .             .  476 

IV.  Days  of  grace,  and  computation  of  time,            .             .  488 
V.     Place  of  presentment  for  payment,  .             .             .  500 

VI.     Mode  of  presentment  for  payment,          .              .             .  517 

CHAPTER  XXI. 

Transfer  of  Bills  and  Notes  by  Indorsement,  .  .  .  526 
Section  I.     Nature  of  the  contract  of  indorsement,  and  liability  of 

indorser,        ......  528 

II.     By   whom,  and   to  whom,  indorsement   or   assignment 

may  be  made,            .....  540 

III.  Form  and  varieties  of  indorsement,               .             .  545 

IV.  Whether  or  not   the  party  is   indorser,  maker  or  guar- 

antor,            ......  560 

V.     How  far  parol  evidence  is  applicable  to  ascertained  in- 
dorsements, ......  572 

VI.     The  time  and  date  of  tiansfer,           .             .             .  579 

CHAPTER  XXII. 

Transfer  of  Bills  and  Notes  by  Assignment,          .             .             .  585 

Section  I.     Liability  of  the  assignor  of  the  legal  title,    .             .  585 

II.     Liability  of  the  assignor  of  the  equitable  title,  .             .  596 

CHAPTER  XXni. 

The  Sale  and  Discount  of  Bills  and  Notes,  and  the  Amount 

OF  Recovery,      .              ......  603 

Section  I.     The  validity  of  the  original  negotiation,        .             .  603 

II.     The  amount  of  recovery  against  the  maker  or  accept(^r,  608 
III.     The  validity  of  the  transfer,  and  amount  of  recovery 

against  the  transferrer,  .  .  .  .619 


Xiv  TABLE   OF   CO^'TENTS. 

CHArTi:K   XXIV. 

PAGE 

Nature  and  Rights  of  a  Bona   Fide  IIolueu  or  Purchaser   of 

Bills  and  Notes,             ......  G24 

Section  I.     ^o««/(/es,  and  gross  negligence,        .             .             .  G27 

H.     What  is  meant  by  "valuable  consideration,"       .             .  634 

ill.     The  ordinary  or  usual  course  of  business,      .             .  636 

IV.     The  phrase  "  before  maturity,"  .             .             .             .  640 

^^     What  is  meant  by  "purchaser  without  notice,"          .  641 

\' I.     When  purchaser  stands  on  same  footing  as  his  transferrer,  65(V 

VII.     The  burden  of  proof  as  to  bona  fide  ownership,        .  661 

CHAPTER  XXV. 


670 


IIoLtEii  OF  Bills  and  Notes  transferhed  to  iiim  as  Collateral 
Security  ;  and  Holder  of  Bills  and  Notes  secured  by  Mort- 
gage,      ........ 

Section  I.     Rights  and  duties  of  holder  of  negotiable  instruments 

as  collateral  security  for  a  debt,        .  .  .       670 

II.     Holder  of  negotiable  instruments  secured  by  mortgage,       685 

CHAPTER   XXVI. 

Rights  of  a  Bona  fide  Holder  or  Purchaser  of  Negotiable  In- 
struments   ORIGINATING    IN    FrAUD,    DuRESS,    OR    VIOLATION    OF 

Authority,  .......       680 

Section  I.     Holder   of  negotiable  instruments  completed,  but  not 

delivered,      ..... 
II.     Holder  of  negotiable  instruments  incomplete  and  unde 

livered, 
HI.     Holder  of  negotiable  instruments  intrusted  to  another  in 

blank,  ..... 

IV.     Holder  of  negotiable  instruments  written  over  blank 

signatures,    ..... 
V.     Holder  of  negotiable  instruments  procured  by   imposi 

tion  on  infirm  or  illiterate  jjcrsons,    . 
VI.     Holder  of  negotiable  instruments   executed  under  mis 

take  and  misrepresentation,  . 
VII.     Holder  of  negotiable  instruments  delivered    by  third 

party  in  violation  of  instructions,     . 
VIII.     Holder  of  negotiable  instruments  executed  under  duress,       712 
IX.     When  holder  of  negotiable  instruments  is  protected  by 

estoppel  in  puis,        .....       714 


689 
693 
694 
695 
697 
699 
706 


TABLE  OF  CONTENTS. 


XV 


CHAPTER  XXVII. 

The   Conflict   of  Law.     The   Law   of    Place    as   applicablr   to 
Negotiable  Instrument,  .  .  .  . 

Section  L  General  principles  of  the  law  of  place, 

II,  Lex  loci  contractus,  .... 

III.  Lex  domicilii^  ..... 

IV.  Lex  loci  solutionis,  .... 
V.  Lex  fori,        ...... 

VI.  Lex  loci  rei  sitce,  .... 

VII.  By  what  law  the  liability  of  the  maker,  acceptor,  drawer 

or  indorser  is  determined,     . 
VIII.     By  what  law  the  validity  and  effect  of  transfer,  and  the 
rights  of  the  holder  are  determined, 
IX.     By  what  law  the  formalities  in  respect  to   presentment 

protest  and  notice  are  governed, 
X.     The  revenue  laws  of  other  countries.     Law  applicable 

to  stamps  upon  negotiable  instruments, 
XI.     Law  applicable  to  the  currency  of  payment,  and  inter 
est  and  damages,       .... 


719 

719 
722 
729 
732 
734 
740 

741 

750 
753 
75^ 
761 


Appendix, 


769 


TABLE    OF    CASES    CITED. 


Tlie  References  are  to  Sections. — §§  1  to  925  inclusive,  are  in  Vol.  I,  the  residue  in  Vol.  11. 


Abat  V.  Rion,  987. 
Abbe  t.  Eaton,  1729. 
Abbey  v.  Chase,  307. 
Abbotts.  AgT.  B'k,  1691. 

V.  Bailev,  246. 

V.  Heudiicks,  81,  174,  199. 

V.  McKinley,  252,  253. 

t.  Rose,  844. 

D.  Striblen,  1473. 
Abeel  t.  Seymour,  296. 
Abel  V.  Sutton,  370,  683. 
Able  i\  Alexander,  1316,  1317,  1319. 
Aborn  v.   Boswortb,    1173,  1464,  1478, 

1481. 
Abraham  v.  Dubois,  14. 
Absolem  v.  Marks,  683. 
Ackland  «.  Pearce,  674,  1051. 

V.  Bletheu,  692. 
Adams  v.  Cordis,  917,  1454. 

v.  Darby,  452,  1076. 

V.  Flanagan,  291. 

V.  Frye,  1392. 

^^  Gregg,  543. 

V.  Jones,  667,  74S. 

V.  King,  99. 

«.  Leland,  1145. 

V.  Oakes,  1230. 

r.  Otterback,  623,  661. 

t.  Reeves,  1226. 

r.  Robinson,  1644. 

V.  Soule,  187. 

v.  Torbert,  996. 

v.  Wilson,  81. 

V.  Wovdley,  517. 

r.  Wright,  1017,  1038. 
Adams  Bank  v.  Anthony,  1339. 

V.  Jones,  1190,  1785. 
Addy  V.  Grix,  688. 
Adle  V.  Metroger,  1335. 
^tna  Nat.  Bank  v.  Fourth  Nat.  B'k, 

1636. 
African  Society  v.  Varick,  399. 
Agan  V.  McManus,  1163. 
Agnew  V.  B'k  of  Gettysburg,  445. 
Agra  &  Mastermau's  B'k,  1798. 

Vol.  I.— B 


Agricultural   B'k   i-.    Commercial   Bk, 

343. 
Ahern  v.  Goodspeed,  753. 
Aiken  v.  Marine  Bank,  685. 
Aillet  V.  Woods.  205. 
Ainslee  i\  Wilson,  1687. 
Ainsworth  t.  Creke.  318. 
Airey  i\  Pearson,  1099. 
Aistiey  v.  Johnson,  354. 
Alabama  Co.  v.  Braiuard,   74,75,412, 


685. 
Albeitz  V. 
Alcock  V. 

V. 
V. 


Mellon,  373. 
Alcock,  93. 
Hill,  1311,  1319,  1338. 
Hopkins,  1275. 
Alden  v.  Barbour,  643. 
Alderson,  ex  jjurte.,  23. 

V.  Langdale,  1411. 
Aldis  V.  Johnson,  611. 
Aldous  T.  Cornwell,  1389. 
Aldrich  v.  Grimes,  234. 

t'.  Jackson,  731,  738.  1676. 
V.  Smith,  1373. 
V.  Stock-well.  176. 
Aldridge  v.  Branch  Bank.  69. 
Alesbrook  v.  Roach,  1219. 
Alexander's  Cotton,  1060. 
Alexander  v.  Burchfield,  332. 

V.  Mackenzie,  280,  299. 
V.  Scott,  940. 
V.  Springfield,  728. 
V.  Thomas,  421 
Alexandria  Canal  Co.  v.  Swann,  393. 

Loudoun,   &c.   R.  R.  Co.  r. 

Burke,  833, 1517. 
Loudoun,  &c.  R.  R.  Co.    c. 
Loudoun,  1517. 
Alger  V.  Scott,  23. 
Allaire   r.    Hartshorne,    749,   757,  758, 

758rt.  827,  832. 
Allan  V.  ]Mawson.  133. 
Alleghany  B'k's  Appeal,  1615.^ 
Allen  V.  American  Nat.  B"k,  1637. 
V.  Avrcs,  1197. 
V.  Bratton,  889. 


Xviii  ne  references]       TABLE     UF     CASES.        iaretoihesecHon». 


Allen  w.  Clark,  731. 
V.  Culver,  1201. 
V.  Dundas,  261.  1615. 
V.  Edmundson,  1016,  10;}8,  1049. 
V.  Fourth  Xat.  B'k,  ISGO,  13G9. 
V.  Furbusli,  157. 
V.  Hart.  1422,  1423,  142G. 
V.  Hearn,  VJ~). 
V.  Inhabitants  of  Jay,  1522. 
V.  Keeves,  1578. 
V.  Keniblc,  898,  920,  1451. 
V.  King,  1082. 
V.  Merchants'  Bank,  338,  341,  345, 

910,  930. 
V.  Miles,  656. 
V.  Newburg,  1197. 
V.  Rigbtmere,  1769.  1786. 
V.  Sea,  Fire  &  Life  As.,  35,  426, 

1581. 
V.  Sharp,  1369. 

V.  State  Bank,  1465,  1479,  1696. 
V.  Suydam,  329,  330,  454,  465,  564. 
V.  Union  Bank.  1439. 
V.  Williams,  1736,  1743. 
AUerton  v.  Belden,  727. 
Alley  V.  Rogers,  325,  335. 
Allison  V.  Juniata  County,  431,  432. 
Allwood  V.  Hasledon,  1173. 
Almy  V.  Reed,  1480. 
Alnutt  V.  Ashenden,  1764,  1770. 
Alsop  V.  Goodwin,  81. 
Alston  V.  Hartman,  1187. 
Alves  V.  Hodgson,  914. 
American  Exch.  B'k  v.  Blanchard,  41. 
Life  Ins.  Co.  t;.  Emerson,  1045. 

V.  Oakley,  394. 
Nat.  Bank  v.  Bangs,  1383. 
Ames  V.  Brown,  1415. 
V.  Mcriam,  1634. 
Amherst  Academy   v.  Cowles,  741,  743, 

1197. 
Amison  v.  Ewing,  413,  414. 
Ammidown  v.  Woodman,  626,  1209. 
Amner  v.  Clark,  8,  9. 
Amoskeag  B'k  v.  Moore,  1106. 
Amsbaugh  v.  Gearhart,  1780. 
Ancher  v.  Bank  of  England,  698. 
Ancona  v.  Marks,  1653. 
Anderson  v.  Bullock,  32. 

V.  Cleveland,  546. 

V.  De  Soer,  21,451,  1644. 

V.  Drake,   460,  639,  640,  656, 

1145,1146. 
V.  Heath,  506. 
1.  Hick,  504. 
V.  Langdale,  1377. 
V.  Magruder,  81. 
V.  Robson,  1478. 
V.  Royal  E.xchange  As.  Co., 
612. 


Anderson  v.  Shoup,  355. 
V.  Walter,  351. 
V.  Warne,  1309. 
V.  Weston,  65. 
Anderton  v.  Beck,  1124. 
Audover  B'k  v.   Grafton,  273,  422,  435,, 

809. 
Andrews  v.  Baggs,  513,  514. 
V.  Blakcv,  1576. 
V.  Boyd,  1104.1159. 
V.  Franklin,  45,  46. 
V.  German  Nat.  B'k,  1590. 
V.  Herriott,  867,  885. 
V.  Hoxie,  11. 
■V.  Marrett,  1328. 
V.  Pond,   788,   867,  879,   918, 

923,  934,  925. 
V.  Russell,  1565. 
Androscoggin  Bank  v.  Kimball,  83,143. 
Angel  V.  Felton,  1483. 

V.  McClcUan.  224. 
Angle  V.  N,  W.  Mut.  Life  Ins.  Co.  143, 

788,  789,  1386,  1411. 
Anketel  v.  Converse,  1252. 
Annon  v.  Hancock,  1437. 
Anon.  V.  Harrison,  288. 
Ansel  V.  Baker,  548. 
Anson  v.  Bailey,  1162. 
Ansted  v.  Sutter,  867. 
Antoni  v.  Wright,  448,  1726. 
Apperson  v.  Bynum,  640,  1119,  1180. 
V.  Pritchard,  640. 
V.  Union  B'k,  656,  1059,  1060, 
1065,  1070. 
Appleton  V.  Parker.  12G0,  1267. 
Arayo  r.  Currill,  891. 
Arbouin  v.  Anderson,  175,  774. 
Arcangelo  v.  Thompson,  1053. 
Archer  v.  Bamford,  193. 

V.  McCray.  207. 
Archibald  v.  Argall,  1260. 
Arents  r.  Conmionwealth,  441,  734,  783, 
1489,  1490,  1496,  1500,  1505,  1506, 
1507,  1513,  1753,  1754,  1769,  1774, 
1777,  1798. 
Argenbright  v.  Campbell,  33. 
Arlington  v.  Hinds,  1187. 
Armat  v.  Union  B'k,  1480. 
Armfield  v.  Allport,  138. 

V.  Tate,  234. 
Armistead  v.  Armistead,  643,  645. 
V.  Brooke,  1253. 
V.  Butler,  1428. 
V.  Ward.  1260,   1373,   1317, 
1339. 
Armour  v.  Michigan  C.  R.  R.  Co.,  1733. 
Arms  V.  Ashley,  1684. 
Armstrong  r.  Christiaui,  983. 
V.  Gibson.  759,  764. 
V.  Pratt,  1432. 


Vie  r(ference><]        TABLE     OF     CASES.        {areto  the  »ection». 


XIX 


Aiinstrong  v.  Thurston,  983,  1173. 

V.  Toler,  866. 
Armsworth  v.  Scotten,  1672. 
Arnold  v.  Camp,  1299,  1300. 
V.  Cheque  B'k,  1372«. 
V.  Dresser,  455,  594,  653,  1149. 
V.  Jones,  1398. 
V.  Kinloch,  954,  983. 
V.  Potter,  894. 
V.  Revonet,  254. 
V.  Richmond  Iron  "Works,  213. 
i\  Rock  River,  &c.  R.  R.  51. 
y.   Sprai^nie,    108,   186,  303,  305, 

6(33. 
V.  Stackpole,  303,  305. 
Arnot  V.  Erie  Railway  Co.,  386. 
Arnott  V.  Redferne,  918. 

V.  Woodljurn,  725. 
Artizan  Bank  v.  Park  Bank,  899. 
Ashby  V.  Ashby,  102. 
Ash  ford  v.  Robinson,  1760. 
Ashley  v.  Gunton,  1119. 
Ashton  V.  Freestun,  1290,  1291. 

V.  Pye,  1286. 
Ashuelot  Man.  Co.  v.  Marsh,  394. 
Ashurst  V.  B'k  of  Australia,  680,  1505, 

1506. 
Aspiuall  V.  Wake,  262,  535. 
Atkins  V.  Blake,  775^,  1468, 
V.  Cobb,  699. 
V.  Owen,  1288. 
V.  Plympton,  122. 
Atkinson  v.  Brooks,  827,  829,  830. 
V.  Hawdcn,  1411. 
V.  Mank,  161,  514. 
Atlantic  B'k  v.   Merchants'  B'k,  1607, 
1610. 
National  B'k  v.  Douglas,  1311. 
V.  Franklin,  831. 
&c.,  M.  Ins.  Co.  V.  Boyes,  833. 
Atlas  B'k  V.  Doyle,  818,  832. 
Attenborough  v.  McKenzie,  480. 
Att'y  Gen.  v.  Life  &  Fire  Ins.  Co.,  382. 
Attwood  v.  Crowdie,  184. 
V.  Hazledon,  996. 
V.  Munnings,    276,    280,    290, 

299,  487. 
V.  Ratteuburv,  1182. 
Atwood  V.  B'k  of  Chiilicothe,  1682. 
Aubert  v.  Walsh,  1648. 
Aud  V.  Magruder,  1316. 
Aude  t.  Dixon,  854. 
Augusta  B'k  v.  Augusta,  1495,  1523. 
Auriol  V.  Thomas.  1438. 
Aurora  City  r.  West,  807,  1500,  1513, 

1523,  1557. 
Austell  V.  Rice,  196. 
Austin  V.  Bunvard,  1578. 
V.  Custis,  1329. 
V.  Imus,  920. 


Austin  V.  Rodman,  1076. 

V.  Vandermark,  365. 
V.  Whitlock.  32. 
Averett's  Adm.  v.  Booker,  49,  50,  104^ 

161,  162. 
Ayer  v.  Hutchings,  1233, 
Avery  v.  Stewart,  620,  627. 
Aymar  v.  Beers,  454,  478,  1125. 

V.  Sheldon,   899,    908,   909,  910, 
919. 
Ayrault  v.  McQueen,  827. 

V.  Pacific  B'k,  341,  342. 
Ayres  v.  Milroy,  855. 
Ayrey  v.  Fearn sides,  60. 

Babcock  v.  Beman,  303,  415,  855. 
V.  Loring,  303. 
V.  Stone,  354. 
Bacchus  V.  Richmond,  1206. 
Bachouse?).  Selden,  921. 
Bachellor  v.  Priest,  120,  454,  464,  573, 
573,   576,    987,   1201,    1333,    1230, 
1399. 
Backhouse  v.  Harrison,  773. 
Backman  v.  Charleston,  1550,  1555. 
Backus  V.  Diuiforth,  620,  743. 

V.  Shepherd,  1096,  1104. 
V.  Spaulding,  187. 
Bacon  v.  Fitch,  99. 

V.  HoUowav,  187. 

V.  Miss.  Ins.  Co.,  384. 

V.  Searles,  1337. 
Badnall  v.  Samuel,  1318. 
Baer  v.  Leppert,  1109,  1149. 
Bailey  v.  Bidwell,  166,  167,  808,  815. 

V.  Bodenham,  1590,  1599, 

r.  Dozier,  926,  940. 

V.  Edwards,  1334,  1337. 

V.  Heald,  898,  920. 

V.  Porter,  636. 

V.  Rawley,  293. 

V.  Smith,  758«,  779. 

V.  Smock,  108. 

V.  Taber,  63,  85, 

V.  Taylor,  1418,  1420,  1431. 
Bain  v.  AVh'itehaven,  &c.  R.  R.  Co.,  887. 

V.  Wilson,  32. 
Bainbridge  v.  Wilcocks,  896. 
Baine  i\  Williams,  1353. 
Baird  r.  Bla<;rove,  33. 

V.  Cochran,  366,  488. 
Baker  v.  Arnold,  745. 

V.  Baker,  268. 

V.  Birch,  1083,  1143. 

V.  Chambliss,  406. 

V.  Collins,  176. 

V.  Denning,  688. 

V.  Flower,  13o5. 

V.  Marden,  136. 

V.  Martin,  1236. 


XX 


Ttte  re/erencee]        TABLE     OF     CASES.        [are  to  the  sections. 


Baker  r.  Morriss,  1023. 
r.  Robinsou,  713. 
V.  Stack])ole,  1253. 
V.  Walker,  «27,  1329. 
V.  Williamson,  1G4G. 
Balcetti  v.  Scrani,  1350. 
Balcoinbe  v.  Northrup,  443. 
Baldwin  v.  B'k  of  La.,  341,  343. 

V.  B'k  of  Newljui-jr,  1188. 
V.  Farnswortli,  C38. 
V.  Hall,  875,  1282. 
v.  Richardson.  1047,  1120. 
V.  Van  Deuscn,  734. 
Balfour  v.  Sea,  Fire,  etc.  Ins.  Co.,  185. 
Ball  V.  Allen,  90,  1584. 
V.  Grciuul,  1095. 
V.  AVaddell,  1G12. 
Ballard  v.  Burnside,  119. 

V.  Fuller,  1G29. 
BuUinGfalls  v.    Gloster,    104,    671,  919, 

1213. 
Ballinger  v.  Edwards,  764. 
Ballou  V.  Talbot,  306,  307. 
Ballston    Spa   Bank    v.    Marine   Bank, 

392. 
Balme  v.  Wambaugh,  326, 
Baltzer  v.  Kansas  P.  R.  R.  Co.,  643. 
Banburj'  v.  Lissett,  509. 
Bancroft  v.  Hale,  1016,  1033. 
Bane  v.  Gridley,  145S'^(. 
Bange  v.  Flint,  835. 
Bangher  v.  Nelson,  1565. 
Bangor  B'k  r.  Hook,  1439,  1455. 
Bangs  V.  Moshcr,  1329. 
Bank  t>.  Cliillicotlie,  1529,  1530. 
V.  Flanders,  688. 
V.  Howard,  1672. 
V.  Lanier,  1709. 
V.  Pittell,  1606. 
V.  Slaughter,  1007. 
V.  Supervisors,  87. 
V.  Whitehead,  802. 
Bank  Commissioners  v.  Lafayette  B'k, 

1682. 
Bank  of  Albion  t\  Smith,  719. 

Alexandria     r.     Swanu,    983, 

1036,  1039. 
Bengal  v.  Fagan,  284,  1634. 

V.  McLcod,  284. 
Bennington  v.  Raymond,  454. 
British  N.  A.  v.  Hooper,  410, 
Cape  Fear  r.  Seawell,  985. 
Charleston  v.  Chambers,  1193. 
Charlotte  v.  Hart,  1689. 
Chenango  v.  Hide,  793,  1190. 

V.  Root,  999. 
Chillicothe  v.  Dodge,  1699. 
Columbia  v,  Lawrence,   1015, 
1016,    1018,  1022, 
1033,  1058, 


Bank  of  Columbia  v.  Mao-radcr,      022, 
.    1023. 
V.  Patterson's  Adm., 
388. 
Commerce  r.  Barrett.  79'7,1394. 
V.  Bogy,  20,  21. 
V.  Selden,  366. 
V.  Union  P/k,   533, 
540,  1361,  1363, 
1384,  1654,1659, 
1661. 
Commonwealth  v.   Cuny,   86, 
142,490,854. 
V.        Letcher, 

1206. 
V.       Mudgett, 
637,  964. 
Cumberland  v.  Maberry,  69. 
Decatur  v.  Hodges,  940. 
England  v.  Newujan,  588,  739, 

1264. 
Galli])olis  v.  Trimble,  890. 
Genesee  v.  Patchin  B'k,  298, 
385,  386,  417,  1189.  1398. 
Geneva  v.  Howlett,  1016,  1022, 

1025. 
Georgia  d.  Lewin,  868,  923. 
Hamburg  v.  Johnson,  294. 
Ireland  v.  Archer,  556. 

V.  Beresford,  726,  790. 
Kentucky  v.  Garey,  581,  583. 
V.  Pursiey,  945,  946. 
T.  Thprnberrv,  1682. 
V,  AVister,  1665. 
Limestone  r.  Penick.  86,  142. 
Louisiana  v.  City  of  New  Or- 
leans, 1505. 
V.  Mausaker,  1017. 
V.  Tournillon,  1028. 
Louisville  v.  Ellery,  491. 
Manchester  v.  Glasen,  687,  947, 

958,  1024. 
Marietta  t.  Pindall,  066,  667. 
Metropolis  v.  Jones,  1217. 

V.   New   Eng.   B'k, 
183,   33>,   338, 
450. 
Michigan  v.  Ely,  558,  561. 
Middleburv  v.   Bingham,  1190. 
Missouri!'.' Hall,  ]217. 

V.  Phillips,  854. 
v.  Vaughn,  991. 
V.  Wright,  1454. 
Mobile  V.  Brown,  927. 

V.  Brunn,  1570,  1651. 
V.  Hudgins,  331,  343. 
r,  Meagiier,  1694. 
Montgomery  v.  Walker,  1335. 
Newbury  v.  Rand,  1190. 
Niagara  v.  McCraken,  1685. 


The  references]       TABLE     OF     CASES.       [are  to  the  sectiont.  xxi 


Bank  of  Niagara  v.  Roosevelt,  1691. 

N.  Y.  V.  B'k  of  Obio,1188,l-417. 

V.  Vauderhorst,  834. 
N.  A.  V.  Barriere,  611. 

V.  Meredith,  2.j4,  1251. 
N.  C.  «.  B'k  of  Cape  Fear,  647. 
Orange  Co.  v.  Colby,  908. 
Orleans  v.  Merrill,  1G99,  1703. 

V.  Smith,  344. 
Peru  V.  Farnsworth,  1703. 
Pittsburg  V.    Neal,    143,   483, 

775,  814,  1503. 
Port  Gibson  v.  Baugli,  370. 
Republic  v.  Baxter,  1608. 

V.  Carriugton,  833. 
V.  Millard,  1636, 1638. 
Rochester  v.  Bowen,  365. 
V.  Gould,  779. 
V.  Gray,909, 948,961. 
V.  Mintent,  304. 
V.  Monteath,  363. 
Rome  V.  Village  of  Rome,  1500, 

1537,    1550,  1553. 
Rutland  v.  Buck,  1190. 

V.  Woodroof,  501. 
Salina  v.  Babcock,  837. 
Sandusky  v.  Scoville,  184. 
Scotland  i\  Hamilton,  477. 
St.  Albans  v.  Gilliland,184, 369. 
St.  Louis  V.  Rice,  553. 
St.  Mary's  v.  St.  John,  1683. 
S.  C.  V.  Flagg.  657. 

v.  Humphreys,  371. 
V.  M' Willie,  391. 
t).  Myers,  1130,1338. 
State  V.    Muskingum    Branch 

B'k,  687. 
Syracuse  v.  Hollister,  606,  656. 
Tennessee  v.  Barksdale,  1767. 

V.  Smith,  1154. 
Troy  v.  Topping,  363,  370. 
U.  S.  V.  Bierne,  275,  703,  999. 
V.  B'k  of  Georgia,  334, 
533,1335,1360,1655, 
1656. 
?;.Carneal,  656, 985, 1023, 

1028. 
V.  Corcoran,  1003,  1019. 
V.  Dandridge,  388. 
V.  Daniel,  1260. 
V.  Davis,  391,  719,  1217. 
V.  Douallv,  883,  885,  903. 
V.  Dunn, '395,  719.  1317. 
r.Goddard,331,987,  993. 
v.    Hatch,     1019,     1305, 

1307.  1320,  1327. 
V.  Lane,  1024. 
V.  Leathers,  926,  1149. 
t.   Lvmau,    1159,    1165, 
1189. 


Bark  of  U.  S.  r.  Norwood,  1015. 
V.  Russell,  1373. 
V.  Sill,  1482,  1695. 
V.  Smith,  644,  962. 
V.   U.  S.  576,    898.   920, 
1230,     1439,     1440, 
1458,  1479. 
Utica   V.    Bender,    1C32,    1058, 
1115,  1121.  1155. 
V.  Davidson,  1032. 
V.  Hillard,  1217. 
V.  Ives.  1316,  1328. 
V.  M'Kiuster,  324,  346. 
V.  Phillip,  1032. 
Seaford  v.  Conneway,  1085. 
V.  Smeds,  324. 
V.  Smith,  455,   572,  576, 
600,  656,  991,  1230. 
V.  Wager,  614. 
Va.  V.  Ward,  1479,  1695,  1696. 
Veraennes  i'.  Cameron,  365, 369, 

■"654,  953,  965,  1236. 
Washington   v.   Triplett,    334, 
329,    340,    345,    349,   354, 
490,   589,    614,   634,    908, 
931,  933. 
Banks  v.  Marshall,  1343,  1244. 
BarI)aroux  v.  Waters,  658,  963,  1085. 
Barber  v.  Backhouse,  201,  756. 

V.  Gingell,  396.  299,  353,  1353. 
V.  Mech's  Ins.  Co.,  382. 
Barbour  v.  Baven,  617. 
Barclay,  ex  ixirte,  990,  1266. 
V.  BaileJ^  602,  603. 
V.  Weever,  1093,  1105. 
I  Baring  v.  Clark,  526,  527. 

V.  Reeder,  1217. 
i  Barkalow  v.  Johnson.  1149.  1152,  1163. 
Barker  r.  Barker,  190,  1107,  1124. 
V.  Clarke,  1146. 
V.  Hall,  1014. 

V.  Mech's  Ins.  Co.,  386,  405,  406. 
V.  Prentiss,  199. 
V.  Sterne,  65,  870. 
V.  Valentine,  724,  725. 
Barley  v.  Freeman,  17G7. 
Barlow  ».  Bishop,  242,  681,  1231. 

V.  Congregational  Soc,  398,  405, 

407. 
V.  Gregoiy,  629. 
T.  Scott,  725. 
Barnabv  v-  Barnaby,  234. 
Barnard  v.  Campbell,  1727,  1750. 
I.  Cushing,  151,  154,  159. 
V.  Gusliii,  719. 
Barnes  ».  Gorman,  60. 
V.  Hedlev,  207. 

I'.  Ontario  B'k,  382. 390, 391,  393 
c.  Reynolds.  1000.  1001. 
c.  Town  of  Lacon,  1551. 


XXll 


The  referencen]        TABLE     OF     CASES.        [ai-e  to  the  sections. 


Barnes  v.  Vau'rhn,  054. 

Barnetr.  Smith,  4'J7.  lOOo,  IGOG,  1G23. 

Barnett  v.  Cecil,  1342. 

T.  Lichtenstein,  248. 
V.  Olt'crman,  170. 
Barney  v.  Earl,  832. 

^.Ncwcoml),  8%,  897,1188,1750. 
Barnwell  v.  Gorman.  00. 

V.  Mitcliell,  1030. 
Barr  v.  Boyer,  1311. 
Barrett  v.  Allen,  027. 
V.  Barrett,  883. 
V.  Charleston  B'k.  1133. 
V.  County  B'k,  1500. 
V.   County    Court,    1500,   1545, 

1548. 
r.  Evans,  1015. 
V.  Funday,  94. 
V.  Goddard,  1279. 
V.  Russell,  083. 
V.  Skinner,  94. 
Barrick  v.  Austin.  103,  393,  728. 
Barring  v.  Clark,  520,  1227. 
Barrington  v.  Bank,  388. 
Barron  r.  How,  1207. 
Barrow  «.  Coles,  1745. 

V.  Pike,  173. 
Barry  v.  Clark,  527. 

V.  Merchants'  Ex.  Co.,  382,  383. 
V.  Morse,  719,  1093. 
Co.  V.  McClothlin,  1185. 
Barstow  r.  Hiriart,  985. 
Bartsch  v.  Atwater,  874. 
Bartlett  v.  Benson,  724. 

V.  Isbell,  349,  992. 
V.  Robinson,  1023. 
t.  Same,  03. 

V.  Tucker,  141,  304,  307. 
Barto  V.  Schenk,  715. 
Barton  v.  Baker,  1131,  1137,  1173. 
V.  Bennett,  1172. 
V.  Trent,  731,  737. 
V.  Wilkins,  80. 
Co.  V.  Walker,  1500,  1504. 
Bartrum  v.  Caddy,  783. 
Bascom  r.  Young,  308. 
Baskervillc  v.  Ilarriss,  1149. 
Bass  V.  Clive,  535. 

v.  Columbus,  1500. 
V.  O'Brien,  3<)3,  411. 
Bassett  v.  Averj-,  720,  803. 

V.  Ilaines,  497. 
Bateman  v.  Joseph,  400,  1114,  1120. 

r.  Mid  Wales  R.  J^,  499. 
Bates  V.  Butler,  003. 
r.  Kemp,  725. 
r.  Kcmpton,  1181. 
T.  Rosekrans,  12G0. 
V.  Todd,  1729. 
Bath  Co.  V.  Amy,  1523. 


'  Bathe  v.  Tavlor,  1375,  1377,  1401. 
Bathford  v.  Shaw,  1780,  1788. 
Batlv  V.  Carswell,  291. 
Battle  V.  Weems,  726. 
Baugh  T.  Ramsey,  81. 
Baumgarduer  v.  Reeves,  1118. 
Baxendale  v.  Bennett,  842. 
Baxter  v.  Duren,  731,  735. 

V.  Earl  of  Portsmouth,  212. 
V.  Ellis,  814. 
V.  Graves,  1084. 
T.  Little,  724,  725,  1233,  1437. 
V.  Stewart,  60. 
Bay  V.  Coddiugton,  826. 

T.  Freazer,  73. 
Bayard  v.  Shunk,  737,  1269,  1672,  1077. 

1678. 
Bayley  v.  Chubb,  1027. 

V.  Greenleaf,  1281. 
V.  Faber,  197,  806. 
Beale  v.  Parrisli,  987,  1058. 
Beall  V.  Leverett,  785. 
Beals  V.  Peck,  979,  973,  999,  1000. 

V.  See,  210,085. 
Beaman's  Adm.  r.  Russell,  1421. 
Bean  v.  Arnold,  1099. 

T.  Briggs,  891,  1703. 
V.  Brown,  1251. 
T.  Keen,  1478. 
Beard  v.  Dedolph,  741,  745. 
V.  Root,  1328,  1329. 
V.  Wel>b,  250. 
V.  White,  81. 
Beardslee  v.  Hortou,  797. 
Beardsley  r.  Baldwin,  41. 
T.  Hill,  86. 

V.  Warner,  1304,  1305,  1339. 
Bearmau  v.  Board  Police,  422. 
Beaty  v.  Grim,  1763. 
Beauchamp  v.  Cash,  998. 
Beaumont  v.  Reeve,  195. 
Beaver  Co.  v.  Armstrong,  1489,  1513. 
Beck  V.  Robley,  1239,  1340,  1341. 

V.  Thompson,  616. 
Beckerdike  r.  Bollman,  1074. 
Beckwith  t.  Corall,  773,  1462,  1463. 
1).  Farnum,  738. 
V.  Smith,  1028. 
Becnel  v.  Tournillon,  1024. 
Bedford  Com.  Ins.  Co.  v.  Covell,  305. 
V.  Deakin,  1295,  1296,  1328. 
V.  Hickman,  1034. 
Beebet).  Brooks.  611,  996. 

V.  Hutton,  122. 
Beeching  t.  Growar,  648,  1679. 
Beeker  t.  Saunders,  1788. 
Becle  ».  Bidgood,  79. 
Beeler  v.  Young,  220. 
Beeman  t.  Duck,  539.  1351,  1354,  1305, 
1300. 


T7ie  references]        TABLE     OF     CASES.        [are  to  the  sections.        XXU'l 


Beers  v.  Plioenix  Glass  Co.,  382. 
Beeson  v.  Lipmau,  1198. 
Besjbie  v.  Levi,  69. 
Beirne  c.  Dunlap,  55. 
Belcher  v.  Smith,  1783. 
Belden  v.  Lamb,  751,  1058. 
Belderback  v.  Burliugume,  1(51. 
Belknap  v.  Nat.  B'k  of  N.  A.  1347, 1660. 
Bell  V.  Alexander,  1587,  1595,  1638. 
V.  Bruen,  1755. 
V.  Buckley,  1369. 
V.  Cagertv,  731. 
V.  Dagg,"^672,  731,739. 
V.  Hagerstown  B'k,  1012,  1023. 
V.  Hall's  Exrs.  1060. 
V.  Lord  Ingestre,  721. 
V.  Morrison,  374. 
V.  Moss,  1737. 
V.  Norwood,  1206. 
V.  State  B'k,  1015. 
«.  Young,  1471. 
Bellamy   v.    Majoribanks,   1571,  1585a, 

1636. 
Bellasis  v.  Hester,  492,  624,  626. 
Belle  V.  Bidgood,  79. 

V.  Bruen.  879. 
:Bellemire  v.  B'k  U.  S.,  341,  343. 
Bellow's  Falls  B'k  r.  Rutland  Co.,  1707. 

r.  Loyell  1311. 
Belmont  Branch  B'k  v.  Hoge,  769,  775, 

814. 
Beloit  V.  Morgan,  1560. 
Belotte  'V.  Wynne.  374. 
Beltzhoover  v.  Blackstock,  775,779,1462. 
Bemis  v.  McKenzie,  996. 
Bend  v.  Weitze,  790. 
Benedict  v.  Caffee,  1135,  1172. 

V.  Cowden,  149, 153, 153, 1397, 

1407. 
V.  Miner,  319,  1377. 
V.  Smith,  321. 
Benham  v.  Bisliop,  331,  334. 
Benjamin  v.  Arnold,  1338. 

V.  McConnell,  1390. 
Benman  v.  Millison,  829. 
Bennell®.  Wilder,  1251. 
Benners  r.  Clemens,  916. 
Bennett  v.  Farrell,  137. 
V.  Young,  966. 
Benoin  v.  Paquin,  798. 
Benson  ®.  Carmel,  432. 
V.  Drake,  70. 
V.  Mayo,  1523. 
Benthall  v.  Judkins,  715,  1757. 
Bentnick  v.  Dorrien,  549. 
Benton  v.  Gibson,  611. 
V.  Martin,  1173. 
V.  Maryiu,  1101. 
V.  Mattin,  68,  81,  1173. 
Berdsell  v.  Russell.  1499«. 


Bcrge  V.  Abbott,  1118,  1119. 
Berkeley  v.  Cannon,  213. 

V.  Watling,  1737. 
Berkshire  B'k  v.  Jones,  656,  657,  1096. 
Berliner  v.  Town  of  Waterloo,  1535. 
Bernard  v.  Barry,  891. 
Bernheimer  ».  Marshall,  1361. 
Berridge  v.  Fitzgerald,  1010. 
Berrien  v.  Wright,  932. 
Berry  v.  Bridges,  1276. 

«.  Griffin,  1367.  1268. 
V.  Robinson,  611,  996. 
V.  South  B'k,  1060. 
Berthume  v.  McCrary,  181. 
Bertrand  v.  Barkman,  184,  827. 
Besant  v.  Cross,  517. 
Besshears  v.  Rowe,  568. 
Best  V.  Hoppie,  713. 

V.  Nokomis  Nat.  B'k,  1198. 
Betts  V.  Kinipton,  256. 
Beyan  v.  Eldridge,  1212. 
Beverley's  Case,  209. 
Bibb  ».  Hitchcock,  196. 

V.  Peyton,  1165. 
Bickerdike  v.  Bollman,  1074,  1170. 
Bickford  v.  First  Nat.  B'k,  1590,  1626. 

V.  Gibbs,  1759,  1788. 
Bicknall  ®.  Waterman,  738. 
Biery  «.  Haines,  1391. 
Bigelow  V.  Colton,  707,  715. 
V.  Grannis,  233. 
V.  Reynolds,  1755. 
V.  Stephen,  1373,  1411. 
Bigler  v.  Waller,  1248. 
Biijnold,  ex  parte,  1109. 
Bilbier.  Lumley,  1148. 
Billgerry  v.  Branch.  217,  218,  669,  678, 

1060,  1063,  1070,  1567,  1571. 
Billing  V.  Devaux,  25,  491,  498,  499, 

503. 
Billings  V.  Billings,  80. 
V.  Collins,  781. 
Bingham  v.  Noyes,  247. 
V.  Reddy,  1373. 
V.  Stanley,  177. 
Binney  v.  Plumley,  63,  65,  1187. 
Biossat  V.  Sullivan,  170. 
Birchard  v.  Bartlett,  705. 
Birckhead  v.  Brown,  1797. 
Bircleback  v.  Wilkius,  162. 
Bird  V.  Brown,  318. 
V.  Daggett,  386. 
V.  La.  State  B'k,  337. 
v.  Le  Blanc,  1091,  1095. 
Birdsall  v.  Russell,  775. 
Bisbing  r.  Graham,  1473. 
Bishop  1'.  Dexter,  611,  996. 
V.  Hay  ward.  1202. 
«.  Rowe,  548,  1206,  1278. 
V.  Yeazle.  1304. 


Xxiv  Tfte  re/erencen]       TABLE     OF     CASES.       [uie  to  the  sections. 


Bisley  v.  Brown,  1298. 
Bissell  V.  Citj'  of  Kankakee,  15-14,  1550, 
15356. 

V.  First  Nat.  Bank,  392. 

)'.  Gowdv,  726. 

r.  Jefferson vi He,   317,  389.  1537, 
1540,  1504. 

V.  Lewis,  561,  807,  897. 
Bissinger  r.  Guitenian,  81. 
Bizzell  V.  Stone,  1432. 
Black  V.  Coleman,  151. 

V.  Peele,  543. 

V.  Ward,  50,  58. 

V.  Zacharie,  1272. 
Blackbourne,  ex  parte,  1262,  1204. 
Blackenhagen  v.  Blundell,  l(i3. 
Blackic  v.  Pidding,  1401,  1483. 
Blackman  v.  Doreu,  1075,  1070. 

V.  Green,  603. 
Blackmore  v.  Wood,  80. 
Black  River  Sav.  B'k  v.  Edwards,  104. 
Blackstone  B'k  v.  Hill,  1251,  1319. 
Blackwell  v.  Denie,  123. 

i\  Hamilton,  33,  34. 
Blade  «.  Noland,  1482. 
Blain  &  Hoge  v.  Wilson,  1064,  1005. 
Blaine  v.  Bourne,  698. 
Blair  v.  B'k  ofTenn.  043,  1303,  1398. 
Blake  v.  Coleman,  151,  1396. 

V.  McMillen,  594. 
Blakely  v.  Grant,  1017,  1782. 
Blakemore  r.  Wood,  80. 
Blakey  v.  Jolnison,  1373,  1405. 

V.  Mutual  B'k,  1108. 
Blanc  V.  Mutual  Nat.  B'k,  1099. 
Blanchard  v.  Kaull,  403. 

V.  Stevens,  827,  830. 
V.  Wood,  1099. 
Bland  v.  O'Hagen,  148. 
Blanding  v.  Burr,  1550. 
Blankenship  i\  Rocers,  1080,1429, 1595. 
Blatcliford  >\  Millikcn,  710. 
Bleaden  v.  diaries,  1408. 
Blessard  v.  Hurst,  1154,  1158. 
Blethen  r.  Lovering,  070. 
Bliss  r.  Covington,  1473. 

V.  Hougliton,  890. 
Blodgett  V.  Durgin,  879,  880. 

V.  Jackson,  139. 
Blood  V.  ^faveuse,  390. 

V.  Nortlirup,  44,  43. 
Bloom  V.  Helm,  303. 
Blossom  V.  Dadd,  1711. 
Blount  V.  Bcstland,  257. 

V.  Windlcy,  1089. 
Blow  V.  Mavnnrd,  1342. 
Blum  r.  Bidwell,  1149. 
Boaler  v.  Maver,  1322. 
Boalt  V.  Brown,  1385. 
Board  of  Supervisors  v.  Hall,  1188. 


Boardman  v.  Paige,  1294. 
■V.  Smith,  1432. 
Boatman's  Sav.  Ins.  Co.  v. 


V. 


B'k  of  Mo., 

1080. 
Mead,  365. 


Bobe  V.  Stickney,  1251, 1252. 
Bobs  V.  Hansel,  231. 
Bock  V.  Laum,  751. 
Boddington  v.  Schlencher,  332,  1590. 
!  Bodley  '".  Higgins,  07. 
Boehm  v.  Gurcias,  508. 

V.  Sterling,  1567,  1595,  1634. 
Boeka  v.  Nuella,  741. 
Bogart  r.  M'Clung,  1150,  1164. 
Bogarth  v.  Breedlove,  1380. 
Bogcrt  r.  Hertell,  266,  268. 
Bogy  V.  Keil,  1083,  1172. 
Boit  V.  Corr,  649. 

V.  Whitehead,  805. 
Bolitho,  e.v  parte,  364. 
Bolton  V.  Dugdale,  53. 
V.  Horrod,  470. 
Bonbonus,  ex  jxirtc,  363,  366,  505,  307. 
Bond  V.  Bratig,  909. 

V.    Farnham,    1128,    1137,    1138, 

1142. 
V.  Fitzpatrick,  1437. 
V.  Storris,  1229. 
V.  Warden.  1592. 
V.  AYhitfield,  1472. 
Boncluraut  v.  Everett,  1015. 
Bonedon  v.  Page,  898. 
Boneton  v.  Welsh,  982,  983. 
Bonman  v.  Van  Kruen,  190. 
Bonner  v.  City  of  New  Orleans,  1499J. 

T.  Nelson,  854. 
Booker  v.  City  of  Robbin, 
Booli!.  Mix,  229. 
Boomer  v.  Koon,  1375. 
Boon  V.  Murphv,  1281. 
Booth  V.  Grove,  287. 

V.  Powers,  1395,1410,  1411, 1412. 
v.  Quin,  375. 
V.  Smith,  1267,  1276. 
i\  Storriss,  070. 
V.  Wallace,  80. 
Borden  v.  Clark,  700,  797. 
Bornemau  v.  Sidlinger,  24. 
Borough  V.  Perkins,  926. 

V.  White,  608. 
Borradaile  v.  Lowe,  1091,  1163. 
Borup  i\  Miningcr,  329,  347. 
Bosanquct  v.  Dudman,  183. 
Boss  V.  Hewitt,  724,  787. 
Bossanger  t\  Ross,  751. 
Boston  B'k  v.  Hodges,  658,  1212- 
Bostwick  V.  Dodge";  832. 
Bottomley  v.  Brooke,  1431. 

V.  Fisher,  402. 
Bottomly  v.  Goldsmith,  198,  808. 


The  references]       TA13LE     OF     CASES.       [are  to  tfte  sectionfi.         XXV 


Bouchell  V.  Clury,  224,  225. 
Boultbee  v.  Stnbbs,  1323. 
Boulton  V.  Welsh,  983. 
Bouhvare  v.  Newton,  170,  1534. 
Bourne  v.  Ward,  162,  163. 
Bouts  V.  Ellis,  26. 
Bowen  v.  Bradley,  868. 
V.  Byrne,  122. 
V.  McCann,  174. 
V.  Newell,   622,   634,  908,  1558, 

1573,  1576. 
V.  Stoddard,  294,  1450. 
Bower  v.  Hastings,  726. 
V.  Hoffman,  1701. 
Bowerbank  v.  Monteiro,  79,  517. 
Bowers  v.  Hard,  179. 

V.  Jewell,  1401,  1403. 
V.  Still,  1301. 
Bowes  v.  Howe,  1172. 
Bowie  V.  Duvall,  576,  1197,  1229. 
Bowker  v.  Cliilds,  1289. 
Bowles  V.  Elmore,  1293. 
V.  Lambert,  100. 
Bowling  V.  Arthur,  343. 

V.  Harrison,  1005,  1007. 
Bowman  v.  McChesnev,  88,  89,  599. 
V.  Nichol,  1401. 
V.  Van  Kuren,  824,  825,  831. 
V.  Wood,  1181,  1192. 
Bowyer  v.  Bampton,  673. 
Boyce  v.  Edwards,  551,  559,   560,  561, 
596,  1799. 
V.  Qeyer,  799. 
V.  Tabb,  169,  172,  173. 
Boyd  y.  Brotherson,  14i  4. 
V.  Cleveland,  1093. 
V.  Corbitt,  1193. 
V.  Emerson,   1621. 
V.  Hitchcock,  1265,  1267. 
r.  McCann,  174,  803. 
V.  Mclvor,  815. 
V.  Orton,  999. 
V.  Parker,  834a. 
V.  Plumb,  365. 
V.  Vauderkemp,  802. 
Boyd's  Adm's  v.  City  Sav.  B'k,  591,  972, 

1000,  1005,  1011. 
Boydell  v.  Harkness,  519,  642. 
Boyle  V.  Skinner,  363. 
Boynton  v.  Pierce,  713. 
Bozeman  v.  Rushing,  196. 
Brabstone  v.  Gibson,  895. 
Bracken  v.  Griffen,  1534. 
Brackett  v.  Montfort,  1392. 
Bracton  t\  Willing,  532. 
Bradford  v.  Corey,  708,  1099. 
V.  Fox,  1617,  1623. 
Bradlaugh  v.  De  Bin,  867. 
Bradlee  v.  Boston  Glass  Co.,  298,  300, 
401. 


Bradley  v.  Anderson,  81. 
V.  Ballard,  423. 
V.  Curry,  1785. 
V.  Davis,  979,  1003,  1019. 
V.  Harrington,  1574. 
V.  Hunt,  24,  1672. 
V.  Sill,  54. 
V.  Mann,  1373. 
r.  Marshall,  726. 
V.  Pratt,  226. 
V.  Root,  23. 
Bradshaw  v.  Hedge,  962. 
Bradv  v.  Chandler,  36. 

"  V.  The  Mayor,  318. 
Bragg  V.  Greeuleaf,  1197. 
Brailsford  v.   Williams,  988,  990,  992, 

1054. 
Brainard  v.  Cappella,  186. 

V.  N.  Y.  &  H.  R.  R.  Co.,  1489, 

1496. 
V.  Reavis,  724. 
Braithwait  v.  Gardner,  535. 
Braman  v.  Hawk,  1317. 

V.  Hess,  760,  766. 
Bramhall  v.  Van  Campen,  69. 
Branch  B'k  v.  Gaffrey,  996. 
V.  James,  1338. 
V.  Knox,  331. 
v.  Pierce,  1030. 
V.  Tillman,  1482,  1484. 
State  B'k  v.  McLeran,  592. 
Brandon  v.  Scott,  354. 
Brandt  v.  Bowlby,  1734. 
V.  Mickle,  1135. 
Brannin  v.  Henderson,  512. 
Bray  v.  Hawden,  1043,  1044. 

V.  Manson,  1305. 
Braynard  v.  Fisher,  1437. 

V.  Marshall,  875,  881. 
Breeds.  Cook,  1262. 

V.  Hillhouse,  1786. 
Breitung  v.  Lindauer,  1260. 
Brengle  ;'.  Bushev,  1328. 
Brent  v.  Ervin,  1478,  1481.    • 
Brent's  Ex'rs   v.   Bank   of  :Mctropoli3, 

639. 
Bresenthal  r.  Williams.  S5. 
Brett  V.  Marston,  1780. 
Brewer  v.  Brewer,  36. 
Brewster  i'.  Arnold,  983. 
v.  Doane,  1057. 
r.  Hobart,  277. 
i\  McCardel,  84,  630. 
V.  Silence,  1T67,  1779. 
V.  Syracuse,  1556. 
r.  Wakefield.  UoSo. 
V.  Williams,  49. 
Bricket  v.  Spakiino-.  649. 
Bridge  v.  Batchclder.  735,  730,  12()0. 
Bridsceford  v.  Masonville  Co.,  1478. 


XXVI 


The  reference]       TABLE     OF     CASES.       iare  to  the  sections. 


Bridfjcport   i\    Housutonic    R.    R.    Co., 

1523. 
Bridfji'ijort  B'k  v.  Dyer,  40o. 
Briiliic'port   City  B'k  v.  Empire  Stone 

Dressinji:  Co.,  386. 
Bridges  V.  Berry,  548,  971. 

V.  H;iwks\vorlli,  1G74. 
Brieber  v.  Coniiuerciiil  Bank,  70. 
Briggs».  Boyd,  793,  1190. 
V.  Brings,  1429. 
V.  Ewart,  851. 
V.  Merrill,  781. 
Brigham  v.  Peters,  299. 
V.  Potter,  204. 
Bright  r.  Judson,  896. 
Brighton  Market  B'k  v.  Philbrick,  1121. 

V.  Webb,  1203. 
Brill  V.  Crick,  154. 
Brindley  v.  Barr,  1012. 

V.  Boyd,  713,  715. 
Brinklcy  v.  Going,  576,  1227,  1229. 
Briscoe   D.   Bank    of    Kentucky,    1715, 

1720,  1740. 
Bristol  Knife  Co.  v.  First  Nat.  B'k,  1618. 
V.  Sprague,  371,  375. 
V.  Warner,  45,  1G2. 
Bristow  V.  Scqueville,  914. 
British  Linen  Co.  v.  Drumraoud,  884. 
Britton  x.  Bishop,  724,  735. 

V.  Dierker,  1376. 
Brock  V.  Thompson,  766. 
Brockway  v.  Allen,  403. 

v.  Comparree,  704,  709. 
Bromage  v.  Lloyd,  64,  267. 
Brombridge  v.  Osborne,  1328. 
Bromley  v.  Com.  N.  Bank,  1620. 
Bromwich  v.  Lloyd,  6. 
Bronaugh  v.  Scott,  1304. 
Bronson  v.  Alexandres,  713. 

V.  Rodes,  1247. 
Brook  V.  Hook,  1352. 
Brooke  v.  Smith,  1421. 
Brookman  v.  Metcalf,  1496. 
Brooks  V.  Day,  905. 

V.  Elgin,  1277. 
V.  llargreaves,  41. 
1).  Iligljv,  635. 
«.  ]\Iartin.  859. 
V.  Mitchell,  006,  608. 
V.  Stewart,  1294. 
V.  White,  1289. 
Broughton  v.  Fuller,  1390,  1401. 
V.  West,  1390. 

V.  M.   &  S.  Water  Works, 
377,  380. 
Brower  v.  Appleby,  395. 

V.  Pcabody,  1750. 
Brown,  ex  jjiarte,  080. 
V.  Barrv,  930. 
V.  Brown,  24,  1181. 


Brown  v.  Butchers'.  &c.  B'k,  74,  688. 

V.  Butler,  715. 

V.  Clark,  373. 

r.  Curtis,  1763,  1779,  1786. 

V.  Davies,  1506. 

■».  Davis,  726. 

».  Dickinson,  684,  701. 

I).  Dc  Wiiiton,  130. 

V.  Donnell,  290. 

V.  Dunl)arr,  986. 

V.  Fergusons,  9,  995,  1045,  1172. 

V.  Finlev,  194. 

Admrs.\\  Gariand,  1433. 

r.  Gilman,  102,  1275,  1381. 

^l.  Harraden,  616,  617. 

V.  Hull,  81. 

v.  Jackson,  698. 

V.  Jones,  1385. 

V.  Langley,  81. 

V.  Leavitt,  183n!.,  827. 

V.  Leckie,    1636,    1637,    1628, 
1786. 

«.  Lusk,  1569,  1595. 

V.  Maffey,  1077,  1083. 

v.  M'Dermont,  588. 

V.  Messiter,  1435,  1473. 

■e.  Montgomery,  1269. 

V.  Mott.^lSl,  726,  766. 

V.  Olmsted,  1260. 

V.  Parker,  294,  303,  304. 

V.  Phillpot,  166. 

v.  Powell,  1729. 

V.  Reed,  1405,  1409. 

V.  Spofford,  70,  81,  719,  769,  812. 

1).  Todrell,  210. 

V.  Turner,  592,  999. 

V.  Van  Braura,  1438. 

v.  Ward,  833. 

V.  Wilcox,  674. 
Browne  v.  Coite,  513. 
V.  Wiley,  70. 
Brownell  v.  Bonney,  1047. 
v.  Winnie,  1388. 
Brownings.  Kinnier,  1117,  1120. 
Brownlee  v.  Arnold,  835. 
Bruce  v.  Bruce,  672. 
V.  Lord,  412. 

T.  Lytle,  1104,  1144,  1157. 
«.  Westcott,  1395. 
r.  Wright,  717,  722. 
Braen  v.  Marquend,  1321. 
Brumah  v.  Roberts,  358. 
Bruminagin  p.  Tallant,  1703,  1707. 
Brummel  v.  Enders,  145,  146,  175,  752. 
Brunsen  v.  Napier,  1135. 
Brush  V.  Reeves,  663. 

«.  Scribner,  775,  832. 
Brutt  V.  Piccard,  1403. 
Bruyn  v.  Receiver,  1691. 
Bryan  v.  Berry,  276. 


Tlie  references]       TABLE     OF     CASES.        [are  to  the  Bectiom.       XXvii 


Bryan  v.  "Wilcox,  1104. 
Bryant  v.  Christie,  194. 

i\  Damariscotta  Bank,  1685. 
V.  Edson,  034,  908. 
V.  Lord,  1092. 

V.  Merchants'  Bank,  1093,  1094. 
V.  Vix,  834. 
Bryden  v.  Taylor,  945. 
Buchanan  v.  Findley,  9,  790. 
«.  Kims,  1281. 
V.  Marshall,  109G. 
Bucher  v.  Jarrett,  1483. 
Buck  V.  Kent,  1483. 

V.  Merrick,  407. 
Buckalew  v.  Smith,  1316. 
BuckhoHse  ».  Selden,  880. 
Bucklen».  Huff,  1373. 
Buckley,  ex  parte,  1613. 
V.  Briggs,  382. 
V.  Beardsley,  1764. 
V.  Jackson,  698. 
Buckner  v.  Finley,  9. 
V.  Jones,  775. 
V.  Lee,  357,  363. 
®.  Say  re,  18. 
Buffington  v.  Curtis,  1743. 
Buffum  V.  Chadwick,  415. 
Buhrman  v.  Bayles,  832. 
Bulger  V.  Roche,  884. 
Bulkley  v.  Butler,  142. 
Bull  w.'Read,  1557. 

V.  Sims,  429,  438. 
Bullard  v.  Bell,  1672, 1683. 

V.  Thompson,  877,  923. 
v.  Wilson,  1056. 
Buller  V.  Crips,  5,  6,  32. 

V.  Heane,  1711. 
Bullet ».  B'k  of  Pennsylvania,  1478, 1 695. 
Bullfin  V.  Clarke,  247. 
Bullock  V.  Loyd,  1205. 
Bumpass  v.  Taggart,  122,  126. 

V.  Timms,  65. 
Bunn  y.  Grey,  196. 
Bunney  v.  Poyntz,  1279,  1280. 
Burbank  v.  Beach,  951. 
V.  Posey,  403. 
Burbridge  v.  Manners,  1036,  1087,  1233, 

1235. 
Burch  V.  Hill,  591. 

V.  Tebbutt,  1252. 
Burchell  v.  Slocock,  104. 
Burchfield  v.  Moore,  1378,  1379. 
Burden  v.  Southerland,  148. 
Burdick  v.  Green,  1260. 
Burge  V.  Dishman,  81. 
Burgess  v.  Chapin,  738. 
V.  Dewey,  1317. 
V.  Merrill,  238. 

V.  Northern  Bank  of  Kentucky, 
1358. 


Burgess  v.  Vreeland.    983,    985,    1039, 

1040,  1041. 
Burgh  V.  Legge,  1047,  1107. 
Burk  V.  Gray,  1281. 
Burke  v.  Bishop,  24,  26,  1618a. 

V.  McKay,  586,  926,  928,  9-34,  001. 
Burkham  v.  Trowbridge,  983. 
Burmester  i\  Barron,  1023,  1029,  1030. 

V.  Hogarth,  663. 
Burnett  v.  Cecil,  1343. 
Burnham  v.  Allen,  86. 

V.  Webster,  1096,  1099. 
V.  Wood,  728. 
Burr  V.  Smyth,  1222. 
Burrill  V.  Smith,  674,    675,1112,   1113. 

1116. 
Burrough  r.  Moss,  254,  686,  1430,  1436. 
Burroughs  v.  B'k  of  Charlotte,  1683. 
Burrows  v.  Hanegan,  1135,  1180. 
V.  Jemimo,  872. 
».  Keays,  748. 
Burson  v.  Huntington,  122,  838. 
Burt  V.  Horner,  1769. 
t).  Walker,  112. 
Burton  v.  Brooks,  57. 
V.  Dees,  1197. 
V.  Payne,  1483,  1649. 
e.  Slaughter,  264,  1223,  1842 
Bushv.  Baldry,  1249. 
V,  Brown,  857. 
V.  Livingston,  760. 
V.  Pickard,  832. 
Bushworth  v.  Moore,  963. 
Bussard  v.  Levering.    627,    1005,  1021, 

1043,  1051. 
Butcher  v.  Carlisle,  55. 

V.  Churchill,  1342. 
Butler  V.  Dubois,  444. 

V.  Dunham,  1523,  1524,  1536. 
V.  Duval,  992,  995. 
V.  Gambs,  1311. 
V.  Horwitz,  1247. 
V.  Kimball,  1210. 
V.  Paine,  56. 
1).  Prentiss,  567. 
V.  Stocking,  367. 
V.  Webb,  1057. 
Butts*.  Dean,  1267. 
Buxton  V.  Jones,  590. 
Byars  v.  Doore,  306. 
Byers  v.  Harris,  314. 
Bynum  v.  Apperson.  1060,  1070. 

v.  Rogers,  764. 
Byram  v.  Hunter,  1162. 
Byrd  v.  HoUoway,  263. 
Byrom  v.  Thompson,  1395. 

Cabot  B'k  r.  Morton,  731,  1358. 
V.  Russell,  1024. 
V.  Warner,  1003,  1005. 


XXVlll 


The  referencei)]       TABLE     OF     CASES.       [are  fo  the  sections. 


Ciuly  V.  Shepartl,  TiiO,  704. 
Cahal  r.  Frierson,  704. 
L'ahoiin  r.  Mooro,  2C.j. 
C'aMer  v.  Provan,  187. 
Caldwell  i\  Bail,  1737. 

i'.  Cassadav,  643,  645,  1685. 
V.  Evans,  326,  1198. 
r.  Lawrence,  1181. 
Calfee  v.  Burijess,  170. 
Calboim  i-.  All.in,  727, 

V.  Calhoun,  172. 
i\  Davis,  81. 
Callander  v.  Kirkpatrick,  1387. 
Gallon  V.  Lawrence,  1237,  1241,  1242. 
Calvert  i\  Williams,  207. 
Camden  v.  Doremu;?.  658,  661,  17G9. 

V.  M'Kov,  707,  710,  713,  1769. 
V.  Mullen,  250. 
Camidge  v.  Allenbv,  452.  732,  740, 1262, 

1203,  1264,  1678,  1679. 
Caramer  v.  Harrison,  617,  1211. 
Camp  e.  Bates,  1048. 
V.  Knox.  1689. 
Campbell  r.  Baldwin,  1281. 
v.  Butler,  713. 
V.  French,  619. 
V.  Hodgson,  81. 
V.  Humphreys,  1229. 
V.  Kenosha,  1523,  1525,  1560, 

1561. 
V.  Knapp,  1759. 
V.  Miss.  Union  B'k,  1671. 
V.  Mchols,  861,  868,  918. 
V.  Pettengill,  513,  1077,  1082. 
V.  Eobins,  719. 
V.  Sloan,  207. 
17.  Tate,  1338. 
V.  Upsham,  80. 
V.  Webster,  1158. 
V.  Wilcox,  124,  125. 
Camp's  Appeal,  24. 
Campton  i\  McNair,  1769. 
Can  V.  Read,  1615. 

Canal  B'k  v.  B'k  of  Albany,  533,  538, 
1225,  1361,  1362,  1303,  1364,  1366, 
1372. 
Cannan  v.  Bryce,  200. 

V.  Farmer,  243. 
Cannon  v.  Gibbs,  1787. 
Canton,  &c.  Ass'n  v.  Weber,  1198. 
Cape  Fear  B'k  v.  Steinmeitz,  960. 
Caphart  v.  Dodd,  406. 
Capron  v.  Capron,  43. 
Card  V.  Miller,  1.387,  1388. 
Cardell  v.  McNeil,  1763. 
Carey  v.  Green,  1094. 

v.  McDouaald,  1703. 
Cariss  v.  Tattersall,  1395.  1401. 
Carlth  V.  Kenealv,  48. 
Carlisle  v.  Chambers,  902. 


Carlisle  r.  Hill,  753, 

V.  Wishart,  832. 
Carlon  i;.  Ireland.  1585rt. 
Carlton  v.  Bailey,  204. 
V.  Woods,  204. 
Carman  ».  Garrison,  1431. 
Carmichael  v.  Bank  of  Penn.,  454,  462, 

1100. 
Came  v.  Brigham,  382. 
Carnegie  v.  Morrison.  661,  897. 
earner  v.  Cameron,  369. 
Carpenter.?).  Farnsworth,  103. 
V.  Longan,  834rt. 
V.  McClure,  194. 
V.  Murphee,  1290. 
V.  Northborough  Nat.  Bank, 

1369. 
v.  Oakes,  713. 
tj.  Reynolds,  1095. 
V.  Sn'elling,  122. 
Carr  v.  Eastabroke,  1286. 
V.  Howard.  1339. 
v.Le  Fevre,  1496,  1509. 
V.  Nat.  Sec.  Bank,  1606,  1636. 
V.  Rowland,  713. 
Carrie  v.  Child,  112. 
Carroll  v.  Weld,  713. 
Carrollton  B'k  v.  Tayleur,  550,  500. 
Carruth  v.  Walker.  664. 
Carruthers  v.  West,  686,  726. 
Carson  v.  Bank  ofxVlabama,  1015. 
V.  Bank  of  State,  1056. 
V.  Russell,  454,  481. 
Carstairs  v.  Rolleston,  1335. 
Carter  v.  Bradley,  979,  980. 
V.  Brown,  581. 
r.  Burlev,   9,  927,  928,  945,  946, 

1039,  1045,  1047,  1053. 
V.  Flower,   465,  1047,  1083,  1084, 

1113. 
v.  Hamilton,  81. 
V.  Sanders,  202,  263. 
V.  Spraguc,  693,  1147. 
«.  Thomas.  262. 

V.  Union  B'k,    9,    586,   657,  909, 
926,  936,  1023. 
Cartwright  v.  Williams,  664,  1335. 

V.  Wilmerding,   1747,  1750. 
Carver  v.  Hayes,  38. 
Carvick  v.  Vickeiy,  684. 
Carville  v.  Crane,  569. 
Cary,Ex'rs  of  Greatorex  v.  Gerrish,  1646. 

V.  White,  1328. 
Casborne  v.  Dutton,  39. 
Casco  Bank  v.  Keene,  1351. 
Case  r.  Burt,  492. 

v.  Hawkins,  1311. 
V.  Morriss.  1387. 
V.  Spaulding,  720. 
Cash  V.  Kennion,  910,  1454. 


The  references]       TABLE     OF     CASES.       [are  tothe  sectionii.       xxix 


Cash  V.  Taylor,  297. 
Casbman  v.  Haynes,  53. 
Cass  V.  Dillon,  lo24. 
Cassebeer  v.  Kalbfleisch,  751. 
Cassell  V.  Dows,  550,  560,  561. 
Castrique  v.  Battigieg,  717. 
V.  Bernabo,  1213. 
Cate  V.  Patterson,  1702,  1703,  1705. 
Cathcart  v.  Gibson,  1147. 
Catlin  V.  Gunter,  751. 
Caton  V.  Lenox,  5. 

V.  Shaw,  1785. 
Catron   v.   First    Universalist    Society. 

380,  387. 
Catskill  B'k  v.  Stall.  368,  488. 
Cattou  V.  Simpson,  1387. 
Caulkins  v.  Whisler,  845.  846. 
Caunt  V.  Thompson,  972,  985, 1087, 1175. 
Cavazos  v.  Trevins,  712. 
Caverick  v.  Vickery,  701. 
Cawein  i\  Browinski,  1590. 
Caxton  V.  Lvon,  84. 
Cavuga  Co.  B'k  v.  Bennett,  1000. 
V.  Dill,  1106,  1107. 
i\  Hunt.  464,   593,  603, 

940.  951,  1038. 
V.  Warden,  978,979,980. 
Cazet  V.  Field,  199. 

V.  Hicks,  1458of. 
Cecil  B'k  «.  Farmers'  B'k,  336. 

t\  Heald,  1652. 
Central  B'k  ®.  Allen,  615,  1119,  1145. 
V.  Davis,  694,  1109. 
V.  Hammett,   753,  769,  781, 
781a. 
Central  Nat.  B'k  v.  Charlotte,  &c.  R.  R. 

31. 
Central  Savings  B'k  v.  Mead,  365. 

».Riehards,496,551. 
V.  Shines,  1785. 
Chaddock  «.  Van  Ness,  710,  713,  717, 

720,  721. 
Chadsey,  v.  McCreery,  415. 
Chadwick  v.  Allen,  102. 

V.  Eastman,  1414, 
Chalmers  v.  Lanion,  726,  803. 

V.  McMurdo,  703,  704. 
Chamberlain  v.  Gorham,  163. 
V.  Hewson,  243. 
V.  McClurg,  1353. 
V.  Townsend,  862. 
V.  Walker,  354. 
V.  White,  1289. 
Chambers  Co.  v.  Clews,  1503. 
Chambers  v.  Davidson,  1279. 
V.  George,  1245. 
V.  Hill.loO,  472. 
Champion  v.  Gordon,  1569,  1573,  1576. 
Champney  v.  Blanchard,  24. 
Chandler  v.  Glover,  233. 


Chandler  v.  Johnson,  19G,  204. 
V.  Mason,  1113. 
V.  Parks,  238. 
V.  Westfall,  713. 
Chanoine  v.  Fowler,  946,  988,  992. 
Chapin  v.  Vt.  &  Mass.  R.  R.,  1500. 
Chapman  ti.  Annett,  1158. 

t.  Black,  183.  206,  760. 
V.  Commonwealth,  1250, 1251. 
V.  Cotterell,  870. 
V.  Duraut,  1260. 
V.  Foster,  249. 
V.  Keene,  987,  990. 
v.  Lipscombe,  1115. 
v.  Robertson,  879,894,922,923. 
i\  Rose,  672,  848,  850,  851. 
V.  White,  1636. 
Chappell  t.  Si)encer,  1388. 
Chappie  V.  Durstou,  1214. 
Chard  v.  Fox.  985. 

Charles  v.  Marsden,  724,  726,  786,  790. 
Cliaruley  v.  Dallas,  1703,  1705. 
Chartres  t.  Cairues,  895. 
Chase  v.  Redding,  24,  26. 

V.  Tavlor,  959. 
Chaters  v.  Bell.  939,  940,  1196. 
Chatfield  v.  Paxton,  1148. 
Chaudron  r.  Hunt,  1478. 
Chautauqua  County  B'k  v.  Davis,  576. 
Cheek  v.  Roper,  456. 
Chemung  Canal  B'k  v.  Supervisors,  422, 

427. 
Chenowith  v.  Chamberlain,  9,  365,  581, 

582,  583. 
Cherd  v.  Ford,  56. 
Cheshire  v.  Barrett,  230.  234. 

i\  Taylor.  1149. 
Chesmer  v.  Noyes,  968. 
Chester  v.  Door,  727,  786. 

&c.  R.  R.  Co.  V.  Lickiss,  63. 
Chew  t\  Bank  of  Baltimore,  259. 
Chewing  i\  Singleton,  1478. 
Chicago  Marine   Ins.  Co.   v.  Stanford, 
1637. 
V.  People,  1514. 
R.  R.  Co.  T.  West,  128. 
Chick  V.  Pittsburg.  1039,  1041. 
Chicopee  B'k  r.  Chapin,  67.  181,  834, 
827,  832. 
r.  EaErer.  1013. 
V.  Philadelpliia  B'k,  67, 
656,  657.    • 
Childers  r.  Boulnois,  36. 
Childs  V.  Laffen,  653. 

V.  Monins.  262,  263. 
r.  Wyman.  700,  713. 
Chilton  V.  Whippin,  1205. 
Chipman  r.  Martin,  1274. 
V.  Tucker,  854. 
Chisholm's  Case,  1346. 


XXX 


TTie  r^'erences]         iAULiIli     OF     CASES.        [are  to  the  sections. 


Chism  T.  Toonier,  1418,  1420. 
Cholmelj'  c.  Darley,  152. 
Chouteau  v.  MeriT,  240,  246. 

1).  Webster,  l(i25,  1027. 
Christian  v.  Milier,  1429. 
V.  Morris,  262. 
Christie  v.  Pearl,  4'Jl. 
Church  r.  Barlow.  992. 

/'.  Clark,  601. 
Churchill  v.  Gardiner,  63,  65. 
Chute  r.  Pattee,  1317. 
Cicotte  r.  Caynier.  834. 
Cincinnati  li'  li.  Co.  v.  Pontius,  1729. 
Citizens'  Nat.  B'k  r.  Hooper,  775. 

V.    liiclunond,    1414, 
1415. 
City  V.  Alexandria,  1523. 
City  B'k  V.  Cutter,  622,  629,  658,  1048, 
1212. 
V.  Farmers'  B'k,  1680. 
V.  Perkins,  392. 
City  Nat.  B'k  r.  Mahan,  1723. 
City   of  Atchinson    v.    Butcher,    1496, 
1500,  1533. 
Aurora  v.  West,  1522,  1550. 
Bridgeport  v.  Housatonic  R.  R. 

Co  ,  1523. 
Elizabeth     v.    Force,     1499a, 

1500,  1503. 
Galena  v.  Corwith,  1527. 
Jeffersonville      v.     Patterson, 

1507,  1513. 

Kenosha  v.  Lamson,  1406,1497, 

1509,1516,1523,1525,1564. 

Lexington  v.  Butler,  1496,1497, 

1506,1516,1537,1542,1550. 

Lynchburg    v.   Norvell,    1533, 

1534. 
Muscatine  v.  Sterneman,  122. 
Pekin  v.  Reynolds,  1514. 
Williamsport       v.      Common- 
wealth, 420,  1531. 
Claflin  V.  Briant,  6(14. 

V.  Farmers'  B'k,  389,  1007, 1609, 
1611. 
Clagett  v.  Salmon,  1322. 
Clair  V.  Burr,  1172. 
Clanton  v.  Barnes,  899. 
Clajip  V.  County  of  Cedsir,  1500,  1524, 
V.  Day,  1189. 
V.  Rico,  703,  707. 
Claremont  B'k  v.  Wood,  1335. 
Claridrje   v.   Dalton,  1074,    1076,  1077, 

1307. 
Clark  V.  Adair,  23. 

V.  Bank,  1586. 

I'.  Barnwell,  1729. 

V.  Benton  Man.  Co.,  388. 

V.  Blackstock,  1390. 

V.  Boyd,  64,  267. 


Clark  V.  Caldwell,  214. 
V.  Clark,  1612. 
v.  Conner,  884. 
V.  Devlin,  1308,  1305,  1321. 
V.  Draper,  1279. 
V.  Eldrige,  983. 
V.  Farmers'  Woolen  Man.  Co.,  33, 

383. 
V.  Iowa  City,  1489,  1516. 
V.  Janesvilfe,  1489,  1500,  1524. 
V.  Loomis,  751. 
V.  Merriam,  713. 
V.  Mundal,  1260. 
V.  Nat.  Metropolitan   B'k,   1587, 

1590. 
V.  Peace,  177. 
V.  Pigot,  686,  695. 
V.  Polk  County,  422,  437,  435. 
V.  Recker,  200. 
V.  Reed,  1481. 
V.  Ricker,  196,  204. 
V.  School  District,  382. 
V.  Sisson,  862. 
V.  Thayer,  790,  798. 
V.  Whitaker,  745. 
t\  Young,  1260. 
Clarke  v.  Cock,  550. 

V.  Deadericli,  724. 

V.  Des  Moines,  420,  422,  427,428, 

1520,  1550. 
V.  Gordon,  505,  515. 
V.  Hawkins,  1691. 
V.  Johnson,  837. 
V.  Lazarus,  201. 
V.  Martin,  5,  163. 
V.  Morey,  223. 
V.  Percival,  50,  53. 
V.  Quince,  1473,  1483. 
V.  Russell,  930. 
V.  Scott,  1250. 
V.  Sigourney,  04,  66,  267. 
V.  Sharp,  1029,  1030. 
V.  Shea,  1469. 
1).  State  of  Ohio,  1345. 
Clarke  Nat.  B'k  r.  B'k  of  Albion,  1607, 

1610. 
Clason  V.  Bailey,  74. 
Clauser  v.  Stone,  54. 
C^axton  V.  Swift,  1284. 
Clay  V.  Cottrell,  359,  725,  1437. 
V.  Crowe,  1484. 
V.  Edgerton,  1786. 
V.  Oakley,  998. 
Clayton  v.  Gosling,  89,  108,  1215. 
Clegg  V.  Cotton,  1U74.  1082,  1170. 
V.  Lemesurier,  32. 
V.  Levy,  914. 
Clemens  v.  Conrad,  122,  126. 
Clement  v.  Reppard,  174. 
Cleveland  r.  Worrell,  1484. 


The  referinces]        TABLE     OF     CASES.        [are  to  the  aecHons.        XXXi 


Clewer  v.  Winn,  843. 
Cline  V.  Guthrie,  852. 
Clinton  B'k  v.  Ayres,  1190. 
Clippinger  v.  Hephaunb,  188. 
Clode  V.  Bavley,  993,  995. 
Clopper  V.  Union  H'k,  12G0,  1335. 
Clopton  V.  Elkiu,  204. 

V.  Spratt,  1311. 
Closson  V.  Stearns,  74,  688. 
Cloud  V.  Whiting,  859,  860. 
Clougli  V.  Davis,  69. 
Clouston  V.  Barbiere,  716. 
Glower  v.  Wynn,  146. 
Clowes  V.  Cbaldecott,  1036. 
Clute  V.  Small,  1401,  1410,  1411,  1412. 
Cobb  V.  Titus,  766. 
Cocheco  B'k  v.  Haskell,  892,  395. 
Cochituate  B'k  v.  Colt,  1681. 
Cochran  v.  Nebeker,  1373,  1418. 
Cock  V.  Fellows,  99. 
Cocke  «.  Dickens,  1187. 
Cockrill  V.  Kirkpatrick,  56,  81. 

®.  Loewenstine,  966. 
Cocks  V.  Borrodale,  1196. 

V.  Mastermau,  1371. 
Cockshott  V.  Bennett,  194. 
Coddington  v.  Bav,  827. 

V.  DaVis,  929,  1095. 
Codman  v.  Lubbuck,  1672. 
Coe  V.  Wallace,  81. 
Coffee  V.  Planters'  B'k,  678. 
Coffraan  v.  Campl)ell,  496,  505. 

V.  Wilson,  790. 
Coge  V.  Palmer,  766. 
Coggill  V.  American  Ex.  B'k,  538,  672, 

1356,  1366. 
Coghlin  r.  May,  786. 
Cohen  v.  Hunt,  656,  600. 
Colin  V.  Dutton,  713. 
Colburn  v.  Averill,  1759. 
Colby  V.  Coop,  1253. 
Coldstone  v.  Tovey,  253. 
Cole  V.  Gushing,  694. 
V.  Handlev,  81. 
V.  Hills,  398. 
V.  Merchants'  B'k,  1777. 
V.  Pennell,  230,  238. 
V.  Sackett,  1260,  1266,  1275,  1299. 
V.  Saxby,  233. 
Coleman  v.  Biedman,  1197. 

V.  Carpenter,  1036,  1043. 

V.  Ewing,  1207,  1209. 

V.  First  Nat.  B'k,  1699,  1700. 

V.  Sayer,  617,  626. 

V.  Smith,  965. 
Coles  V.  Frecothick,  277. 
Golgin  V.  Henley,  1765. 
Coliger  v.  Francis,  758,  778. 
Colkett  V.  Freeman,  1036. 
Collett  V.  Haight,  1333. 


Collier  v.  Gray,  88. 

V,  Mahan,  679. 
V.  Nevill,  759,  764. 
Collins,  ex  parte,  1612. 

V.  Blantern,  196. 

V.  Bradbury,  51. 

V.  Buckeye  State  Ins.  Co.,  305. 

V.  Butler,  1118. 

V.  Central  B'k,  1682. 

V.  Gilbert,   728,  776,  812,  814, 

815. 
V.  Johnson,  687. 
V.  Makepeace,  1414. 
T.  Westbury,  857. 
Collis  V.  Emett,  136,  138. 
Coiombies  v.  Slim,  1199. 
Colson  V.  Arnot,  677,  1470. 
Colt  V.  Barnard,  996. 
V.  Ives,  1644. 
V.  Miller,  1048. 
V.  Noble,  992. 
Coman  v.  The  State,  1317. 
Comb  V.  Killridge,  1317. 
Commercial  B'k  v  Barksdale,  581,  586. 
V.  Benedict,  1465, 1478, 

1695,  1696. 
V.  Claiborne,  1190. 
V.  Clark,  1157,  1221. 
v.  French,  399,  1189. 
V.  Grove,  1017. 
i\  Hamer,  600,  656. 
V.  Hughes,  1170,  1596. 
V.  King,  1041. 
V.  Newport   Man.   Co., 

382,  383,  400. 
V.  Norton,  277,283,290. 
v.  Paton.  1402. 
V.  Strong,  1016,  1054. 
V.  Union  B'k,  341,344. 
V.  Varnum,  934. 
V.  Varum,  581,582,586. 
Commercial    Mutual   Life   Ins.   Co.    v. 

Cleveland  II.  R.,  1500,  1513. 
Commercial  Nat.  B"k  v.  First  Nat.  B'k, 
775. 
V.  Tola,  1522. 
of  Albany  v.Clark, 

1159. 
of  Clvder.  Marine 
B'k,  339. 
Commissioners  r.  Ballis,  1503,  1539. 
V.  Bolles,  1537. 
V.  Clark,  803.  812,  814, 

815,  1500,  1503. 
of  Craven  Co.  v.   A.  & 

N.  R.  R.  Co.,  925. 
of  Floyd    Co.   V.   Day, 

428,  431. 
&c.  V.    January,  1537, 
1544,  1547. 


XXxii  T/,e  re/erefices]       TABLE     OF     CASES.        [are  to  the  sections. 


Commisoioners  of  Knox   Co.   r.  Aspin- 
wall,  389.1489.1509, 
15:^7,     1538,     1539, 
ir)40,  1550,  1554. 
of  Knox  Co.  i\  Nichols, 
1.V24.     1537,     1540, 
1554. 
V.  Pittsburg,  389. 
of  Leavenworth  v.  Kel- 
ler, 432,  434. 
V.  Ross,  1311. 
of  Shawnee  Co.  v.  Car- 
ter, 1558,  15G3. 
Commonwealth  r.  Alleghenj"  Co.,  389. 
T.  Beauniarchais,  87. 
V.  Chandler,  1345. 
V.  Emigrants'  B'k,  1400, 
V.  Emigrants'  Ins.  Co., 

86. 
».  Foster,  1345. 
V.  Haas,  1311. 
V.  Industrial      Emigra- 
tion   Savings    B'k, 
I499rt. 
V.  Johnson,  196. 
V.  Kendev,  69. 
v.  McWifliams,  1523. 
V.  Parmenter,  76. 
V.  Pease,  196. 
■V.  Pittsburg,   282,  589, 

1527. 
V.  Powell,  667,  713. 
«.  Saukey,  1348. 
V.  Simonds,  1664. 
V.  Stone,  1676. 
V.  Thomas,  1664. 
V.  Ward,  1396. 
Comparree  v.  Brockway,  710. 
Comstock  V.  Hannah,  775. 
V.  Smith,  1267. 
Conard  v.  Atlantic  Ins.  Co.,  1743. 
Concord  v.  Pittsburg,  1431. 
Condon  v.  Pcarce,  672. 
Cone  V.  Baldwin,  775. 

V.  Brown,  573. 
Confederate  Note  Case,  87. 
Congan  v.  Bankes,  920. 
Conine  v.  Junction,  &c.  R.  R.,  31. 
Conkling  v.  Gandall,  1586. 

V.  King,  1208. 
Conlin  v.  Cantrell,  248. 
Conn  V.  Coburn,  225,  1314. 

V.  Thornton,  46. 
Connecticut    Mutual   Life   Ins.    Co.   v. 
Cleveland   R.   R.  Co.,  1495,   1496, 
1497,  1500,  1513. 
Connelly  v.  McKean,  492,  1646,  1648. 
Conner  r.  Clark,  271. 
Connor  v.  Bellamont,  894. 
V.  Martin.  242,  681. 


Connor  v.  Routh,  76,  1404. 

Conolly  V.  Goodwin,  947. 

Conover  v.  Earl,  668. 

Conro  V.  Port  Henry  Iron  Co.,  399,  409. 

Conrov  v.   Warren,    1081,    1586,    1587, 

1588,  1596,  1652. 
Consequa  v.  Willings,  918. 
Consolidated  Ass.  v.  Avegno,  1500. 
Conway  r.  Case,  1647. 
Conv  V.  Wheelock,  683. 
Cook  V.  Baldwin,  497. 
V.  Barnes,  1274. 
i\  Beech,  1262. 
V.  Buck,  1277. 

V.  Citizens'  Mut.  Ins.  Co.,  871. 
V.  Clayworth,  214. 
V.  Coxwell,  1375. 
V.  Crawford,  11. 
V.  Darling,  616,  617. 
V.  Gray,  616. 
V.  Helms,  814,  827. 
i\  Larkin,  803. 
V.  Litchfield,  868.  899,   925,  ■  976, 

977,  979. 
V.  Martin,  646,  1084. 
V.  Miltenberger,  550. 
V.  Moftat,  868. 
V.  Saterlee,  60. 
T.  Seeley,  1613. 
V.  Shipman,  196. 
«.  South  wick,  713. 
V.  Wolfendale,  509. 
Cooke  V.  Branch  B'k,  358. 
V.  Darwin,  1483. 
V.  Nathan,  1769. 
V.  State  Nat.  B'k,  1600,  1607. 
Cookendorfer  v.  Preston,  622,  623. 
Cool  broth  v.  Purrington,  86. 
Cooley  V.  Rose,  1213. 
Coolidge  V.  Brigham,  731. 

t).  Payson,  551,  500,  1799. 
V.  Ruggles,  41. 
V.  Wiggin,  703. 
Cooper  V.  Bailey,  6fi8. 

V.  Curtis,  385,  392. 
V.  Dedrick.  1777. 
V.  Earl  of  Waldergrave,  896. 
V.  Meyer,  535,  538,  1365. 
V.  Poston,  128,  130, 
V.  Town  of  Thompson,  1490. 
Coore  V.  Callaway,  487. 
Coperthwaite  v.  Sheffield,  50. 
Copp  V.  M'Dugall,  669,  1113. 

V.  Sawyer,  179. 
Coppmann  r.  B'k  of  Kentucky,  1333. 
Coppock  V.  Bower,  200. 
Corbet  v.  B'k  of  Smyrna,  737, 1263,  1675, 

1676,  1677. 
Corbett  v.  State  of  Georgia,  41,  50. 
V.  Steinmetz,  47. 


The  refereneea]        TAT5LE     OF     CASES.        [are  to  the  secti&nn.     XXxiil 


Corbin  v.  Southgate,  547. 
Corburn  i\  Webb,  142,  1375. 
Corby  v.  Weddle,  851. 
Corcoran  v.  Dale,  1419. 

V.  Powers,  751. 
Corgan  v.  Frew,  8G,  688,  1580. 
Corielle  v.  Allen,  1317. 
Corn  Excli.  Ins.  Co.   v.   Babcock,   248, 

1266. 
Cornay  v.  DaCosta,  112,  141,  1128,  1141. 
Cornell  v.  Ilicliens,  834. 

«.  Moulton,  599. 

V.  Nebeker,  1407. 
Cornthwaite  v.  First  N.  B.,  262. 
Cornu  V.  Blackbourne,  221. 
Cornwall  i\  Gould,  1266. 
Cornwell  v.  Pumphrey,  56. 
Corp  V.  McComb,  104*3. 
Corser  v.  Craig,  19,  451,  742. 

V.  Paul,  392. 
Cory  V.  Scott,  1047,  1077,  1170,  1172. 
Coster  V.  Thomason,  592,  999. 
Cota  V.  Buck,  45. 
Cotes  V.  Davis,  242,  252,  680. 
Cotton  V.  Evans,  368. 

V.  Simpson,  1389. 

V.  Sterling,  803,  804. 
Cottrell  V.  Conklin,  713. 
Couch  V.  Meeker,  68,  855. 
V.  Sherrill,  900,  1051. 
V.  Waring,  1306,  1329. 
Coulter  V.  Richmond,  713. 
Commissioners  v.  Chandler,  1522. 
County  Judge  v.  Shelby  R.  R.  Co.  1556. 

of  Beaver  v.  Armstrong.   1491, 
1509. 

of  Calloway  v.  Foster,  1524. 

of  Cass  V,  Johnson,  1535a. 

of  Cass  i;.  Jordan,  1535rt. 

of  Hardin  «.  McFarlan,  1555'T. 

of  Henry  v.  Nicolay,  1524, 1537. 

of  Ray  V.  Vansycle,  1545. 

of  Randolph  v.  Post,  1523,1548. 

of  Scotland  v.  Thomas,  1524. 
Course  v.  Shackleford,  611,  996. 
Courtney  v.  Doyle,  162,  713. 
Covington  v.  Comstock,  653. 
Cowden  v.  Elliott.  1428. 
Cowgill  v.  Long,  1561. 
Cowie  V.  Halsall,  1378,  1379. 
Cowles  V.  Harts,  985. 

V.  McVickar,  750,  764,  765. 
Cowpertliwaite  v.   Sheffield,  20,  21,  22, 

630,  991,  1636. 
Cowton  V.  Wickcrsham,  535. 
Cox  V.  Coleman,  504. 
V.  Earle,  1254. 
V.  Fenwick,  1281. 
11.  Smith,  1458rt. 
V.  Troy,  63,  490,  493. 

Vol.  1.— C 


Coxe  1}.  State  B'k,  1672,  1689. 
Coxon  V.  Lyon,  80. 
Coye  V.  Palmer,  1702. 
Coyle  V.  Smith,  1596. 
Crabtree  ?;.  Mav,  237. 
Craft  V.  Fleming,  700. 
V.  Hendrick,  765. 
V.  Isham,  1785. 
Crafts  V.  Beale,  1330. 
Craig  V.  Brown,  694. 

V.  City  of  Vicksburg,  1500. 

V.  Craig,  25. 

•v.  Dimock,  125,  126. 

V.  Price,  617. 

V.  Sibbett,  174. 

t\  State  of  Missouri,  1715,   1718, 

1719,  1720. 
«.  Twomey,  11!)1. 
Crain  v.  Cold  well,  1163. 
Crandel  v.  Vickery,  758/^,  759. 
Cram  r.  Hendricks,  776. 

V.  Sherburne,  1100,  1155. 
Cramer  v.  loder,  70. 
Cramlington  v.  Evans,  616,  1185,  1231. 
Crandali  V.  Schroeppel,  654,  1228. 
Crane  v.  McDonald,  1262. 
Cranson  v.  Goss,  65,  70. 
Craven  v.  Rvder,  1730. 
Cravens  v.  Gillilan,  299. 
Crawford  v.  Branch  B'k,  898,  920,  983, 
991,  1052,  1448. 
V.  Millspaugh,  1295,  1316. 
V.  Roberts,  1260. 
r.  Roval  B'k,  1680. 
County  r.  Wilson, 428,432,434. 
Crawshay  v.  Collins,  370. 
Craythorn  v.  Swinburne,  1340. 
Creamer  v.  Perry,  1100,  1131,1140,1162. 
Cremer  r.  Higgenson,  1771. 
Crenshaw  v.  M'Kiernan,  616,  1209. 
Crescent  B'k  v.  Hernandez,  187. 
Cribbs  v.  Adams,  581,  586,  617. 
Cripps  V.  Davis,  728,  783. 
Crisp  V.  Griffiths,  1270. 
Crocker  v.  Coldwell,  364. 
V.  Gilbert,  1767. 
V.  Gitchell,  719,  984,  992. 
Crockett  v.  Thomason,  1273. 

V.  Trotter,  1266. 
Croft  V.  Bunster,  748,  834. 
Crofts  «.  Beale,  185. 
Croix  V.  Sibbett,  790. 
Cromer  v.  Piatt,  982,  983. 
Cromwell  v.  County  of  Sac,  758(t,  803, 
1458'^  1500. 
r.  Hvnson, 590,943,1017, 1145. 
r.  Tate's  Ex'rs,  32. 
Cronise  v.  Kellogg,  790,  1335. 
Cronk  v.  Frith,  112. 
Cront  V.  DeWolf,  1353. 


XXXiv  Vie  references]        TABLE     OF     CASES.        [are  to  the  aectiom. 


Crook  V.  Jadis,  773,  1503. 
Crooker  v.  Holmes,  44. 
Crooks  r.  Tully,  724,  990. 
Crookshank  v.  Rose,  206. 
Crosby  i\  Grant,  787. 

V.  New  London  &c.R.R.Co.,1512. 
V  Roiib,  089,  090.  834. 
V.  Wyatt,  l:-!17,  1789. 
Croskey  v.  Skinner,  1195. 
Cross  V.  Wood,  l;ilo. 
Crosse  r.Smitli,972,998,101C,1038,1119. 
Crossen  v.  Ilutchins,  1172. 
Crossley  v.  Ham,  788. 
Crossman  v.  Fuller,  158. 
Crosthwait  v.  ^lisener,  1200. 

V.  Ross,  358. 
Croton  V.  Delheira,  1083. 
Crougliton  «.  Duval,  1339. 
Crout  r.  DeWolf,  859. 
Crow  V.  Eichinger,  203. 
Crowe  V.  Clay,  1475,  1484. 
Crowell  V.  Hinson,  590,  943. 

V.  Plant,  508,  517. 
Crowley  v.  Barrv,  592,  1023. 
Croxen  v.  Worthen,  1153,  1158,  1162. 
Cruchers  V.  Wolt,  1149. 
Cruger  v.  Armstrong,    1073,  1507,  1571, 

1586,  1595,  1620,  1652. 
Cruni  )'.  Corby,  8346. 
Crutcliley  v.  Clarence,  145,  1194. 

V.  Mann,  870. 
Crvst  V.  Crvst,  265. 
Cullum  V.  Branch  B'k,  827. 
Culver  V.  Ashlev,  319. 

V.  Leavy,  684,  704. 
Cumber  v.  Wane,  1266. 
Cumberland  B'k  v.  Hall,  1387,  1418. 
Cuming  v.  Brown,  1749. 
V.  French,  1167. 
Cummings  v.  Boyd,  827. 

V.  Freeman,  30.  37. 
V.  Thompson,  714,  715. 
Cumpston  v.  McNair,  1769. 
Cundy  r.  Marriott,  669,  674,  11 J3. 
Cunningham  c.  Smithson,  360,  363. 
V.  Ward  well,  128,482. 
Curlewis  v.  Corfield,  1160. 
Curran  v.  Arkansas,  1724. 
Currie  v.  Donald,  856. 

r.  Miser,  1623. 
Currier  v.  Hale,  81. 

V.  Hodgdon,  747. 
r.  Lockwood,  36,  39,  899. 
Curry  v.  B'k  of  Mobile,  694,  1043,  1218. 

V.  Reynolds,  486,  1218. 
Curtin  t.  Fatten,  236. 
Curtis  «.  Bemis,  1199. 

V.  Leavitt,  382,  832,  1565. 
V.  Martin,  llOo,  1110,  1165. 
V.  Mohr,  824. 


Curtis?'.  Rush,  1274. 

V.  Smallman,  1769. 

V.  State  B'k,  1012,  1049. 
Curtton  V.  IVFoore,  258. 
CushiEg  v.  Gore,  1583,  1596. 
Cushman  v.  Dement,  713. 

V.  Haynes,  53. 
Cuthbert  r.  Bowie,  154,  156. 

V.  Haley,  207. 
Cutler  V.  Welsh,   200. 
Cutter  r.  Roberts,  856. 
Cutts  V.  Perkins,  21,  23,  451,  491,  498, 

1618a. 
Cuylas  V.  N.  Y.  K.  &  S.  R.  R.,  1555. 
Cuyler  v.  Merrilield,  290. 

V.  Nellis,  1022. 

V.  Stevens,  972. 

Dabncy  v.  Campbell,  629. 
V.  Stager,  999.    . 
Da  Costa  v.  Cole,  1244. 
V.  Jones,  195. 
Daggett  V.  Whitting,  790. 
Daily  v.  Coker,  122,  125. 
Dair  v.  U.  S.,  856. 
Daist  V.  Gale,  318. 
Dakin  v.  Graves,  966. 
Dale  V.  Gear,  719,  721,  722. 

V.  Motiit,  707,  717. 

t)   Pope,  81. 
Dalrymple  v.  Hillenbrand,  072,  076. 

V.  Whittingham,  422,  430. 
Daly  V.  Butchers'  &  Drovers'  B'k,  341. 

T.  Slater,  992. 
Dana  v.  Kemble,  1019. 

V.  San  Francisco,  422,  427,  431. 

V.  Sawver,  602,  603. 

V.  Third  Nat.  B'k,   1636. 
Danher  v.  Blackuey,  1763. 
Dangerfield  v.  Wilby,  1275. 
Daniel  v.  Cartony,  760. 
®.  Daniel,  1418. 
i\  Kyle,  1586,  1587,  1588. 
Daniels  v.  Wilson,  758. 
Dann  v.  jMorriss,  667. 
Darbishire  v.    Parker,    612,    911,   1330, 

1039,  1046. 
Darling  v.  March,  370. 
Darnell  v.  Williams,  201. 
Darrach  v.  Savage,  452,  971. 
Darrington  v.  Alabama,  1723,  1725. 
Dartmouth  College  v.  Woodward,  378, 

379,  1519,  1520. 
Darwin  v.  Rip|>ey,  1386. 
Da  Silva  v.  Fuller,  1233,  1461,  1618. 
Daubuz  «.  Morchead,  221. 
Davess  Co.  Court  v.  Howard,  422,  1533. 
Davega  v.  Moore,  105. 
Davenport  v.  City  B'k,  1681. 
V.  Schram,  700. 


The  references}        TABLE     OF     CASES.        [are  to  the  sections.      XXXV 


Davenport  v.  Sleight,  148. 

r.  Woodbridge,  741. 
Nat.  B'k  V.  Homeyer,  1727. 
Sav.  Fund  Ass.  v.  N.  A.  Fire 
Ins.  Co.,  321. 
Davidson  c.  Cooper,  V-'>Ti. 
V.  Jordan,  193. 
V.  Lanier,  142,  147. 
V.  Kamsey  Countv,  1521. 
».  Stanley,  294,  299. 
Davies  v.  Dodd,  1196,  1475,  1479. 
0.  Humphries,  1341. 
V.  Stain  back,  1336. 
V.  Watson,  1371. 
Davis'  Estate,  1260,  1309. 
Davis  V.  Allen.  350.  352,  353. 
1-.  Anable.  1266. 
V.  B'k  of  Tenn.,  1023. 
V.  Bartlett,  812,  814,  818. 
V.  Bowsher,  337. 
•v.  Briggs,  354,  1183, 
V   Brown,  719,  1217. 
V.  Carlisle,  1373. 
V.  Clarke,  97,  98,  362,  485,  486. 
V.  Clemson,  868,  894. 
v.  Coleman,  868,  918,  1387. 
V.  Desauque,  373. 
V.  Emerson,  1340. 
i\  Eppinger,  1209. 
V.  Francisco.  1177. 
V.  French.  262. 
i'.  Garr,  101. 
V.  Graham,  1316. 
V.  Gyde,  1274. 
V.  Hanly,  1041. 
V.  Humphrevs,  134'. 
V.  Jenny,  1418,  1421. 
V,  Jones,  85. 
i\  McCready,  790. 
V.  Miller,   5,  724,  725,  775,  782, 

786,  1228.  1333,  1436,  1437. 
V.  Morgan,  716. 
V.  Neligh,  725. 
V.  Peck,  086. 
v.  Philips,  1245. 
V.    Proprietors'   Meeting   House, 

383. 
V.  Ram-ey  Co.,  1523. 
V.  Richardson,  122,  125,  126. 
v.  Staats,  1306. 
V.  Thomas,  859,  860. 
V.  West  Saratoga  B.  Union,  383, 
Davison  v.  City  B'k,  542. 

V.  Robertson,  114. 
Dawson  v.  Bk.  of  Illihois,  80. 
V.  Goodyear,  793. 
V.  Morgan,  1449,  1459. 
Day  V.  Elmore,  1767. 
V.  Nix,  201, 
V.  Schofield,  1454. 


Day  V.  Zimmerman,  800. 

Dayton  v.  Trull,  1269,  1275,  1270,  1278, 

Deacon  v.  Stodhart,  1223. 

De  Aquila  r.  Lambert,  1730. 

Dean  v.  Carruth,  180. 

V.  Loziirdi,  83. 

V.  Newhall.  1291. 

i\  Richmond,  243.  254,  1184. 

V.  Speakman,  1482,  1484. 
Dearbourn  r.  Union  Nat.  B'k,  286- 
Deardorft' ».  Foresman,  854. 
Dearing  v.  Rucker,  170. 
De  Berdt  r.  Atkinson,  1173. 
Deberry  v.  Darnell,  56. 
De  Bignis  v.  Arinistead,  199 
Deblieux  v.  Bullard.  1041,  1043. 
Debuys  v.  Mollere.  1140,  1150,  1152. 
Do  Camp  v,  Hanna,  850. 
Decker,  ex  prn-te,  148. 

V.  Mathews,  1483. 
Deener  v.  Brown,  1587. 
Deering  v.  Chapman.  204. 

V.  Earl  of  Winchelsea,  1340. 
De  Forest  v.  Frary.  41.  161. 
De  Freest  v.  Bloomingdale,  71. 
De  Groot  v.  Van  Duzer,  200, 
Dehers  v.  Harriott,  124,128,576,611, 

617,  724,  1464, 
De  la  Chaumette  v.  B'k  of  England,  903, 

1468,  1483,  16S0. 
De  la  Courtier  v.  Bellamy,  66,  83, 
Delancy  v.  Stoddart,  330. 
Delanney  v.  Mitchell.  167. 
Delano  v.  Bartlett,  164 
De  la  Torre  v.  Barclay,  932. 
De  la  Vega  v.  Vianna.  886, 
Delaware  B'k  i\  Jervis,  733,  1269. 
Delegal  v.  Nay  lor,  916. 
De  Mantort  r.  Saunders,  351. 
Deminds  v.  Kirkman,  1041. 
Demuth  r.  Cutler,  1101. 
Den  V.  Clarke,  213. 
Denegre  v.  Hiriart,  979,  983. 

V.  Milne,  481. 
Dennett  r.  Wvman.  012. 
Dennie  v.  Walker,  1123,1145, 1209,1212. 
Dennis  v.  Morrice,  1163,  1170. 

V.  Table  Mountain  Water  Co., 

424, 
V.  Williams,  1262, 
Denniston  v.  Bacon,  794. 
Dennistoun  v.  Imbrie,  222. 

V.  Stewart,  940,943,95-.979. 
Denny  v.  Dana.  204, 

V.  Palmer.  1136,  1172. 
Denston  v.  Henderson,  1257. 
Denton  r.  Peters,  712,  720, 

V.  Rodie,  360. 
De  Pean  v.  Humphreys,  922, 
Depew  r.  Wheelau,  1483. 


XXXV  1 


Vie  references^        TABLE     OF     CASES.        i<ireto  the  sectiom. 


Depiiy  V.  Schuyler,  7'28. 

Dcrrv  r.  Dutchess  of  IMazarine,  2-45. 

Des  Arts  v.  Lejjgett,  1482. 

Dcsbrowe  v.  Weatherbv,  1379. 

Desha  r.  Stewart,  4b0,  G83. 

Dese--se  v.  Napier,  21,  23. 

Desmond  i\  Morris,  124. 

De  Tastet  v.  Harrino,  U44,  1448. 

Deturler  r.  Hish,  851,  852. 

Deuttrs  v.  Towusenil,  1199. 

Develing  i\  Ferris,  1133.  ; 

Devlin  v.  Clark,  815. 

DeVoss  V.  Cityof  Richmond,  1527,1539,  ! 

1550. 
Dewey  r.  Cochran,  1190,  1309. 

V.  Reed,  149, 152, 154,1383,1884, 
1385. 
Dewing  v.  Scars,  1247. 
Dowitt  V.  Perkins,  778. 
Dc  Wolf  V.  Johnson,  207,  894,  918,  920, 
924. 
r.  Murray.  9.-)l,  983,  1119. 
D'Wolf  r.Rahaud^  570,  1767. 
Dews  V.  Eastham,  1211. 
Dexlaux  v.  Hood,  G16. 
Diamond  v.  Karris,  724. 

V.  Lawrence  Co.,  1500. 
Dibble  r.  Duncan,  719. 
Dick  V.  Leveiick,  538. 
Dickens  v.  Beal,  945,  959,  9G0,  961,1050, 

1051,  1055,  1076,  1081. 
Dickerman  v.  Miner,  1387. 
Dickerson  v.  Burke.  728. 

V.  Derrickson,  1769,1786,1 788. 
V.  Seelye,  1729. 
V.  Turner,  964,  1156. 
V.  Wason,  339. 
Dickinson  v.  Ilall,  203. 

V.  Hoomes,  891. 
V.  King,  1260. 
v.  Valpy,  358. 
Didlakc  ».  Robb.  186. 
Dietrich  v.  Bayhi,  62. 

r.  Mitchell,  713. 
Dillard  v.  Evans,  56,  1245. 
Dillon  V.  Rimmer,  1273. 
Dingwall  v.  Dunster,  543,  544,  545,  546. 
Dinsmore  v.  Duncan,  441,  1495. 
Disher  v.  Disher,  63. 
Dispatch  Line  of  Packets  v.   Bellamy 

Man.  Co..  404. 
Ditchhourn  v.  Goldsmith,  195. 
Dively  v.  Cedar  Falls,  420,  1520. 
Diven  v.  Phelps,  169o,  1691. 
Dixon  V.  Dixon,  832,  1190. 

T.  Elliott,  1158,  1163, 1164, 1167. 
V.  Nuttall.  599,  619,  621. 
Dob  t\  Ilalsey,  366. 
Dobbins  v.  Parker,  835. 

V.  Com.  of  Erie,  126. 


Dobree  r.  Eastwood.  1009,  1033,  1045. 
Dobson  V.  Espie,  542. 
Dod  t.  Fourth  N.  B'k,  239. 
Dodge  V.  Bank,  748. 

T.  IVk  of  Kv.,  999. 
V.  Nat.  Ex.  B"k,  575,  1618,  1663. 
Doe  r.  Burnham,  198.  808. 
V.  Catamore,  1418. 
t.  Newton,  1219. 
r.  Suckerinore,  1219. 
Doebling  t.  Loos,  1260. 
Dogau  V.  Dubois,  795. 
Doherty  v.  Perry,  797. 
Duhmey  r.  Dohmey,  69. 
Dole  r.  Lincoln,  24. 
Dollfus  V.  Frosch,   292,    576,  622,  634, 

1081,  1198. 
Don  r.  Lippman,  878,  896. 
Donaldson  v.  Means,  1162. 
Donallv  V.  "Wilson,  1250. 
Donei\  Wallev,  1341. 
Doncgan  r.  Wood,  9,  581,  614,  946,  947, 

1050. 
Donelly  r.  Howe,  1147. 
Donels'on  v.  Taylor,  1480. 
Donley  v.  Tindall,  87,  170. 
Donner  v.  Madison  Co.  B'k,  341. 

v.  Remer,  1016. 
Donohue  v.  Gamble,  833. 
Donovan  t.  Pitcher,  866. 
Dooley  v.  Smith,  1248. 
Doolittlet'.  Terry,  719. 
Dorchester,  &c,,  B'k  v.  Milton  B'k,  623, 
661. 
V.     New   England 
B'k,  341. 
Dorn  V.  Parsons,  812. 
Dorsey  v.  Watson,  1157. 
Doty  V.  Bates,  361,  369,  1361. 

V.  Knox  Co.  B'k,  204. 
Doubiedav  v.  Kress,  573,  574,  575. 
Dougal  r.'Cowlos,  362.  482,  1260,  1268. 
Dougherty  v.  Deeney,  1221. 
V.  Savaije,  194. 
V.  Western  B'k,  647,  1685. 
Douglass  V.  Howlaud,  1767,  1785. 
V.  Matting,  850. 
r.  Reynolds,  1755,1773,  1785, 

1786. 
T.  Scott,  144,  713. 
V.  AVilkeson,  102,  104. 
Dow  V.  Moore,  407. 
V.  Rowcll,  899. 
r.  Sperry,  1351,1352. 
V.  Tuttle,  158. 
Dowe  V.  Schutt,  187,  860. 
Dowell  v..  Brown,  11 '.19. 
Down  V.  Hailing,  1468,  1595,  1633. 
Downer  v.  Cheescbrough,  719,  887. 
V.  Reed,  859. 


The  references]        TA13LE     OF     CASES.        [areio  the  sectiotm.    XXXvii 


Downer  v.  Remer,  980, 1024, 
Downes  v.  Church,  464,  482. 

V.  Richardson,  191,1401. 
Downey  v.  Hicks.  1260,  1262. 
Downing  v.  Backenstoes,  620. 
Downs  V.  Perrin,  173o,  1750. 

V.  Webster,  81. 
Dowse  V.  Masters,  1260. 
Dracachi  v.  Anglo-Egyptian  Nav.  Co. , 

1743. 
Drags  V.  Ibl)erson,  196. 

V.  Netter,  1291. 
Drake  v.  Chandler,  207. 
V.  Ehvyn,  361. 
V.  Henlv,  1217. 
V.  Markle,  56,  1706. 
V.  Mitchell,  1274. 
Draper  v.  demons,  588,  590,  654. 
V.  Hill,  1209. 

V.  Jackson,  255,  256, 1184. 
V.  Mass.  Steam  Co.,  507. 
V.  Snow,  1759,  1767,  1779. 
i\  Weld,  713. 
V.  Wood,  854,  1373. 
Dravton  v.  Dale,  93,  227,  260,  536, 1385, 

'1390. 
Dresser  i\  Misso.,  &c.  R.  R.  Co.,  566,567, 

758&,  789. 
Drew  V.  Towle,  203. 
Driggs  V.  Rockwell,  725. 
Drinkwater  i\  Tebbetts,  1096. 
Drumm  v.  Bradiute,'  964. 
Duanesburg  v.  Jenkins,  1523,1550,1552. 
Dubois  V.  Delaware,  &c.,  Canal  Co.,  298, 
Du  Bose  V.  Weddon,  226. 
Dubreys  v.  Farmer,  622. 
Dubuque  Co.  v.  R.  R.  Co.,  1523. 
DuCairy  ».  Gill,  275. 
Ducarse  r.  Kevser,  748. 
Ducket  V.  Van  Lilienthal,  956,  963. 
Duerson's  Adm'r  o.  Alsop,  629,  814,  815, 

817,  896,  898.  970. 
Duff  v.  East  India  Co.,  1614. 
Duffield  V.  Elwes,  24. 
Duffy  v.  Hobson,  122. 
Dufour  V.  Morse,  1130,1142. 

V.  Oxenden,  497. 
Dugan  V.  U.  S.,  443,  576,  687,  1189,1198, 

1227,  1229,  1230. 
Duggan  i'.King,  1125,1216. 
Duhammel  v.  Pickering,  221. 
Duko  of  Norfolk  v.  Howard,  654. 
Duker  v.  Franz,  1403. 
Dumont  v.  Pope,  470,  474,  966. 

i\  Williamson,  670. 
Dunbar  v.  Marden,  112. 

r.  Tyler,  1070,  1076. 
Duncan  v.  Berlin,  1636,  1643,  1644. 
i;.  Louisville,  51,  834. 
V.  McCuUough,  1144. 


Duncan  r.  Nells.  307. 

V.  Pope,  856. 

V.  Scott,  857. 

V.  Sparrow,  899. 
Duudas  V.  Howler,  899. 
Dunlap  V.  Hales,  232. 

V.  Smith,  1689. 

V.  Thompson,  1032. 
Dunn  r.  Adams,  5,  891. 
V.  Clements,  1400. 
V.  O'Keefe,  454. 
v.  Snell,  748. 
Dupays  v.  Shepherd,  487. 
Dupeau  v.  Waddington,  827. 
Dupont  V.  Mt.  Pleasants  Ferry  Co.,  1188. 
Duramus  i\  Harrison,  1428. 
Duran  v.  Aver,  1458a. 
Durant  v.  Banta,  762,  763,  767. 

V.  Iowa  Co.,  1500. 
Durdenv.  Smith,  1060,  1070. 
Durgin  v.  Bartol,  105. 
Durham  v.  Manrow,  1779. 

r.  Price,  1133,  1779. 
Durkin  v.  Cranston,  112. 
Durnford  ».  Patterson,  633. 
Durrum  v.  Hendrick,  1G84. 
Dusenbury  v.  Ellis,  306. 
Dutcher  v.  Porter,  71. 
Dutchess  Co.  B'k  v.  Ibbottson,  959. 
Dutchess  Cotton  Manf.  Co.  v.  Davis,  630. 
Dutton  V.  Ives,  834. 

V.  Marsh,  408. 
Duvall  V.  Farmers'  B'k,  1092, 1130, 1135. 
Dwight  r.  Emerson,  611,  996. 

V.  Newell,  266,  680. 

'.  Scovil,  1087. 
Dyer  v.  Covington  Township,  432,  434. 

V.  Gilson,  1763. 
Dvkers  v.  Leather  B'k,  1584,  1017. 
v.  Townsend,  303. 

Eadie  v.  Ashbans^h,  318,  319,  321. 
Eagle  B'k  v.  Chapin,  1039,  1051. 

V.  Hathawav,  992,  1005,  1006, 

1011,  i914. 
r.  Smith.  740,  1675. 
Earhart  v.  Gant,  781. 
Earl  V.  Peck,  180. 

Earl  of  Shrewsbury  v.  North  Stafford- 
shire R.  R.,  377. 
Earle  v.  Reed,  226. 
Early  v.  Preston,  970,  1052. 

V.  Wilkinson  &  Hunt,  298,  800. 
Earnest  v.  Taylor.  1116. 
Easeley  v.  Crockford,  774. 
Easterly  v.  Barber,  703. 
Eastern  B"k  r.  Brown,  1023. 
East  Haddam  B"k  r.  Savill,  341. 

Ilartlord  v.  Hartford  Co..  1519. 
India  Co.  v.  Trittou,  672,  676. 


XXXviii        The  veferenceH]        TABLE     OF     CASES.        [are  to  the  sections. 


East  River  B'k  v.  Buttcrworth,  126C. 
Eastman  r.  CDiunionwcalth.  1(](J4. 

r.  Pliiim-r,  1-221.  1323,  1336. 
r.  8Ii:i\v,  751,  7o8. 
v.  Tiiriiian.  1)83,  998. 
Easton  v.  Isahcll,  03.5. 

r.  PracliL'tt,  174,  180. 
East  River  Nat.  B'k  v.  Gove,  389. 
Eastwood  r.  Kenyon,  183,  240. 
Eaton  T.  Boessonault,  1458a. 
V.  Dennis,  719 
v.  Emerson,  80. 
V.  McMahon,  719,  1445. 
Eavans  v.  Secrest,  342. 
Eaves  i\  Henderson,  81. 

v.  Reed,  23(). 
Ebersole  v.  Ridding,  1333. 
Eccles  r.  Ballard,  013,  GC3. 
Ecpert  I'.  Condres,  611. 
Eddy  V.  Bond,  2U5,  1393. 
Edefen  v.  White,  1303. 
Edgeeomh  r.  Dowe,  190. 
Edgerly  v.  Shaw,  330. 
Edie  V.  East  India  Co.,  023. 
Edis^^  Bury,  131. 
Edmunds  v.  Cates,  983. 

V.  Digys,  737, 1073, 1675, 1077 
V.  Groves,  177. 
Edmundson  v.  Drake,  1785. 
Edon  V.  Smytl),  1380. 
Edson  V.  Fuller,  550. 

V.  Jacobs,  1017. 
Edwards  p.  Bohannon,  1381. 
V.  Brewer,  1730. 
V.  Brown,  850. 
v.  Dick,  674. 
r.  Jones,  758. 
V.  Mclvee.  1478. 
V.  Moses,  1580,  1020. 
V.  Scull,  1195 
t.  Thomas,  775. 
EfTlnger  r.  Richards,  150,  154. 
Egerton  r.  Fulton  Nat.  B'k,  336. 
Ehle  r.  Cliitteuaugo  B'k,  50. 
Eichelherger    v.    Findlev,    1078,    1580, 

1588,   1596. 
Eilbert  v.  Finkbeiner,  718. 
Eisner  v.  Kellev,  1339. 
Elbert  v.  iMcl^lelland,  1418. 
Eldred  v.  Malloy,  41. 
Elford  V.  Teed,  404,  050. 
Elgin  V.  Hill,  1233. 
Ellctt  V.  Britton,  51. 
Ellicott  V.  Martin,  105,  775,  814. 
Elliott  I'.  Abbott,  390,  1190. 
V.  Armstrong,  741. 
V.  Dudley,  307. 
I'.Giess,  1704. 
V.  Leveings,  1400. 
V.  Martin,  105,  775. 


Elliott  r.  Wheeler,  1584. 

V.  White,  965. 
Ellis  i\  Brown,  713. 

V.  Com.  B'k,  583,  1031,  1118. 

V.  Ellis.  40. 

V.  jMcLemore,  103. 

1-.  Ohio  Life  In.s.   Co.,   533,    1361, 

1303,  1307,  1371,  1373,  1657. 
t).  Wheeler,  96,  1584. 
T.  Wild,  731. 
Ellison  V.  Chesnut,  146. 

V.  CoUingride,  35,  1581. 
1}.  Jackson  Water  Co.,  316. 
Ellsworth  V.  lircwer,  694,  1304,  1223. 

T.  Fogg,  1389. 
Elminger  v.  Drew,  202,  303. 
Elson  V.  Dennv,  1243. 
Elting  V.  Brinkerhoff,  1571. 
Elwood  V.  Deidendori,  1266. 
Elwell  V.  Dod<?e,  394. 
Ely  V.  James,  1300. 
T.  Kilt)orn,  81. 
Emanuel  r.  White,  833. 
Eml)len'«.  Dartnell,  043. 
Emerson  r.  Cults,  094. 

V.  Murray,  154,  1121. 
r.  Providence  Hat  Man.    Co., 
377,  294,  400,  401. 
Emery  v.  Hobson,  1090,  1587.  1589. 

V.  Irviny  Nat.  B'k,   1731,    1734, 
1736,  1750. 
•  «.  Mariavillc,  435. 

Emly,  exjiartt'^  30n. 

V.  Lye,  300,  739. 
Emmatt  v.  Kearns,  1700. 
Emmons  t.  Meeker,  143. 
Empire  Trans.  Co.  v.  Steele,  1731. 
English   r.    Darlev,    1305,    1307,    1336, 
1327. 
«.  Walles,  834?-. 
V.  W^all,  481,  1073. 
Enthoven  r.  Ilovle,  102,  148. 
Epler  V.  Funk.  735.  1437. 
E])ps  V.  Dillaye,  1273. 
Epling  V   Jones,  1185. 
Erie  Hank  v.  Smith,  Randolph  »fc  Co., 

280. 
Ernst  V.  Steckman,  44. 
Erwin  v.  Carroll,  202. 

V.  Downs,  592,  675. 
V.  Lynn.  090. 
i\  Sanders,  158. 
Esdaile  v.  Lanauze,  281,  202. 

1}.  Sowerby,  1172. 
Espy  V.  B'k   of  Cincinnati,    559,   1568, 

1569,  1603,  1606,  1661. 
Essex  Co.  V.  Edmonds,  713. 

Nat.  B'k  V.  B'k  of  Montreal, 
835. 
Estabrook  v.  Kyle,  884. 


Tli6  reference^l       TABLE     OF     CASES.        \.are  to  the  Hecfumn.     XXxlx 


Estabrook  v.  Smith,  1183. 
Estes  i\  Kyle,  884. 

i\  Tower,  1209,  1210. 
Etlieridge  ®  Ladd,  ()04. 
Ethiiii?  V.  Scliuylkill  B'k,  988. 
Etna  Ins.  Co.  v.  Alton  City  B'k,  341, 
Etting  V.    Scluivlkill    B'k,    984,    1045, 
1053. 
V.  Vandeiiyn,  827. 
Evans  v.  Anderson,  867. 

«.  Cramlington,  085. 
«.  Drummond,  1295,  1299. 
V.  Foreman,  1412. 
».  Gee,  669,  094. 
v.  Gordon,  1198. 
r.  Kneelaud,  1309. 
V.  Kymer,  790. 
».  Prosser,  1425. 
V.  St.  John,  056. 
V.  Underwood,  40. 
V.  Whyle,  1755. 
Everard  ®.  Watson,  983. 
Everett  v.  Collins,  1623. 

%\  United  States,  393. 
t).  Vendryes,  896,  898. 
Everson  «.  Carpenter,  233. 
Evertson  v.  National  Bank,  1489,   1490, 
1494,  1497,  1506. 
t.  Nat.  B'k  of  Newport,  1489, 
1500,  1505. 
Ewin  V.  Lancaster,  1334,  1837. 
Exchange  B'k  ».  Knox,  1681, 1689,  1691. 
«.  Monteith,  284. 
V.  Tiddy,  1689. 
■d.  Boyce,  1025. 
Exeter  B'k  «.  Sullivan,  374. 
Exon  V.  Russell,  1379. 

Fabens  «.  Mercantile  B'k,  324,  341. 
Fair  v.  Cranston,  267. 
Fairchild  «.  Adams,  1187,  1188. 
V.  Holly,  1253. 
V.  Ogdensburgh,  424. 
Fairclough  v.  Pavia,  726. 
Fairfield^-.  Adams,  687,  1195. 
Fairlee  «.  Herring,  503,  504,  511,  552, 

563. 
Fairley  v.  Roch,  1254. 
Fairthorne  v.  Blaquire,  243. 
Faith  V.  Richmond,  361,  362. 
Fake«.  Eddy,  919. 
Fales  V.  Russell,  1478,  1480. 
Fall  River  Union  B'k  v.  "VVillard,  454, 

462,  463,  654. 
Fallows  V.  Taylor,  196. 
Fancourt  r.  Thome,  51. 
Fanning  r.  Consequa,  879. 
Fanshawe  v.  Peet,  85. 
Fant  v.  Miller,  189,  867,  914. 
Faquliar  v.  Southey,  545,  546,  1398. 


Farbell  v.  Sturtcvant,  181,  182. 
Farina  v.  Home,  1712. 
Farmeloc  v.  Bain,  1712. 
Farmer  «.  Rand,  1390. 
v.  Sewall,  766. 
Farmers'  B'k  v.  Allen,  953. 

V.  Battle,  1014,  1023. 

t.  Butler,  1012, 1015,  1034. 

v.  Duvall,  598,  658,  1039, 

1057. 
'c.  Goddin,  1689,  1691. 
'0.  Gunnell,  970,1021, 1000, 

1070. 
v.  Harris,  1032. 
V.  Mutual  Ass. Society,  205. 
V.  Revm)lds,    1311,    1405, 

1471,  1479,  1695. 
V,.  Vail,  331. 
v.  Vanmeter,     703,     1074, 

1083,  1113. 
?j.  Whitehill,  1219. 
Farmers'  «&  Citizens'  Nat.  B'k  v.  Noxon, 

791. 
Farmers'  &  Mechanics'  B'k  i\  Butchers' 

&c.  B'k,  390,  391,  1552,  1610. 
Farmers'  &  Mechanics'   B'k  v.  Harris, 

1032. 
Farmers'  &  Mechanics'  B'k  v.   Humph- 
reys, 854,  1190. 
Farm.'s  &  Mech.'s  B'k  «.  King,  1615. 

t\  Rath  bone,  1335. 
t.  White,  1609. 
Farmers'  Nat.  B'k  v.  Fletcher,  834. 
Farmers'  &c.  Bank  i\  Hathaway,  793. 
i'.  Kercheval,  1788. 
V.  Trov  City  Bank, 

392,  417. 
V.  Wackles,  1106. 
Famsworth  v.  Allen,  602. 
V.  Drake,  139. 
V.  Sharp,  1418. 
Farnum  v.  Brooks,  211. 
V).  Fowle,  1173. 
Farr  v.  Stevens,  1200. 
Farrar  v.  Gil  man,  392. 
Farrington  i'.  Brown,  1149. 

«.  Frankfort  B'k.  1266. 
Farwell  v.  Curtis,  1586,  159u,  1598. 
ti.  Hilliard,  1203. 
v.  Kennett,  56. 
V.  Tvler,  1197. 
Fassin  v.  Hubbard,  700,  998. 
Faulderr.  Silk,  213. 
Faulkner  c  Ware,  812. 
Fawell  T.  Heelis,  1281. 
Fay  r.  Fay.  194. 
*  r.  Noble,  382. 
V.  Smith,  1373,  1385. 
Favle  V.  Bird,  042. 
Fear  i\  Dunlap,  709,  713. 


xl 


The  referencen]       TAIU.E     OF     CASES.         {are  to  the  sections. 


Fearn  v.  Filica,  809. 
Fearslake  v.  Morgan,  12C9. 
Fcathcrston  v.  Wilson,  82. 
Fell  r.  Cook,  260. 
Fellows  V.  Kress,  1229. 

V.  Prentiss,  1329. 
r.  Wvman,  370. 
Fell's  Point  Sav.  Inst.  v.  Weedon,  1703, 

1707. 
Fenby  v.  Pritchard,  827. 
Feun  r.  Dugdale,  1238. 

i-.  Harrison,    278,    279,    687,   689, 
730,  638,  1268. 
Fenton  v.  Robinson,  848,  850. 

V.  White,  225. 
Fentum  v.  Pocock,  1319,  1334,  1335. 
Ferdon  v.  Jones,  824. 
Ferguson  v.  Coppeau,  1733. 
V.  Landram,  1545. 
i\  Oliver,  2U3. 
V.  Turner,  1311. 
Fernan  r.  Doubleday,  1317. 
Fernandez  v.  Lewis,  466,  470. 
Ferner  v.  Williams,  644. 
Ferris  v.  Bond,  91. 
Fesenmayer  v.  Adcock,  36. 
Fetters  v.  Muncie  National  Bank,   790, 

793. 
Field  V.  Lelean,  1279. 

V.  Mayor  of  New  York,  23. 

V.  Nickerson,  607,  609,  611,  G12, 

1211. 
V.  Tibbetts,  787. 
Fielden  v.  Lahens,  753. 
Fields  V.  Tunston,  724,  725. 
Fifield  V.  Close.  122. 
Fink  V.  Fox,  179. 
Finlay  v.  Hall,  1458rt. 
Finlcy  v.  Green.  707,  729. 
Finney  v.  Bennett,  1691,  1692. 
V.  Callendar,  69,  70. 
t\  Shiriey,  39. 
First  Municipality  v.   Orleans  Theater 

Co.,  1557,  1562. 
First  Nat.  B'k  v.  Carpenter,  309. 

V.  County  Corns.,  1505. 

V.  Crittenden,  656. 

V.  Gav,  62,  282,  299,  316. 

V.  Hall,  417. 

V.  Harris,  1571,  1634. 

V.  Hogan,  396. 

V.  Kelly,  1731. 

V.  Leach,  1604. 

V.  Leatli.  1603. 

V.  Leavitt,  1317. 

V.  Lieiman,  849, 

V.  Morgan,  368,  12G6. 

V.  ]\Iorris,  868. 

V.  Needham,  1633. 

V.  Ocean  Nat.  B'k,  286. 


First  Nat.  B'k  v.  Owen,  600. 
V.  Parsons,  319. 
V.  Plankinton,  207. 
V.  Kicker,  1655,  1657. 
V.    Kversun,     972,     990,. 

no6. 

V  Shaw,  1734. 
0.  Silvers,  62. 
V.  Whitman,  1630. 
of  Angelicas.  Hale,  1188. 
N.  Y.  V.  Morriss,  868. 
924. 
Firth  V.  Thrush,  992,  1120. 
Fish  V.  Jackuian,  1034. 
Fisher  v.  Beck  with,  462. 

v.  Bradford,  63,  1201. 
V.  Carroll.  1480. 
v.  Ellis,  101. 

V.  Evans,  640,  1017,  1030. 
r.  Fisher,  832. 
i\  Krutz,  222. 
V.  Leland,  782,  789. 
V.  Leslie,  36. 
V.  Mershon,  1482. 
V.  Otes,  748,  834. 
V.  Price,  1095. 
Fisk  v.  Brackett,  883. 

■».  City  of  Keuosha,  1550. 
Fiske  V.  Eldridge,  403,  405. 
Fitch  T.  Jones,  85,  153,  8u8,  815. 
t'.  Lawton,  403. 
V.  Remer,  894. 
V.  Sutton,  1289. 
Fitchburg  B'k  v.  Greenwood,  700. 
r.  Perlcy,  1045. 
Mut.  Fire  Ins.  Co.  v.  Davis,. 
983, 
Filler  v.  Morris,  1115. 
Fitzgerald  v.  Keid,  212. 

V.  Williams,  1084. 
Fitzhugh  V.  Wilcox,  213. 
Fitzpatrick  v.  Hearne,  172. 
Flack  V.  Green,  1054. 
Flagg  v.  Palmyra,  1551. 
Flanagan  t\  Meyer,  69. 
Fleckner  r.  B'k  of  U.   S.,   52,388,392,. 

687. 
Fleming  v.  Burge,  36. 
V.  Fulton,  979. 
V.  Gilbert,  159. 
V.  Lei  per,  1389. 
Flemming  v.  McClain,  1646,  1648. 

V.  iMulligan,  751. 
Fletcher  v.  Blodgctt,  150,  i54. 
V.  Bradilyll,  1052. 
V.  Cushec,  814. 
V.  Dana,  683. 
V.  Dysart,  319. 
V.  Dvte,  94. 
V.  Froggatt,  1168. 


Tlie  referencexl        TABLK     OF     CiVSES.        [are  to  the  sections.  xli 


Fletcher  v.  Heath,  1335. 
I'.  Jackson,  1340. 
V.  Manninj;,  1647. 
V.  Sell  ail  mburg,  686. 
V.  Tlionipson,  o9,  60. 
Flight  i\  McLean,  130. 

V.  Read,  182. 
Flint  v.  Craig,  1395. 

r.  Flint,  74,  668,  688,  724,  725. 
V.  Rogers,  600,  1209. 
Flowers  v.  Billing,  74. 
Floyd  Acceptances,  273,  436,  437,  440, 

809,  1544. 
Foard  v.  Johnson,  1030. 
V.  Womack,  1074. 
Foden  v.  Sharp,  643. 
Fogarties  v.  State  B'k,  1637. 
Fogg  V.  Sawyer,  736,  1676,  1678. 

V.  Virgin,  405. 
Foland  v.  Boyd,  1086,  1087. 
Folcott  V.  Og'den,  883. 
Folger  V.  Chase,  417.  656,  657,  687,  690, 

1398. 
Follain  v.  Dupre,  1028. 
Follett  V.  Steele,  1267. 
Foltz  V.  Mey.  760. 

V.  Pouree,  683. 
Fontaine  r.  Gunter,  1418. 
Foot  r.  Sabin,  305,  366. 
Forbes  v.  Cochrane,  866. 
V.  Espv,  136. 
V.  Marshall,  361. 
Ford  V.  Angelrodt,  508. 
V.  Beecker,  1291. 
V.  Buckeje  Ins.  Co.,  867. 
I'.  Dallam,  1149. 
V.  Ford,  1373. 
v.  Henderson,  713. 
V.  McCkmg,  1587. 
V.  Mitchell,  927,  1702,  1706. 
V.  PhiUips,  232. 
V.  Thornton,  326,  1427. 
Fores  v.  Johnes,  196. 
Forman  v.  Wright,  201. 
Forshay  v.  Ferguson,  857. 
Forsyth  v.  Kimball,  70. 
Foss  V.  Nutting,  883. 
Foster  v.  Andrews,  359,  367,  369. 
V.  Callaway  Co.,  1557. 
V.  Dawber,  542. 
V.  Essex  B'k,  286. 
r.  Fuller,  265,  271. 
V.  Hoyt,  1431. 
V.  Jolly,  80,  199,  720. 
V.  Julien,  1145. 
V.  Mackay,  1471. 
V.  McDonald,  1003,  1005. 
V.  McKinuon,  850. 
V.  Parker,  1083,  1170. 
V.  Paulk,i586,  1595. 


Poster  V.  Shattuok,  130. 
V.  Smeath,  1015. 
V.  Trustees,  1281. 
V.  Wise,  183. 
Foulke  V.  Fleming,  891. 
Fountain  v.  Anderson,  271. 
Fourth  Nat.  B'k  i\  llenschuh,  592,  999. 
Fowler  v.  Atkinson,  403. 

r.  Brantly,  622,  623,  788. 
V.  Brooks,  1325. 
r.  Clearwater,  1763. 
V.  Hendon,  1052. 
V.  Ludwig,  1267. 
V.  Palmer,  727. 
V.  Strickland,  1342. 
Fox  V.  Clifton,  356. 
V.  Foster,  748. 
V.  Whitney,  1217. 
Fralick  v.  Norton,  6t>. 
Francis  i\  Rucker,  1438,  1449. 
Frank  v.  Kuigler,  668. 

V.  Longstreet,  674. 
V.  Wessells,  47,  57. 
Franklin  v.  March,  38. 

V.  Twogood,  748. 
V.  Vanderpool,  1586,  1595. 
Franklin  B'k  v.  Freeman,  1583,  1584. 
Franklin  Sav.  B'k  v.  Heusman,  769. 
Frazer's  Adm'r  v.  Frazer,  728. 
Frazier  v.  Gas  B'k,  341. 
V.  Jordan,  1324. 
V.  Wartield.  881,  896. 
Freakley  v.  Fox,  1285. 
Fredd  ».  Eaves,  681. 
Frederick  r.  Clemins,  850. 

V.  Cotton,  105. 
Free  v.  Hawkins.  80,  719. 
Freeman  v.    Bovutou,    454,    460,   653, 
'1123,  1148,  1228,  1478, 
1480. 
V.    Britton,    750,     762,     703, 

767,  1217. 
V.  Ellison,  63. 
V.  O'Brien,  1449. 
Freeman's  B'k  v.  Perkins,  901. 
V.  Rollins,  1326. 
r.  Ruckman,90,648,667, 
748,  879. 
Freese  i\  Brownell,  90,  868,    879,   896, 

898. 
French  v.  Andratte,  1428. 

r.  B'k  of  Columbia,   189.  1074. 
1076,     1078,     1083,     1085, 
1170. 
V.  Gordon,  128. 
V.  Jarvis,  1238,  1241. 
V.  Price,  1300 
V.  Stewart,  1780. 
V.  Turner.  690,  748. 
Freund  v.  Importers',  &c.  B'k,  1603. 


xlii 


Tfie  references]        TAT'.LK     OF     CASES.        [are  to  thf  sections. 


Frey  v.  Kirk,  875. 
Fricud  v.  Harrison,  195. 

V.  Wilkinson,  (IS)2,    lOil,    1043, 
1051,  H)5:). 
Frisbie  v.  Larned,  1000. 
Frith  r.  Tlirusli,  1047. 
Fritscli  T.  neesless.  09. 
Frois  r.  MayfieUl,  1:329. 
Frontier  C'k  r.  Moss,  1G76. 
Freest  r.  Wood,  292. 
Fry  V.  Dudley,  56,  57. 
V.  Evans'  268,  1432. 
V.  Hill,  466,  467,  471. 
ti.  Kosseau,  56. 
Fuke  T.  Smith,  732. 
Fultbrd  r.  Johnson,  1209. 
Fuller  V.  Hooper,  410,  1086. 

V.  Hatchings,  815,  1652. 
V.  McDonald,  719,  1091,  1093. 
V.  Scott,  713,  1788. 
Fullerton  v.  B'k  ofU.  S.,  656,  1039. 

V.  Sturgiss,  142,  H43. 
Fulton  t.  McCracken,  949,  990. 
Fulton  B'k  V.  N.    Y.  &  Sharon   Canal 
Co.,  1616. 
V.  Phoenix  B'k,  1671. 
Fulton  Co.  V.  Walnxsh  &  Miss.  11.  K.  Co., 

1535. 
Furman  v.  Nichol,  447. 
Furz  V.  Nicholls,  69. 
Furze  t>.  Sharwood,  983,  985. 
Fydell  v.  Clark,  739,  1264. 

Gable  v.  Gall,  1282. 
Gage  V.  Jaqueth,  1732. 

V.  Meclianics'  Nat.  B'k,  1784. 

V.  Morse,  1738. 

V.  Sharp,  775,854. 
Gahn  v.  Niemcewiez,  1317. 
Gaines  v.  Dorsctt,  4s,  49. 
Gaither  ?>.  Farmers',  &c.  B'k,  760. 
Galbraith  r.  Fullerton,  1310. 
Gale  T.  Kemper,  656. 

V.  Miller,  ;i66,  370,  656. 

V.  Walsh,  926,  971. 
Galen  v.  Niemcewiez,  1329. 
Galladay  r.  B'k  of  Union,  963. 
Gallagher  v.  Roberts,  658,  1262,  1277. 
Gallery  r.  Prindle,  513. 
Galvestcm  K.  R.  r.  Cowdrev,  1543. 
Galway  v.  Mathews,  94,  358,  360. 
Gammon  v.  Everett,  646. 
r.  Schmoll,  508. 
Gano  V.  Heath,  1335,1390. 
Gansevoort  r.  Williams,  367. 
Garden  v.  Bruce,  1650. 
Gardner  t.  B'k  ofTenn.,  964. 
r.  Barger,  44. 
V.  Gorham,  1273. 
T.  Howland,  1731. 


Gardner  v.  Maxey,  1 96,  200. 

v.  Mavnard,  1238,  1239,  1240. 
i\  Walsli,  1387,  1389. 
i\  Watson,  1319. 
Garforth  v.  Bradley,  254. 
Garland  «.  Jacoms,  358. 
Garlock  «.  Geortner,  1468,  1483. 
Gamett  ».  Woodcock,  600,  603,  1038. 
Garr  v.  Louisville  B.  Co.,  53,  62,  693. 
Garrard  v.  Haddan,    1405,   1400,  1407, 

1408,  1409. 
Garton  v.  Union  City  Bank,  1188. 
Garvier  v.  Downie,  1114. 
Garvin  v.  Wiswell,  104. 
Gascoyne  v.  Smith,  608. 
Gaskin  r.  Wells,  1260. 
Gaters  v.  Madeley,  254,  256. 
Gates  r.  Beecher,  455,  594,  635. 
f.  Erie,  500. 
V.  McKee,  1773. 
Gaul  V.  Willis,  752,  757,  762,  767,  862, 

1217. 
Gaunt  V.  Taylor,  1615. 
Gawtry  v.  Doane,  584,  1057,  1115,  1149. 
Gay  r.  Kingsley,  241,  686. 

v.  Ladder,  130. 
Gazoway  «.  Moore,  81, 
Gazzam  v.  Armstrong,    523,    524,   525, 

526,  531. 
Geary  v.  Physic,  74,  688. 
Geig'er*.  Clark,  713,  996. 
Geill  V.  Jeremy,  1044. 
Gelpeke  v.  City  of  Dubuque,   10,  389, 
391,  1497,  1500,   1518,  1514,  1522, 
1524,  1525,  1527,  1537. 
George  v.  Surry,  74,  688. 
Georgia   Nat.    B'k  v.  Henderson,    327, 

1568,  1574. 
Gcralopulo  v.  Wider,  939,  940,  941,1258. 
Gerard  B'k  v.  B'k  of  Pcnn  Township, 

1603. 
Gerhardt  v.  Boatman's  Savings  Institu- 
tion, 343. 
German  v.  Ritchie,  933. 
Germania  B'k  v.  Distler,  83. 
Gerwig  v.  Bitterly,  1274. 
Getty  t).  Binssic,  1298. 
Gibb  V.  Mather,  519.  642. 
Gibbon  r.  Coggen,  1158. 
V.  Scott,  79,  159. 
Gibbons  r.  R.  R.  Co.,  1523. 
Gibbs  V.  Howard,  890. 
V.  Linabury,  851. 
V.  Tremont,    898,  918,    920,  921, 
1451. 
Gibson  v.  Carruthers,  1730. 

V.  Cooke,  17,  21,22,451,452,743. 

v.  Finley,  32. 

V.  Hunter,  136,  137. 

i'.  Miller,  706,  781«.,  812. 


Tlie  references']        TABLE    OF    CASES.        {are  to  the  sections.  xliii 


Oibsoii  V.  Minct,  17,  102. 
v.  Powell,  688. 
V  Tobey,  1262,  1204. 
Giddings  v.  Coleman,  16t-t. 
GiffertB.  West,  731,  734. 
Giflbrd,  ex  parte,  1322. 
Gilbert  v.  Dennis,  054,656,972,  974,  979, 
983,  1473. 
V.  Nantucket  B'k,  6G3. 
Gilbough  V.  Norfolk,  1506. 
Gilchrist  i'.  Douuell,   10u3,   1031,   1116, 

1117. 
Glies  V.  Bourne,  66,  83. 
V.  Mauldin,  34. 
V.  Perkins,  333. 
Gill  T.  Cubitt,  772,  1503. 

v.  General  Iron  Screw  Collier  Co., 

'1741. 
t).  Morris,  205. 
V.  Palmer,  978. 
Gillaspie  v.  Kelley,  90,  144. 
Gillespie  v.  Neville,  979. 
Gillett  V.  Averill,  656,  657. 

V.  Sweat,  1387. 
Gilliatt  «.  Lynch,  1429. 
Gillingham  v.  Boardman,  1759,  1764. 
Gillispie  «.  Hannahan,  654,  1144,  1145, 

1146. 
Gilly  V.  Springer,  643. 
Gilman  v.  Douglass  Co.,  1249. 

V.  Peck,  1676. 
Gilmore  v.  Bussey,  1260. 
Gilpike  v.  Quintrell,  1756. 
Gilpin  V.  Marlev,  713.  • 

Gilstrah  v.  St.  Louis,  &c.,  R.R.  Co.,  424. 
Gimmi  v.  Cullen,  752,  757. 
Gindrat  v.  Mechanics'   B'k,    992,  1007, 

1013. 
Ginn  v.  Weissenberg,  1563. 
Gist  V.  Gans,  1412. 

V.  Lybrand,  1012,  1015,  1145. 
Givens  «.  Merchants'    Nat.   B'k,   708, 

1147,  1155. 
Glasgow  V.  Copeland,  454. 
V.  Pratte,  972,  990. 
®.  Sands,  257. 
Glasscock  v.  Rand,  175. 
v.  Smith,  371. 
Glazebrook  v.  Ragland,  1429,  1431. 
Gleason  v.  Henry,  1352. 
V.  AV right,  748. 
Glen   Cove   Mat.    Ins.    Co.   v.  Harrold, 

1767,  1779. 
Glendinning,  ex  parte,  1322. 
Glenn  v.  Farmers'  B'k,  197. 

^.  Smith,  1260,  1267,  1268. 
Glickauf  «.  Kaufman,  713. 
Glossup  V.  Jacob,  494,  495. 
Gloucester  B'k  ».  Salem  B'k,  1361,  1871, 
1657,1669,1675,1688. 


GlouceslerB'k  ».  Worcester,  1810,  1321. 
Glover  V.  Bobbins,  1385. 

V.  Thompson,  1475 
Glynn  v.  B'k  of  England,  1475. 
Goddard  ®.  Cox,  1350. 
V.  Cutts,  81. 
«.  Lyman,  1183. 
V.  Mallory,  1739. 
V.  Mercliants'   B'k,   533,    684, 

1225,  1361,  1308,  1372. 
V.  Sawyer,  894. 
Goddiu  V.  Crump,  1523,  1557. 

«.  Shepley,  022,  879,  908. 
Godin  v.  B'k  of  Commonwealth,  1618. 
Goggerty  v.  Cuthbert,  721. 
Colder  v.  Foss,  1198. 
Goldschmidt  v.  New  Orleans,  422,  431. 
Goldsmid  n.  Lewis  Co.  B'k,  777. 
Goldsmith  v.  Blane,  1010. 
GoUaday  v.  B'k  of  Union,  1074,  1034. 
Gompertz  v.  Bartlett,  732. 
Gonslin  v.  Commander,  &c.,  148. 
Gooch  «.  Bryant,  1418. 
Good  r.  Elliott,  195. 

V.  Martin,  710,  712,  713,  714,  715, 
728. 
Goodale  r.  Holdridge,  190. 
Goodall  ».  Dolley,  449,  1154. 

V.  Poihill,  520. 
Goode  V.  Colehan,  40. 

?'.  Harrison,  237. 
Goodenow  ».  Tyler,  1200. 
Gooding  i).  Morgan.  1260. 
Goodloe  V.  Godley,  000,  056. 

V.  Taylor,  43. 
Goodman  ».  Eastman,  1373,  1381. 

».  Harvev,  774.  788,  943,  980, 

1230,  1503,  1681. 
t).  Murks,  884. 

V.  Simonds,  142,  391,  775,  776, 
814,  1503. 
Goodnow  «.  Warren,  1000. 
Goodrick  ».  Gordon,  550,  551,  561. 

®.  Tracy,  1274,1369. 
Goodsell  «.  Myers,  229,  230,  233. 
Goodson  V.  Johnson,  782. 
Goodwin  v.  Coates,  1278. 

V.  Davenport,  611. 
V.  Jones,  884. 
V.  McCay,  517. 
v.  Nickerson,  81. 
«.  Roberts,  1404. 
Gordan  v.  Montgomery,  1094. 

D.  Phelps,  919. 
Gordon  v.  Brown,  4423. 

r.  Price,  1260,  1262,  1264,  1208. 
v.  Sutherland,  1890. 
V.  Wansev,  1238. 
Gore  V.  Gibson,  214,  215. 
V.  Wilson,  703. 


xliv 


ne  rfferetices]       Tx\DLE     OF     CASES.        [are  to  the  sections. 


Gorgier  v.  Melville,  150+. 
Gorham  v.  Carroll,  1217. 
Gorman  r.  Kctchuin,  709, 
Goshen  v.  Stonington,  15G3. 

V.  Turpin,  47. 
Goslin  r.  Grifiin,  S30. 
Goss  v.  Nelson,  4G. 
Gough  V.  'I'indou,  2."5,  63. 
Gould  V.  Coombs,  1387. 

V.  Norfolk  Lead  Co.,  294. 
V.  Robson,  1305,  1337. 
V.  Segee,  777,  840. 
V.  Stevens,  778. 

V.  Town  of  Sterling,  1523,  1533, 
1550,  1552. 
Goulding,  ex  parte,  36G. 
Goupv  V.  Harden,  314,  465,    466,  467, 

4'71,  611. 
Gove  V.  Vining,  1103. 
Governors.  Carter,  1672. 

v.  Dailv,  272. 
Gowan  v.  Jackson,  999,  1086. 
Gower  v.  Moore,  591,  1175. 
Grace  c.  Adams,  1732. 
Gracie  v.  Sanford,  452. 
Grafton   IVk  v.  Cox,  1116,  1117,  1144, 
1145. 
v.  Woodward,  158,  159. 
Graham  ».  Adams,  56. 

V.  Campbell,  305. 

V.  Cox,  1646. 

V.  Gillespie,  1409. 

v.  McGuire,  173,  674. 

V.  Sangston,  656,  969,  983,  1019, 

1026. 
V.  U.  S.  Savings  Inst.,  294. 
Grand.  B'k  v.  Blanchard,  658. 
Grand  Chute  v.  Winegar,    1537,    1540, 

1541,  1543. 
Grand  Gulf  B'k  v.  Wood.  658,  741,  748. 
Grandin  ».  Leroy,  726,  790. 
Grand  Lodge  of  Free  Masons  v.  AVad- 

dill,  384. 
Granite  B'k  v.  Avres,  637, 1118. 

V.  Ellis,  1190. 
Grant  r.  Da  Costa,  108. 
V.  Ellicott,  790. 
V.  Hawks,  369 
V.  llealy,  916. 
V.  Hunt,  503. 
V.  Mills,  1281. 
T.  Norway,  1733. 
V.  Shaw,  504,  505,  550, 
V.  Spencer,  1108. 
V.  Vaughan.  5,  104,  1504, 
V.  Woods,  40,  41. 
Grapengether  v.  Fejervary,  248. 
Graves  v.  American  Exchange  B'k,  677, 
1470. 
V.  Clark,  79,  80. 


Graves  v.  Kay,  4,  72. 
Graw  V.  Hannah,  265. 
Gray  r.  B'k  of  Kv.,  790. 
V.  Bell,  612."  996. 
i\  Brown,  1321. 
■  V.  Cooper,  93,  227,  682. 
V.  Milner,  96,  97,  486. 
V.  Wood,  84,  85. 
r.  Worclen,  55,  56. 
Great  Falls  B'k  v.  Farmington,  422,  435. 
Greathead  v.  Walton,  70,  899. 
Greatlakc  v.  Brown,  455. 
Great  West  R.  R.  v.  McDowell,  1729. 
Grecle  v.  Parker,  503,  550,  551,  560,  561. 
Greeley  v.  Hunt,  996. 

V.  People,  1522. 

V.  Thurston,    1208,    1209,   1210, 
1212,  1232. 
Green  v.  Clark,  173. 
V.  Davies,  102. 
V.  Deakin,  366. 
V.  Drebillis,  88. 
v.  Holway,  122,  125. 
V.  Louthain,  926. 
V.  Neal,  1525. 
V.  Sarmierto,  875. 
V.  Sizer,  170. 
V.  Skell,  303. 
V.  Steer,  667. 
Greene  v.  Dodge  &  Cogswell,  1789. 

V.  Farley,  1005,  1007. 
Greenfield  B'k  r.  Crafts,  1351. 

Savings  B'k  v.  Stowell,  1373. 
Greenh^w  i\  Boyle,  145. 
Greening,  ex  jiarte,  744. 
Greenough  v.  McClelland,  1336. 

V.  Smead.  455,712,715. 
Greenshields  r.  Crawford,  1218. 
Greenslade  v.  Dower,  355,  358. 
Grecnstrcet  v.  Carr,  1471. 
Greenwalt  v.  McDowell,  1327. 
Greenway,  ex  parte,  1475, 1476,  1480. 
Greenwich  B'k  «.  De  Groot,  1008,1115. 
Greer  v.  Higgins,  802. 
V.  Perkins,  1660. 
Gregory  v.  Allen,  1091. 

V.  Leigh,  262,  403. 
V.  McNealy,  1192. 
V.  Paul,  245. 
V.  Walcup,  529. 
Greiner  v.  Ulcry,  93. 
Grenaux  v.  Reed,  775. 

r.  Wheeler,  796,  814. 
Grew  V.  Burdilt,  1437. 
Grierson  v.  Sutherland,  97. 
Griffin  V.  Central  B'k,  1682. 
V.  Goff,  598,1163. 
V.  Kemp,  1587,  1600. 
V.  Ranney,  122. 
GriffingP.  Harris,  1217. 


Tfie  references]        TABLE     OF     CASES.        [are  to  the  sections.  xlv 


Griffith  V.  Cox,  137G. 

V.  Osawkee  Township,  1522. 
\  V.  Rfced,  95,  1236,  1272. 

Griffiths  V.  Kellogg,  849. 

V.  Owen,  1270,  1272. 
V.  Perry,  1712. 
Grimes  v.  Hillenbrand,  192. 

r.  Piersol,  094. 

V.  Talbot,  1471. 
Grimshaw  v.  Bender,  9,  878,  1438. 
Grimstead  v.  Briggs,  1401. 
Grioman  v.  Walker,  1016. 
Grinnell  v.  Suydam,  1634. 
Griswold  v.  Davis,  05,  824,  1233. 
V.  Slocuni,  709. 

V.  Waddington,  216,  222,  678, 
1082. 
Grocers'  B'k  v.  Penficld,  791,  814,  826. 
Grosvenor  v.  Stone,  998,  1076. 
Grover  v.  Grover,  24,  1181. 
Groves  v.  Ruby,  608. 
Grudgeon  v.  Smith,  983. 
Grutacai)  v.  WouUuise,  54, 1453,  1454. 
Guidon  v.  Robson.  1182. 
Guild  I'.  Belcher,  201,  2()4. 
Guilford  v.  Sup.  of  Chenango  Co.,  1556. 
Guillaume  v.  Hamburg,  &c.  Packet  Co., 

1740. 
Guion  V,  Doherty,  1260. 
GuUett  V.  Hoy,  725. 
Gunson  v.  Mentz,  1110, 1159. 
Guptill  V.  Home,  681. 
Gurney  v.  Behrend,  1727,  1750. 

V.  Langlands,  1219. 

T,  Womersley,  731,  1269. 
Gustine  v.  Union  B'k,  1322. 
Guy  V.  Bibend,  185. 
V.  Harris,  36. 
V.  Hill,  1217. 
Gwinnell  v.  Herbert,  705,  715. 

Hackettstown  Nat.  B'k  v.  Rea,  924. 
Hackney  v.  Jones,  105,  664. 
Hadden  v.  Rod  key,  664. 
Haddock  v.  Crocheron,  370,  871,  373. 
V.  Murray,  1124. 
V.  Woods,  56. 
Hagey  v.  Hill,  1322. 
Hague  V.  French,  66. 
Haight  V.  Brooks,  1766. 
V.  Joyce,  807. 
V.  Naylor,  302. 
Haile  v.  Pierce,  418. 
Haines'  Adm'r  v.  Tannant,  226. 
Haines  v.  Dennett,  1217. 

r.  Dubois,  978. 
Hair  v.  La  Bronse,  81. 
Hale  T.  Burr,  1144,  1179. 
V.  Clouser,  1385. 
V.  Gerrish,  231,  233. 


Hale  V.  Houghton,  1522, 

V.  Wall,  222. 
Halford  v.  Cameron's,  Coalbrook  &  Co.. 

387. 
Halifax  v.  Lyle,  535. 
Hall  V.  Allen,  643,  812. 

V.  Auburn  Turnpike  Co.,  386. 
V.  Bradbury,  305. 
V.  Feathers,  815,  817. 
V.  Fuller,  1408,  1658. 
V.  Hale,  775. 
V.  Henderson,  187. 
V.  Keese,  173. 
V.  McHenry,  1387. 
V.  Newcomb,  709. 
W.Phelps,  112,1220. 
«.  Rodgers,  1763. 
V.  Shorter,  128,  130. 
V.  Smith,  361,611,  1613. 
V.  Tafts.  100 

V.  Wilson,  751,  752,  758,  775,  807, 
840. 
Hallenbeck  v.  Hahn,  1523. 
Hallett  V.  Holmes,  1319. 
Halley  v.  Adams.  25. 

V.  Falconer.  700. 
Halliday  v.  Hart,  1327. 

V.  Martinett,  1057. 
Hallock  r.  Jaudin,  124,  125. 
Hallowell,  &c.  B'k  v.  Howard,  1673, 1689, 

1691. 
Halls  V.  B'k  of  State,  324. 
Halsey  v.  Lange,  724. 
Halstcad  v.  Brown,  1317. 

V.  Skelton,  519,642,  1519. 
V.  The  Mayor,  482. 
Haly  V.  Brown,  1116. 

V.  Lane,  242,675,  1116. 
Hamber  v.  Roberts,  1218. 
Hamer  v.  Moore,  25. 
Hamilton  v.  Cunningham,  1277. 
T.  Hooper,  1387. 
V.  Marks,  775,  796. 
V.  Newcastle  R.  R.  Co.,  382, 

402. 
V,  Scull's  Adm'r,  194. 
1),  Seaman,  370,  373. 
V.  Summers,  369. 
V.  Vought,  775,  795. 
V.  Wafson,  1309. 
Hammin  v.  Richardson,  670,  G72. 
Hammond  v.  Barclay,  491,498. 

i\  Duferne,  1070,  1080. 
V.  Hopping,  207. 
Hammond's  Case,  1219. 
Hamper,  c.r  parte,  351. 
Hapgood  r.  Watson,  354. 
Hauauer  t.  Duane,  200,  204,  789. 
V.  Grav,  199. 
V.  Woodruff,  171. 


xlvi 


T7ie  re/erericei]        T^VJJLK     OF     CASES.        {are  to  the  sections. 


llance  k.  .Miller,  694,  1195,  1788. 
Hancock  IJ'k  r.  Joy,  3.")2,  ()81. 
Hand  r.  Armstrong,  172,  1458a. 
llanircr  c.  Abbott,  iXS. 
Ihinkcy  v.  Iliiiitor,  1251. 
('.  Trotman,  012. 
Ilannilial,  kc.  II.  R.  Co.  v.  Marrion  Co., 

1545,  1548.  15(50,  1564. 
TLinnum  v.  Richardson,  670,672. 
llaurick  c.  Andrews,  920. 

T.  Fanners'  B'k,  1450. 
Hansard  v.  Robinson,   1228,  1475,  1476, 

1477,  1482,  1023. 
Hansborger  r.  Geigher,  1318. 
Hansborongh  w  Gray,  i:};35. 
Ilansom  r.  Crawley,  1400. 

v.  Vernon,  1528. 
Harbcck  c.  Craft.  1587,  1588,  1652. 

V.  Vanderbilt,  1492. 
Ilarbert  r.  Dnment,  1:517,1322. 
Harbison  r.  H'k  of  Indiana,  815. 
Hardeman  i\  B'k  of  Middleton,  359. 
Harden  i\  Boyce,  l(i6n. 
Harding  v.   Rockford,    &c.   R.  R.   Co., 
1551. 
V.  State,  145. 
Hardman  v.  Hellhouse,  1289. 
Hardy  /•.  Merriman,  382. 

v  Merri weather,  385. 
V.  Norton,  142. 
V.  Waters,  227. 
T.  Woodroofe,  635. 
Hare  v.  llentv,  332,  601, 1592. 
Harger  v.  Wilson,  752,  758,  766. 
Hargons  r.  Lahens,  1455. 
Hargreave  v.  Smee,  1755. 
Htirick  V.  Jones.  700. 
Harkcr  v.  Anderson,   1567,  1587,  1595, 

1600.  1007. 
Ilarley  v.  Thornton,  737,  1676. 
Harman  r.  Howe,   80. 
Ilarmer  r.  Killing,  235. 
r.  Steele,  1285. 
Harner  v.  Dipple,  223. 
Harper  r.  Butler,  883,  904. 
V.  Calhoun,  392. 
v.  Clark,  124,  125. 
V.  Hampton,  891. 
V.  West,  491. 
Harrel  v.  Bixler,  610. 
Harriman  r.  Hill,  1190. 

V.  Sanljorn,  50. 
Harrington  r.  Fry,  1218. 

V.  Stratton,  202. 
Harris  v.  Bradley,  672. 

V.  Brooks,  1309,  1332,1336. 

V.  Clark,    18,   19,  21,  22,  25,  50, 

451.4  55,594. 
V.  Lewis,  49. 
V.  Memphis  B'k,  1032,  1034. 


Harris  v.  Nichols,  790,  797. 
V.  Rolnnson,  991. 
V.  Shipwav,  1274. 
V.  Wall,  230. 
Harrisburg  B'k  r.  ]\Ieyer,  789. 
Harrison  r.  Bailey,  l648. 
V.  Close,  1294. 
V.  Courtland.  1335. 
r.  Crowder,  (iOo. 
V.  Edwards,  889,  895. 
V.  Field,  1298. 
V.  Firth,  805. 
V.  McClelland,  262,  203. 
V.  Pike,  679. 
V.  Richardson,  209. 
V.  Robinson,  1055,  1115,  1116. 
V.  Ruscoe,  979,  981,  989,  990, 

991,  998. 
V.  Shurburn,  698. 
V.  Stacy,  884. 
V.  Williams,  20. 
V.  Wortham,  1425. 
Co.  Justices  «.  Holland,  1557. 
Harrop  v.  Fisher,  744. 
Harrow  v.  Dugan,  1189. 
Hiirsh  v.  Klepper,  1411. 
Harshinor  v.  Bates  Co.,  1524,  1535</. 
Hart  V.  Boiler,  1208,  1273. 
V.  Eastman,  996. 
V.  Hudson,  1789. 

V.  Mo  ,  &c.  F.  &  M.  Ins.  Co.,  386. 
v.  Potter,  309. 
V.  Smith,  017. 

V.  Stephens,  254,  257,  1184. 
V.  Stickney,  787. 
Harter  v.  Moore,  1317. 
Hartford  B'k  v.  Barry,  572,  624. 
V.  Green,  654. 
1).  Stedman,     572,     1005, 
1035.  1039. 
F.  Ins.  Co.  V.  Wilcox,  275. 
Hartley  v.  Case,  982,  1030.  1235. 
V.  Manton.  1290,  1291. 
V.  Rice,  190. 
V.  Wharton,  231. 
V.  Wilkinson,  59,60,  79,  151. 
Hartman  v.  Shaffer,  180. 
Harvey  r.  Archibald,  923. 
V.  Irvine,  944. 
v.  Martin,  499. 
V.  Smith,  1400. 
V.  Towers,  100,  808. 
V.  Troupe,  1149,  1105,  1107. 
Harwood  v.  Jarvis,  1086. 
Hasbrouck  i'.  Milwaukee,  1556,  1563. 

V.  Palmer,  56. 
Hascall  v.  Life  Ass.  of  America,  485. 

V.  Whitmore,  803. 
Hasey  v.  Wli;te  Pigeon  Beet  Sugar  Co., 
424,  482. 


Thereferencetil        TABLE     OF     CASES.        [are  to  t/te  sections.       xlvii 


Haskell  v.  Boardman,  1040,  1041,  11:31, 
1139. 
V.  Champion,  1387. 
V.  Cornish,  40(). 
V.  Mitchell,  741,  745. 
Haslett  V.  Ehrick,  104:}. 

V.  Kunhardt,  1111. 
Hastings  v.  Pepper,  1721). 
Hatch  V.  Burrough,  197,  807. 
V.  Frays,  108. 
V.  Searles,  147. 
Hatcher  v.  Stahvorth,  503. 
Hatchett  v.  Baddelev,  243,  246. 
Hatfield  p.  Phillips, '1731. 
Hathwick  v.  Owen,  99. 
Hatten  v.  Robinson,  1(587. 
Hauer  v.  Patterson,  719. 
Haughton  i\  Ewbauk,  296. 
Havemeyer  v.  Iowa  Co.,  1523,  1525. 
Haven  v.  Grand  June.  R.  R.  Co.  1491, 
1492. 
v.  Hobbs,  299. 
Havens  v.  Talbott,  1105. 
Haverhill,  &c.  Ins.  Co.  t\  Newhall,  403. 
Haverin  v.  Donnell,  81,  517. 
Hawkes  v.  Phillips,  713,  1760. 
V.  Salter,  1041,  1054. 
1).  Saunders,  182. 
Hawkey  v.  Borwick,  635. 

V.  Foote,  1260. 
Hawkins  v.  Cardy,  668. 
t\  Rutt,  1024. 
■i\  Watkins,  56. 
Hawks  V.  Hiuchliff,  1266. 
Hawley  v.  Sloo,  918. 
Hawse  v.  Crowe,  1269. 
Haxtun  v.  Bishop,  645, 1181,  1685,  1691, 

1692. 
Hay  V.  Ayling,  204. 

V.  Goldsmidt,  292,  293. 
Haydock  ».  Lynch,  50,  101. 
Hayes  «.  Canfield,  748. 
«.  Caulfield,  607. 
i\  Ward,  1311. 
V.  Warren,  182. 
Haynes  v.  Birks,  992,  1036,  1039,  1043, 

1285. 
Hays  V.  Crutcher,  403. 
V.  McClurg,  1275. 
V.  Myrick,  1320. 
v.  N.  W.  B'k,  970. 
V.  Stone,  1268. 
Hayward  v.  B'k  of  England,  055. 
V.  French,  257. 
r.  Pilorim  Soc,  383. 
Hazard  v.  White,  1093,  1147,  1156,  1317. 
Hazlehurst  v.  Franklin,  921. 
Hazleton  v.  Union  B'k,  1702. 
Headly  v.  Reed,  1045. 
Healey  v.  Story,  402. 


Healy  r.  Oilman,  1588, 1596, 1646, 1647. 

V.  Gonnun,  919. 
Heane  v.  Rogers,  1220. 
Heard  >\  Stanford,  258. 
Ileartt  v.  Rhodes,  1623. 
Heath,  ex  jxtrte,  1077,  1085,  1170. 
V.  Samson,  165. 

V.  Silverthorn  Mining  Co.,  827. 
Heaton  v.  Ilulbert,  1781,  1786. 

r.  Knowlton,  193. 
Hedger  v.  Steavenson,  982,  983. 
Hedley  v.  Bainbridge,  358. 

V.  Reed,  1640. 
Heenan  v.  Nash,  302,  488. 
Hefi'elfingcr  c.  Shutz.  1420. 
Heffner  v.  Wenrick,  1418. 
Heffbrd  o.  Morton,  1305. 
Hefner  i\  Dawson,  1352. 

r.  Vandolah,  1352. 
Helborn  v.  Artus,  063. 
Helfeiistein's  Estate,  25. 
Heller  i\  Meis,  834. 
Hellings  r.  Hamilton,  1676. 
Helmer  v.  Krolick,  43,  770. 
Helmsley  v.  Loader,  287,  1220. 
Helper  v.  Aldeu,  32. 
Hemmenway  v.  Stone,  94,  1390. 
Hemphill  v.  B'k  of  Ala.,  147. 

V.  Hamilton,  267. 
Henchman  v.  Lybrand,  1282. 
Henderson  v.  Anderson,  1217. 
'D.  Cmnmings,  821. 
V.  Fox,  225. 
V.  Irby,  1469. 
V.  Johnson,  1764. 
V.  Palmer,  196. 
V.  Pope,  1576. 
V.  Franklin,  921,  1438. 
i\  Judah,  728. 
Adm.  V.  Thornton,  100. 
Berkowitz,  753. 
Dickinson,  1418. 
Henry  i\  Bishop,  112. 
V.  Coleman,  150. 
■V.  Jones,  620. 
v.  Lee,  003. 
V.  Ritenour,  184,  185. 
T.  Thompson,  1458a. 
Henshaw  p.  Dutton,  68. 
Hepburn  v.  Griswold,  1248. 
t.  Toledano,  1180. 
Hereth  v.  Mever,  50. 

V.  Merchants'  Nat.  B'k,  797,  803, 
804,  1394. 
Hern  v.  Nichols.  391. 
Herndon  v.  Givens,  1471. 
Herrick  v.  Baldwin,  1145,  1146. 
r.  Borst,  1339. 
V.  Maliu,  1418. 
V.  Woolvt^rton,  608.  1215. 


Hendricks 


Hendrie  v 
Henman  r 


The  references]         TA15LE     OF     CASES.        {are  to  the  secHom. 


lleniiiu-  i\  Kosee,  15G7, 1508,  1509, 1573. 
^   T.  Sanger.  1273. 
r.  Woodliull,  088. 
Ilcrscv  r.  Elliott,  2(>0,  085. 
llertei  /•.  B()',a-rt,  200. 
Ht'stonc  ;-.  Williamson,  004. 
Ik'thcrington  i\  Kemp,  1054. 
lloutih  r.  Jones,  248. 
Ilevev's  Case,  1345. 
Hew  ins  r.  Cargill,  1384. 
Hewill  V.  Goodrieb,  1318,  1327. 
T.  Kaye,  20. 
7\  Thompson,  1042. 
lleylin  r.  Adamson,  009. 
Ileyward  v.  lleyward,  250. 

r.  Stearns,  725. 
Ileywood  v.  Perrin,  79,  150,  154,  1410. 

V.  Waring,  1279. 
Ilihblewhitc  r.  McMowrie,  148. 
Hibernian  B'k  i\  Evcrman,  208,  725. 
Hiekerson  r.  Kaiguell,  790. 
Ilirkligg  r.  Ilardey,  450. 
Ilieks^r.  Brown,  921. 

1).  Hinde,  303,  311. 
Hidden  v.  Bishop,  790. 
Hier  v;.  Staples,  248. 
Higgins  i\  B.  K.  &  Aw.  &  M.  Co.,  1247, 
T.  Morrison,  999. 
T.  Nichols,  042. 
r.  Senior,  303. 
r.  Watson,  710,  1776. 
Highmore  t.  Primrose,  108. 
Uightower  i\  Ivey,  1093,  1172,  1327. 

r.  MauU,  87. 
Higley  r.  Newell,  70. 
Hilborn  r.  Alford,  74. 
nildel)urn  r.  Turner,  955. 
Hilder  i\  Seelve,  1476. 
Hill?'.  Altord'  41. 
v.  Allen,  043. 
T.  Barnes,  1418. 
V.  Bostick,  1200,  1327. 
T.  Buckminster,  179. 
T.  Calvin,  1785. 
V.  Cooley,  1379. 
r.  Ely,  721,  722. 
r.  Gaw,  80. 
V.  Halford,  41. 
^^  Heap,  450,  1105,  1170. 
r.  Henrv,  1211. 
r.  Kraft,  784,  800. 
V.  Lewis,  104,  105,  663,  669,  743. 
r.  Martin,  1170. 
r.  Norris,  1070,  1082. 
i\  Norvell,  020,  1027. 
T.  Planters'  B'k,  992. 
r.  Stevenson,  23. 
«.  Sutherland,  1250,  1251. 
t\  Todd,  54. 
V.  Varrcll,  1030,  1117. 


Hill  T.  Wilkes,  891. 
Hills  c.  Place,  042,  043. 
Hilton  V.  Houghton,  07. 

V.  Shepherd,  987,  1067,  1125. 
Himmelman  r.  Hotaling,  012,654,1590. 
Ilindhaugh  r.  Blakcy.  504. 
Hindley  i\  Marean.  880. 
Hine  e.  AUcby,  1030,  1119,  1235. 
Hinely  v.  Margaritz,  234,  235. 
Ilinesburgh  /'.  Sumner,  190. 
Hinsdale  v.  B'k  of  Grange,  1478,  1479, 
1482,  1093. 
V.  Miles,  1404. 
Hinton  t.  Bank  of  Columbus,  532. 
Hirschtield  v.  Smith,  94,  1391. 
Hitchcock  r.  City  of  Galveston,  1520. 

r.  Sawyer,  124. 
Hoar  11.  Da  Costa,  055. 
Hoare  v.  Cazenove,  521,  1527. 

r.  Graham,  79,  159,  719. 
Hobart  v.  Dodge,  89. 
Hobson  I'.  Davidson,  1741. 
Hodges  v.  City  of  Buffalo,  1519. 
n.  Eastman,  1 12. 
v.  First  Nat.  B'k,  394,  395, 
t\  Gait,  1029. 
V.  Hunt,  233. 

IK  Shuler,  52,  159,  970,  977. 
r.  Steward,  104. 
Hodgson  V.  Dexter,  445,  1504. 
Hoff  r.  Baldwin,  1050. 
Hofl'man  &  Co.  t.   B'k  of   Milwaukee, 

174,  175,  479,  533,  803. 
Hoffman  v.  Smith,  1082. 
Hogan  V.  Cuyler,  015. 
V.  Moore,  803. 
Hoge  t\  Lansing,  753. 
Hogg  V.  Skene,  309. 

V.  Snaith,  292,  293. 
Hogue  e.  Davis,  703. 
Hoit  V.  Underbill,  233. 
Holbrook  v.  Basset,  385. 
V.  Lackey,  1428. 
v.  Mix,  775. 
1}.  Vibbard,  899. 
Holcomb  v.  Wyckoff,  757,  758. 
Holden  r.  Cosgrove,  108,  177. 
Holdsworth  r.  Hunter,  114,  115,  116. 
Holeman  r.  Hobson,  181,  751,  814. 
llolford  r.  Wilson,  1105. 
Holladay  «.  Atkinson,  174,  179, 180,  227. 

V.  Sigil,  1408,  1471. 
Holland  t).  Hatch,  1398. 
V.  Turner,  1134. 
Holley  v.  Adams,  25. 
HoUiday  v.  Lewis,  07. 
HoUier  ■?;.  Eyre,  1334,  1330. 
Holbngsworth  v.  City  of  Detroit,  1513. 
IloUin's  V.  Fowler,  1372a. 
llolman  r.  Gilliam,  94. 


The  references]        TABLE     OF     CASES.        {are  to  the  secticma.         xll'x 


Holman  v.  Ilolson,  T58,  778. 

V.  Lanji'tree,  1276. 

V.  VVhitinu-,  1085,  ll.'i5. 
Holrao  V.  Karsi)err812,  814,  816. 
Holmes  V.  Crane,  173n. 

V.  Holmes,  257. 

V.  Hooper,  698. 

V.  Jacques,  101. 

V.  Kerrison,  619. 

V.  Kidd,  725 

x\  Smvtli,  832,  1057. 

V.  Triimper,  1406. 
Holroyd  v.  Whitehead,  1186. 
Holt  ».  Moore,  81. 
V.  Ross,  538. 
Holtz  V.  Boppe,  456,  591. 
Home  Ins.  Co.  v.  Greene,  978. 
Homer  v.  Wallis,  1392,  1410. 
Honored.  Blakewell,  1281. 
Hood  i\  Hallenbeck,  407,  418,  1095. 
Hooker  r.  Gallagher,  683. 
Hooper  v.  Keay,  1250,  1251,  1253. 

V.  Ruthbone,  1741. 

V.  Williams,  130. 
Hoovers  Assignee  v.  Wise,  344. 
Hope  V.  Gust,  366. 
Hopes  B.  Alder,  1158,  1162. 
Hopkins  v.  Adams,  1481,  1486. 

i\  Beebee,  22. 

V.  Crittenden,  1458rt. 

V.  Kent,  728. 

V.  Liswell,  1163. 

V.  MehafltV,  307. 

V.  R.  R.  Co.,  32. 

V.  Richarson,  1763. 
Hojikinsou  v.  Forster,  1567,  1636,  1637, 

1638,  1639,  1645. 
Hopkirk  ».  Hage,  664,  748,  1074,  1076, 

1080. 
Hopley  V.  Dufresne,  1153,  1155. 
Hopper  v.  Eiland,  63. 
Horah  v.  Long,  1187,  1189. 
Hornblower  v.  Prond,  827. 
Home  V.  Planters'  B'k,  1353. 

D.  Redlearne,  40. 
Homes  v.  Hale,  850. 
Horst  V.  Wagner,  1415. 
Horton  v.  Bayne,  796,  812,  815, 
Hortons  v.  Townes,  291,  823. 
Hortonsman  v.  Hensbaw,  538,  534,  538, 

1354,  1356.  1363,  1366. 
Hotchkiss  V.  Mosher,  704. 
Hougb  v.  Barton,  1473,  1482,  1483. 

V.  Gray,  1779. 
Houghton  «.  Adams,  1676. 
V.  Francis,  1398. 
Housatonic  B'k  i\  Laflin,  979,  983. 
House  V.  Adams,  1059, 1060,  1070, 1071. 
Housego  V.  Cowne,  972,  1017. 
Houston  V.  Banner,  712,  1017. 

Vol.  I.— D 


Housum  V.  Rogers,  1089. 
Houx  v.  Russell,  1687. 
Hovey  v.  Bannister,  403. 

V.  Magill,  404. 
Howard  v.  Bowman,  643. 

V.  Central  B'k,  1453. 
V.  Duncan,  1351. 
V.  Ives,  331,  992,  1039,  104-3. 
V.  Mississippi  Valley  B'k,  1359, 
V.  Oakcs,  254. 
v.  Palmer,  105. 
V.  Windham  Co.,  1185. 
Howe  V.  Bowes,  1119. 

V.  Bradley,  979,  984,  1018,  1019. 
V.  Carpenter,  124,  125. 
V.  Hale,  1483. 
V.  Litchfield,  194. 
«.  Merrill,  707,  719,  759. 
«.  Quid,  63. 
v.  Potter,  758. 
V.  Purves,  1390. 
V.  Wildes,  340. 

Knox  &  Co.  V.  Quid  &  Carring- 
ton,  63. 
Howell  V.  Crane,  174,  728,  786,  808. 
V.  Jones,  789,  1789. 
V.  Wilson,  899. 
Howry  v.  Eppinger,  51,  775. 
Hoyt  V.  Lynch,  73. 
v.  Macon,  204. 

V.  Seeley,  1586,  1587,  1596,  1653. 
V.  Thompson,  317,  395. 
V.  Wilkinson,  1204. 
Hubbard  v.  Chapin,  758&,  808. 
i\  Gurney,  1339,  1338. 
1).  Harrison,  62. 
V.  Jackson,  1237,  1343. 
V.  Matthews,    333,    593,    861, 

998,  999. 
V.  Rankin,  85(7. 
V.  Town  of  Lyndon,  433. 
V.  Troy,  926. 
V.  Williams,  1402. 
Hubbell  V.  Flint,  200,  1250. 
Hubbersty  v.  Ward,  1733. 
Hubble  V.  Fogartie,  108. 
Hubbly  V.  Brown,  1305. 
Huber  v.  Steiner,  884. 
Hubner  v.  Richardson,  306. 
Hudson  V.  Goodwin,  1195. 
V.  Matthews,  616. 
Huedekopcr  v.  Buchanan  Co.,  1553. 
Huff  V.  Wagner,  758. 
Huffiiker  v.  \\atioual  B'k,  656,  946. 
Huffman  v.  Walker,  1221. 
Hughes  r.  Bowen,  1147,  1148. 
V.  Kiddell,  668. 
v.  Large,  725,  1437. 
V.  Nelson,  260.  7!  3,  744. 
V.  Wheeler,  108,  1274. 


J7ie  references]       TAT)LK     ()F     CASES.        [are  to  the  sections. 


Hull  V.  Blake,  800. 

V.  Conover,  574,  741,  1197. 
Hulme  V.  Tenant,  247. 
v.  Turner,  207. 
Humboldt  Townshij)  v.  Long,  1.542. 
Hume  r.  "Watt,  !iO<J. 
lluniphrcv  r.  llitt,  1311.  1839. 
llumphrevs  v.  Bieknell,ir)80, 1.587, 1590. 
r.  Chastain,  370,  683. 
V.  Clement,  1247. 
V.  Guillow,  1390,  1402. 
Humphreyville  v.  Culver,  1181,  1198. 
Hunt  V.  Adams,  74,  94,  1332,  1404, 17G3. 
V.  Aldrich,  1190. 
V.  Bell,  195. 
V.  Divine,  56,  1707. 
V.  Gray,  1418. 
V.  Hall,  918. 
V.  Jobnson,  891. 
V.  Massey,  230. 
V.  Maybee,  586,  656,  1144. 
T.  Sauford,  775,  778. 
V.  Standart,  879,  898,  899,  901. 
V.  Stewart,  1218. 
V.  Wadleigh,  1173. 
Hunter,  ex  parte,  1612. 
V.  Blodgett,  186. 
V.  Cobb,  126. 
V.  Hempstead,  694. 
r.  Hook,  1103,  1149. 
V.  Ingraliam,  514. 
V.  Jetfrev,  736. 
V.  Jett,  1320. 
V.  Van  Bondiorst,  969, 
V.  Wilson,  174. 
Huntington  v.  Branch  B'k,  147,  848. 
V.  Finch,  1890,  1420. 
V.  Harvey,  1147,  1804. 
V.  Wellington,  1763. 
Huntley  i\  Sanderson,  1045. 
Huntzinirer  v.  Jones,  1646. 
Hurd  i-.  Hall,  732. 

1).  Little,  1328. 
Hurst  V.  Chambers,  731. 
Husband  v.  Epling,  41. 
Huse  V.  Alexander,  1266. 

V.  Hamblin,  56,  57,  1706. 
Husk  V.  Smith,  870. 
Hussey  v.  Freeman,  6,  1106. 
V.  Jacob,  6,  521,  525. 
t).  Sibley,  731,  734. 
V.  Winslow,  88,  78. 
Huston  V.  Noble,  1245. 
V.  Weber,  127G. 
V.  Young,  83,  680. 
Hutchings  v.  Olcutt,  1260,  1279. 
Hutchinson  v.  Bogg,  177,  815. 

V.  McCann,  766. 
Hutton  V.  Eyre,  1291. 
Huyck  V.  Meador,  38,  39. 


Hyde  r.  First  Nat.  B'k,  341,  344. 

V.  Franklin  Co.,  4-22.  427,  435. 

V.  Goodnow,  867,  868,  879. 

V.  Page,  303,  305. 

V.  Planters'  B'k,  341. 

V.  Price,  243, 

V.  Stone,  1159. 
Hyslop  V.  Clark,  204. 
V.  Jones,  1003. 

Ide  V.  Ingraham,  374. 

Ihmsen  r.  Nesley,  857. 

Illinois  Cent.ll.  K.  Co.  v.  Owens,  1732. 

Hsley  r.  Jones,  562,  564. 

V.  Stubbs,  1 73. 
Indiana,  &c.  B'k  v.  Colgate,  1731,  1734. 
Indiana,  «fec.  R.  R.  Co.  r.  Davis,  424. 
Ingalls  r.  Lee,  669,  674,  701,  766. 
Ingcrsoll  r.  Long,  899. 
Ingraham  r.  Gibbs,  114. 
Ingram  r.  Forster,  492. 
IniialMtants  /•.  Weir,  422. 
Innes  r.  Munro,  159. 

v.  Stephenson,  1612. 
International  B'k  i\  German  B'k,  1706. 
Ireland  v.  Kip,  1014,  1016. 
Irish  V.  Cutter,  715. 
T.  Nutting,  26. 
r.  AVebster,  448. 
Irvin  V.  Maury,  5. 
Irvine  «.  Lowry,  56. 
Irving  B'k  r.  Wetherald,  135,  493,  1608. 

.1610,  1621,  1655. 
Irwin  v.  Brown,  31. 

V.  Planters'  B'k,  1479. 
Isaac  V.  Daniel,  1319. 
Isbery  v.  Bowden,  1429. 
Iser  V.  Cohen,  710. 
Isnard  v.  Towe.s,  1405. 
Israel  v.  Douglas,  23. 

V.  Israel,  30. 
Ives  ».  Bosley,  710,  713. 

V.  Farmers'  B'k,  142,  146. 
Iveson,  ex  jxirte,  56. 
Ivory  V.  B'k  of  State,  327,  1574. 

V.  Micheal,  142,  1385,  1408. 

Jaccard  t\  Anderson,  1094,  1095. 
Jack  V.  Morrison,  713. 
Jacks  ».  Darrin,  1049,  1105,  1473,  1596. 
V.  Moore,  1425. 
V.  Nichols,  92'3. 
Jackson  v.  Brown,  382. 

V.  Claw,  398. 

V.  Gumaer,  213. 

t\  Henderson,  622. 

V.  Hudson,  98,  485. 

V.  Jiickson,  162,  1471,  1479. 

V.  King,  208. 

t.  Newton,  598. 


The  reference»\        TABLE     OF     CASES.        {(ire  to  the,  secUoM. 


Jackson  v.  Packer,  050,  1217. 
X.  Parks,  241. 
v.  Phillips,  1219. 
®.  Pigot,  491. 

w  Richards,  1035,  1083,  1173. 
«.  Union  B'k,  341. 
V.  Van  Duseu,  208. 
v.  Vicksburg,  &c.  R.  R.,  1501. 
V.  Walker,  196. 
v.  Yendes,  1785. 
v.  Y.  &  C.  R.  R.  Co.,  1511. 
Jackson  County  v.  Hall,  1491. 
Jacobs  v.  Benson,  100. 

v.  Hart,  1376,  1404, 
«.  Town,  1017. 
Jacquin  «.  Warren,  36,  119. 
Jaffray  «.  Dennis,  919. 
James  v.  Badger,  1327. 

«.  Catherwood,  913,  914. 
».  Johnson,  1433,  1492. 
V.  Roger's,  78. 
«.  Taylor,  250. 
«.  Wade,  1060,  1070,  1147. 
Jameson  «.  Swinton,  601,  987,  990,  1038, 

1044. 
Jansen  v.  Thomas,  617. 
January  v.  Goodman,  112. 
Jaqua  v.  Montgomery,  862. 
Jarvis  v.  Garuett,  636. 

®.  St,  Croix  Manf.  Co.,  1033. 
Jeflfersou  Co.   B'k  «.    Chapman,    1673, 

1690. 
Jeffries  v.  Austin,  174. 
Jefts  V.  York,  307. 
Jenkins  v.  Hart,  33. 

V.  Hutchinson,  307,  485. 
v.  Morris,  362. 
«.  Reynolds,  1764. 
'v.  Shaub,  824. 
V.  Temples,  196. 
Jenks  V.  Barr,  1289. 

v>.  Doylesburg,  656. 
Jenners  v.  Howard,  314. 
Jenney  v.  Hearle,  50. 
Jennings  v.  Roberts,  979,  989. 
v.  Thomas,  710,  716. 
Jennison  ».  Parker,  826,  1276. 

v.  Stafford,  827. 
Jenys  v.  Fawler,  533. 
Jeune  «.  Ward,  499,  500,  682. 
Jewell  V.  Parr,  1206. 

v.  Wright,  808,  908,  924. 
Jewitt  V.  Smith,  261. 
John  V.  Farmers'  B'k,  93. 
Johnes  x.  Pha3nix  B'k,  334. 
Johnson,  ex 'parte,  1172. 

®.  B'k  of  Fullerton,  933. 
v.  B'k  of  U.  S.  1395. 
V.  Barney,  1701,  1703. 
v.  Bentley,  1565. 


Johnson  v.  Berlizheimcr,  370. 

V.  Bhisdale,  147. 

V.  Carfjenter,  748,  854. 

«.  Chadwell,  211. 

v.  Cleaves,  1268. 

V.  Collins,  555,  558,  559. 

V.  Crossland,  62. 

V.  First  Nat.  B'k,  1364,  1657. 

«j.  Frisbie,  54. 

v.  Gilbert,  1703. 

«.  Haith,  1175. 

V.  Heagan,  150,  154,  1897. 

».  Johnson,  1250. 

V.  Josey,  738 

V.  Kennion,  1237. 

V.  Kent,  1429. 

V.  Lane's  Trustees,  71. 

V.  Mangum,  680. 

V.  Martlnus,  717. 

«.  Meeker,  198,  808. 

®.  Searcv,  1094. 

v.  Smith,  307,  403. 

V.  Stark,  663. 

«;.  Stark  County,  317,1497,1500. 
1509,1511,1512,1514,1524. 

».  Thayer,  21. 

%\  Titus,  202. 

v.  Way,  775,  769. 

?'.  Weed,  1272. 
Joliffe  ».  Higgins,  161, 
Jones  V.  B'k  of  Iowa,  553. 
V.  Berryhill,  790. 
».  Broadhurst,  1337,  1339,  1240. 
V.  Brown,  1317. 

V.  Darch,  93,  337,  393,  535,  536. 
v.  Dever,  24. 

V.  Fales,  55,  56,  150,154,616.658, 
1048,  1383,  1410,  1473,  1478, 
1481. 
V.  Fort,  576,  1229. 
«.  Heiliger,  1600. 
«.  Hibbert,  756. 
«.  Hook,  884. 
V.  Ireland,  1401. 
V.  Jones,  182,  1218. 
v.  Lane,  1199. 
«.  Lathrop,  313. 
«.  Le  Tom  be,  439. 
®.  Lewis,  1015,  1023. 
».  Mars,  288 . 
v.  Middleton,  611,  996. 
V.  Nellis,  663. 
V.  O'Brien,  1158. 
V.  Ryde,  731,  1675. 
v.  Savage,  1149,  1159,  127 
•0.  Shelbyville  Ins.  Co.,  142. 
«.  Simpson,  53. 
V.  Strawhan,  1260. 
V.  Thayer,  1758. 
V.  Thorn,  683. 


The  roferenceis^,        TABLE     OF     CxVSES.        \<ir6  to  the  sections. 


Jones   V.  Thornton,  370. 
V.  Turnonr,  1218. 
r.  WanU'll.  105:3. 
Jordainc  v.  1-aslibrookc,  14,  1217. 
Jordan  r.  Bell,  14.")8. 

v.  Tarkington,  534. 

V.  Tate,  43, 

V.  Thomas,  1389. 

V.  AYheden,  473. 

V.  Whittier,  741,  748. 
Joseph  r.  Nat.  B'k,  142. 
Josselyn  v.  Lacier,  50,  IGl. 
Jiidah  V.  Harris,  50. 
Judd  V.  Smith,  1580. 
Judson  V.  Corcoran,  747. 
Julian  V.  SlK)rtl)rook,  508,  509. 
Juniata  B'k  v.  Hale,  591,  972,  988,  1175, 
1177. 

Kalinweiler  i).  Anderson,  20,  21 . 
Kamm  v.  Holland,  708,  716. 
KanaLia  v.  Tavlor,  807. 
Kasson  r.  Smith,  789,  794. 
Kaufman  v.  Barringcr,  497. 
Kay  ».  Brookman,  112. 

v.  Ducbesse  de  Peiune,  245. 
Kayser  ®.  Hull,  716. 
Kean  r.  Davis,  411. 
Kearney  v.  King,  11, 1580. 

r.  West  Granada  Mining  Co., 
113. 
Kearslake  v.  Morgan,  1272. 
Kearsley^.  Cole,  1295,  1322. 
Keefe  v.  Volge,  196. 
Keeleri'.  Bartine,  1290. 
Keene  v.  Beard,  1567,  1587,  1638,  1652 

1653. 
Keith  V.  Jones,  56. 
Kcithsburg  t\  Frick,.317,  1545. 
Kellers.  Hicks,  429. 
v.  Weeks,  422. 
Kelley  i).  Brown,  1149,  1584. 
V,  Hemmingway,  46. 
V.  Mavor  of  Brooklyn,  420,  427 
430.  433,  434,  1520. 
Kellogg  v.  Bndlong,  1687. 

V.  Dunn,  715. 

V.  Fancher,  800,  832. 

V.  French,  800. 

V.  Schmaake,  782. 

®.  Steiner,  849. 
Kelly  1).  Scripture,  1734. 
Kelmer  v.  KroUick,  834. 
Kelsey  v.  Ilibbs,  76. 
Kelso  r>.  Frvc,  152. 
Kelty  v.  Bank,  1590. 
Kembler.  Christian,  830. 

t".  Lull,  517,  534. 

V.  Mills,  1084,  1596. 
Kemp  t.  Balls,  1235. 


Kemp  r.  Findcn,  1341. 
Kendall  «.  Galvin,  108. 

t).  Roberson,  197,  198. 
Kendrick  v.  Campbell,  551. 
i;.  Forney,  1342. 
V.  Lomax,  1266,  1829,  1458, 
Kennan  ®.  Nash,  485. 
Kenuard  v.  Cass  Co.,  1509,  1510. 

v..  Knott,  1319. 
Kennedy  i\  Geddes,  551,  552,  556,  1045. 
V.  Knight,  894. 
V.  Lancaster  Co.  B'k,  1418. 
V.  Murdick,  196. 
Kenner  v.  Creditors,  508,  633. 
Kennicott  r.    Supervisors,     1520,    1523, 

1537, 1550. 
Kenningham  r.  Bedford,  1317. 
Kennon  r.  ^fcRae,  611,1048,1110,1148, 

1163,  1195. 
Kenny  v.  Hinds,  50. 
Keut'y  Reynolds,  1243. 
V.  Rogers,  1431. 
V.  Warner,  1048. 
Kenyon  v.  Williams,  303,  305. 
Kephart  ;;.  Butcher,  1276. 
Kern  v.  Van  Phul,  903,  1093. 
Kernodle  v.  Hunt,  203. 
Kerrison  v.  Cooke,  1333. 
Kershaw  v.  Cox,  1395,  1402,  1404. 
Ketchum  i\  City  of  Buffiilo,  383,  1530. 
v.  Duncan,  1491. 
V.  Gray,  1779. 
Key  V.  Flint,  790. 

V.  Knott,  1671. 
Keyes  v.  Fenstermaker,  606,  1163. 

V.  Winter,  1085. 
Keymer  «.  Lawric,  326. 
Kidder  ».  Blake,  204. 

».  Norris,  1252. 
Kidson  «.  Dilworth,  717. 
Kierstead  v.  Rogers,  1194. 
Kilgore  v.  Bulkley,  622,  634,   979,  983, 
1703. 
V.  Dcmpsey,  922,  923. 
Kilgour  «.  Finlavson,  292,  360,  373. 
Kilkelly  v.  Martin,  1385. 
Kill i an  «.  Ashley,  713. 
Killough  V.  Alford,  1247. 
Kimball  ®.  Bittner,  314. 
V.  Bowen,  963. 
i;.  Cleveland,  392. 
w.  Huntington,  39,  163. 
Kimble  %\  Christian,  852. 
Kimbro  v.  B'k  of  Fulton,  1684. 
V.  Bullit,  358,  368. 
t).  Holmes,  638. 
ti.  Lytle,  793. 
Kincaid  v.  Higgins,  80. 
Kinchloe  v.  Holmes,  1785. 
Kine  «.  Beaumont,  1051. 


The  references]       TABLE     OF     CASES.       [are  to  the  sections.  \\\\ 


King  ».  Baldwin,  1311,  1339. 
V.  Buckley,  983,  985. 
V.  Croweli,  G37,  G38.  054,  1086. 
V.  Dedhani  B'k,  1G85. 
V.  Doolittle,  833. 
V.  Faber,  358. 
V.  Fleece,  1193. 
'c.  Flemiucf,  69. 
V.  Gillet,  1288. 
t.  Hoars,  1294,  1296. 
V.  Holmes,  638. 
1}.  Hourie,  94. 
i\  Johnson,  700. 
V.  Lambton,  63. 
V.  Milsom,  1470. 
V:  Morrison,  1294. 
«.  Rid^-e,  753,  763. 
V.  Thorn,  263,  263,  268,  270. 
Kingsberi-y  v.  Pettis  County,  433. 
Kingsbiu'y  v.  Butler,  88. 
Kingsley  V.  Buchanan,  1283. 
V.  Robinson,  1083. 
Kingston  B'k  r.  Ettinge,  1363. 
Kinney  v.  Ford,  67. 

V.  Heald,  449. 
V.  Kruse,  818. 
Kinyon  v.  Wohlford,  769,  837. 
Kirby  v.  Duke  of  Marlborough,  1350. 

V.  Sessin,  1475. 
Kirk  V.  Blurton,  361,  363. 

x\  Dodge  Co.  Mut.  Ins.  Co.,  53. 
V.  Strickwood,  196. 
Kirkman  «.  B'k  of  America,  67. 
V.  Benham,  263,  263. 
V.  Boston,  719. 
Kirkpatrick  v.  McCuUough,  996. 
Kirksey  v.  Bates,   946,  1338. 
Kirsliner  v.  Conklin,  703. 
Kirtland  v.  Wanzer,  887,  928,  959. 
Kitchen  v.  Bartsch,  1231. 

V.  Place,  1406. 
Kittle  «.  DeLamater,  783. 

V.  Wilson,  1317. 
Klein  v.  Boernstein,  1018. 
v.  Currier,  713,  1760. 
V.  Keys,  174. 
Klockenbaum  v.  Pierson,  979. 
Klosterman  v.  Loose,  405. 
Knapp  V.  Grant,  1560,  1561. 

V.  Mavor  of  Hoboken,  420. 
V.  McBride,  369. 
Knight  V.  Hunt,  194. 
V.  Jones,  99. 
V.  Leigh,  1468, 1483. 
«.  Lord  Plynioutli,  287. 
V.  McRcynolds  49. 
t.  Packard,  1317. 
V.  Pugh,  165,  814. 
Knights  y.  Putnam,  750. 
Knill  V.  Williams,  1394. 


Knott  X.  Venable,  617,  1033. 
Knox  V.  Clitford,  837. 

■V.  Lee,  1348. 

V.  Ileedside,  513,  514. 

v.  The  Nivella,  1729. 

Co.  «.  Aspinwall,  317,  1523. 
Koch  V.  Howell,  499. 
Kock  V.  Bringer,  1005. 
Kohlen  v.  Smith,  1458. 
Konig  V.  Bayard,  530,  534,  993. 
Koontz  v.  Central  Nat.  B'k,  1373. 
Kost  V.  Bender,  805. 
Kountz  11.  Kennedy,  1415. 
Kramer   «.    Sanford,  1130,   1134,    1137, 

1139,  1142. 
Krampt's  Ex.  i\  Hatz's  Ex,  1753. 
Krumbaar  v.  Ludeling,  311. 
Kuhns  V.  Gettysburg  Nat.  B'k,  1052. 
Kunezi  v.  Elvers,  891,  898. 
Kuntz  V.  Tempel,  637,  710. 
Kuph  V.  Weston,  1031. 
Kyle  V.  Bostick,  1317. 

t\  Green,  1133,  1135. 
V.  Thompson,  576. 
Kyner  v.  Shower,  713. 

Lacoste  v.  Harper,  1079. 
Lacy  D.  Holbrook,  56. 

V.  Kinnastou,  1391. 
Ladd  V.  Baker,  94. 

1).  Kenuey,  1153. 
V.  Rogers,  141. 
Lafayette   I3'k  v.  St.  Louis  Stoneware 
Co.,  386. 
V.  State  B'k,  393. 
Lafitte  V.  Slatter,  1076. 
Lagow  «.  Badollet,  1381. 
Lagrue  ■v.  Woodruff,  553. 
Laing  v.  Barclay,  109,  503,  1455. 

V.  Meader,  1338. 
Lake  v.  Haynes,  669. 
V.  Reed,  775. 
V.  Stetson,  715. 
V.  Trustee,  433,  433. 
V.  Tysen,  71. 
Lamb  v.  Durant,  1737. 

V.  Moberly,  1468,  1483. 
Lambarde  i\  Older,  1432. 
Lambert,  ex  parte.,  1255. 

y.  Ghiselin,   1050,  1055,  1058, 

1115,  1335. 
».  Heath,  734. 
i\  Jones,  18,  913,  914. 
r.  Sandl'ord,  1335. 
Lamon  «.  French,  514. 
Lamorieux  v.  Hewit,  1784. 
Lampkin  v.  Nye,  630. 
Lamptou  v.  Haggard,  56. 
Lancaster  Nat.  B'k  i\  Smith,  386. 

V.  Taylor,  706,  745. 


TAe  re/erencen}        TABLE     OF     CASES.        [are  to  the  sections. 


Lancaster  Nat.  B'k  r.  Woodward,  1633, 

4G47. 
Lancy  v.  Clark,  1221. 
Land  r.  Cowan,  liiS. 
Landrum  v.  Trowbridge,  449,  4. 54, 1152, 

1154. 
Landry  v.  Stansl.urv,  1177,  1179. 
Lane  v.  B'k  of  Wc-t  'I'enn.,  1058,  1070, 
107;3,  1119. 
V.  Krekle.  93,  18G,  139. 
V.  Salter,  94. 
V.  Stacey,  704. 

V.  Stewart,  1093,  11G2,  11G5,  1196. 
Lanfair  v.  Sumner,  1737. 
Lanfear  v.  Blossman,  775. 
Lang  -v.  Gale,  624. 

V.  Smyth,  IIG,  1504. 
Langan  r.  Hewitt,  3G5. 
Langdale  v.  Trimmer,  992. 
Langdon  v.  Hulls,  1052. 
Lange  v.  Koline,  50. 
Langenbergcr  v.  Kroeger,  654,  1373. 
Langhorne  &  Scott  v.  Kobiuson,  1556, 

1557,  1558. 
Langley  v.  Pahner,  649,  650. 
Langston  v.  Corry,  508. 

V.  S.  C.  R.  R.  Co.,  1500,  1507, 
1513.  1514. 
Langton  i\  Hughes,  200, 
V.  Lazarus,  540. 
Lansing  v.  Caiues,  63,  370,  371,  374,  375. 
Lanuire  v.  Dorrell,  1372fif. 
Lanussa  v.  ]\Iassicot,  636. 
Lanusse  v.  Barker,  916. 
Lapcyre  v.  Wilks,  680. 
Laporte  v.  Landry,  11G3. 
Laprice  v.  Bowman,  173. 

v.  Clifton,  775. 
Larned  v.  Burlington,  1525,  1537. 
Lame  r.  Cloud,  1596. 
LaRue  r.  Gylkison,  213. 
Lary  i\  Young,  1104. 
Lash  V.  Egerton,  1252. 
Latham  v.  Clark,  170. 
V.  Smitli,  126. 
Lathrop  v.  Commercial  B'k,  866. 
Laub  V.  Paine,  1393. 
V.  Rudd,  793. 
Laubaeh  v.  Pursell,  193. 
Laughlin  v.  Marshall,  56,  1703. 
Lawrence  v.  American  Nat.   B'k,  1166, 
1369. 
i\  Dobyn,  644,  700. 
V.  Doughertv,  55. 
V.  Fussell,  692. 
v.  Langley,  1175. 
V.  jMcCalmont,  1755. 
V.  Miller,  1116. 

V.  N.  Y.,&c.  R.  R.  Co.,  1733. 
V.  Ralston,  1147. 


Lawrence  v.  Stonington  B'k,  339,  721, 
V.  Tucker,  802. 
r.  Wright,  261. 
Lawson  v.  Farmers'  B'k,  993, 1039, 1041, 
1043,  1044. 
«.  Lawson,  36. 
V.  Lovejoy,  330,  234. 
V.  Miller,  170,  173. 
i\  Sayder,  1311. 
V.  Siierwood,  1051. 
V.  Weston,  771,  1461, 1463,1503. 
Law's  Ex.  V.  Sutiierlaud,  301. 
Laxton  v.  Peat,  1333. 
Lay  V.  Wissman,  753,  758a,  758&,  778. 
Lazarus  v.  Cowie,  726,  786,  1237. 
Lazell  V.  Lazell,  1472,  1475,  1478,  1481. 
Lazier  v.  Nevin,  1275,  1276. 
Lea  V.  Branch  B'k,  663. 
Leach  v.  Buclianan,  497,  533,  1351. 
V.  Hewitt,  1083,  1113,  1173. 
V.  Nichols,  850. 
Leadbetter  r.  Farrow,  300,  311,  411. 
Lean  v.  Lozardi,  83. 
V.  Schutz,  343. 
Leary  v.  Miller,  317,  1107. 
Leathers  v.  Commercial  Ins.  Co.,  1061. 
Leavenworth,  ttc.  R.  R.  Co.  v.  Com'r  of 

Douglas  Co.,  1548. 
Leavenworth,  &c.  R.  R.  Co.   v.  County- 
Court,  1559. 
Leavitt  -v.  Blatchford,  382. 

V.  Connecticut  Peat  Co..394,685. 
V.  Putnam,  610,  699,  724,   996, 

1243. 
v.  Simes,  658,  663,  1051. 
Lebel  v.  Tucker,  906. 
Ledger  v.  Ewer,  201,  760. 
Ledlie  v.  Vrooman,  348. 
Ledwick  v.  McKim,  843,  1498. 
Lee  V.  Alexander,   1373. 

V.  Chilicothe  Branch  B'k,  698. 
t\  Davis,  919. 
«.  Dick.  1755,  1785. 
t\  Jilson,  1289,  1330. 
V.  Levi,  1319. 
V.  Love,  1304. 
T.  JMuggridge,  249. 
V.  Op])enheimer,  1289. 
V.  Pile,  719,  749. 
V.  Rogers,  1525. 
V.  StaVbird,  1385. 
V.  Wheeler,  256. 
V.  Wilcocks,  916,  1454. 
V.  Zagury,  285. 
Lee  B'k  v.  Spencer,  1109. 
Leech  v.  Hill,  713. 
Leeds  v.  Lancashire,  60,  79,  151. 

V.  Vail.  681. 
Le  Fevre  v.  Loyd,  312. 
LefSngwell  v.  Warren,  1535. 


The  references]       TABLE     OF     CASES.        [are  to  the  sections. 


Iv 


Leffingwell  v.  White,  1103. 

Leftly  V.  Mills,  572,  016,  939,  1036,1308. 

1466. 
Legg  V.  Legg,  254,  801. 
Legge  V.  Thorpe,  1079. 
Leggcitt  V.  JoiiL's,  54. 

V.  Raymond,  1759. 
Legro  V.  Staples,  21,  53,  1644. 
Lehman  v.  Jones,  1144. 
Leith  V.  Elphiston,  1384. 

B'k  Co,  V.  Walker's  Trustees,  607. 
Lelancl  v.  Farnham,  728. 
V.  Parriott,  701. 
Lemon  v.  Dean,  112. 
Lenheim  v.  Fay,  789. 
Lennig  v.  Ralston,  12,  869,  898,  1439. 
Lenox  v.  Cook,  1213. 

i\  Leverett,  943,  1046. 
V.  Prout,  1311. 
«.  Roberts,  1036,  1039. 
Lent  V.  Padelford,  1785. 
Leonard  v.  Gary,  1104. 

V.  Hastings,  1107. 
V.  Leonard,  213,  1231. 
V.  Mason,  73. 

V.  Vredenburgh,  1764,  1767. 
V.  Walker,  108. 
v.  Wilson,  1400. 
Lerned  v.  Johnson,  3' '3. 
Leroux  v.  Brown,  887. 
Le  Roy  v.  Beard,  885. 
Lesler  «.  Rogers,  1377. 
Leslie  v.  Hastings,  497. 
Lester  v.  Garland,  626. 

V.  Given,  1634,  1637. 
Lett  «.  Morris,  23. 

Levy  V.  Bk  U.  S.,  334,  533,  1655,  1656. 
v.  Cadet,  374. 
V.  Drew,  610. 
t\  Gadsby,  763. 
V.  Peters,  1165, 1586,  1634. 
V.  Pvne,  358. 
T.  Wilson,  287. 
Lew  T.  Peers,  187. 
Lewin  v.  Brunette,  535. 
Lewis  V.  Bakewell,  1000. 

V.  Brehme,  314,  315,  1156. 

V.  Com.    of  Bourbon  Co.,    1550 

1552. 
V.  Cosgrove,  193. 
«.  Davidson,  1360. 
».  Gompertz,  982,  983. 
V.  Hanchman,  1335. 
V.  Harvey,  710. 
V.  Jones,'  1289,  1330. 
V.  Kramer,  552,  554, 1377. 
V.  Lady  Parker,  728. 
^^  Lee,  243. 
V.  McElvin,  1565. 
V.  M'Kee,  1745. 


Lewis  V.  Owen,  89G. 
i\  Pead,  211. 
V.  Petayvin,  1471,  1478. 
V.  Reilly,  370,  372,  683. 
V.  Tipton,  88. 
V.  Wilson,  32. 
Lewiston  Falls  B'k  v.  Leonard,963,1029. 
Libby  v.  Pierce,  997. 
Lick  V.  Faulkner,  1247. 
Lickharrow  v.  Mason,  803,  1634,  1727, 

1730,  1735,  1744. 
Lieber  v.  Goodrich,  56. 
Liggett  V.  Weed,  454,  509. 
Light  ».  Kingsbury,  610,  996. 

V.  Lieninger,  1432. 
Lightbody  v.  Ontario  B'k,  737,  1676. 
Lightfoot  r.  Tenant,  200. 
Lightner  v.  Hill,  640. 
Lilleyi;.  Miller,  1105,  1595,  1596. 

V.  Petteway,  1149,  1153. 
Lime  Rock  B'k  v.  Macomber,  1190. 

F.  &  M.  Ins.  Co.  V.  Hewitt, 
53. 
Lincoln  v.  Bassett,  1338. 
V.  Fitch,  1317. 
V.  Hinscy,  713. 
•  V.  Smith,  311. 
&  Kennebec  B'k  v.  Hammatt, 
658. 
V.  Page,  658. 
Lindauer  v.  Fourth  Nat.  B'k,  339. 
Liudell  V.  Rokes,  183,  196. 
Lindenberger  v.  Beall,  1021,  1043,  1051. 
Lindo  V.  Unsworth,  628,  1041,  1043. 
Lindsay  v.  Price,  668. 
Lindsey  v.  McClelland,  1701,. 1703,  1727. 
Lindus^'.  Bradwell,  252,  681,  122C. 

V.  Melrose,  402. 
Linkous  v.  Hale,  963. 
Linnigo  v.  Ralston,  13. 
Linyille  v.  Savage,  834J. 
»,  Welch,  1586. 
Litchfield  v.  Falconer,  80. 

B'k  r.  Peck,  781. 
Littauer  v.  Goldman,  733. 
Littell  V.  Hord,  764. 
Little  v.  Blunt,  1215. 
V.  Derby,  1407. 
V.  Duncan,  230. 
V.  Nabb,  1704. 
V.  Pha?nix  B'k,  56,1570,1587,1588, 

1651. 
V.  Stackford,  3-5. 
Littledale  v.  Mayberry,  954. 
Littlefield  v.  Hodge,  51. 

V.  Spec,  182,  240,  250. 
Little  Miami,   &c.  R.  R.  Co.  v.  Dodds, 

1729. 
Little  Rock  %\  State  B'k,  422. 
Livermore  v.  Blood,  724,  802. 


Ivi 


Tfie  referencex]        TABLE     OY     CASES.        [are  to  tJte  sections. 


Livingston  v.  Roosevelt,  488. 
Lizaidi  v.  Cohen,  81)6. 
Llewellyn  v.  Winckwortli.  299. 
Lloyd  V.  Howard,  GOT. 

V.  Keuch,  753,  759,  7GG,  703,  7G7. 
V.  Lee,  240,  249,  250. 
V.  McGarr,  9G1,  1055,  1439. 
V.  Oliver,  132. 
V.  Sandilands,  1648. 
V.  Scott,  760. 
V.  West  Braneli  B'k,  423. 
Loan  Ass'n  v.  Topcka,  1520,  1522. 
Lobdell  r.  Baker,  734,  735. 

r.  Niphler,  1305. 
Lobey  r.  Barber,  1275, 
Lock  V.  Tiilford,  726. 
Locke  V.  Hilling,  581. 

«.  Leonard  Silk  Co.,  1198. 
Lockett's  Case,  1345. 
Lockwood  V.  Conistock,  370,  373. 

V.  Crawford,  654,  983,  996. 
Lodge  V.  Dicas,  1295,  1301. 
V.  Plielps,  907. 
V.  S])ooner,  1454. 
Lodge  ol'  Free  Masons  v.  "Waddill,  384. 
Lodnian  v.  Crouch,  170. 
Logan  V.  Attix,  1200. 
v.  Pliinier,  200. 
V.  Smith,  834a,  834/;. 
Lohman  v.  Crouch,  87,  170. 
Loniax  v.  Picot,  700. 
London   S.   C.   v.   Hagerstown   S.   B'k, 

1706. 
Long  V.  Bailie,  1484. 
v.  Collniru,  299. 
v.  Crawford,  724. 
V.  iVIoor,  1377. 
V.  SpruU,  12G9 
V.  Story,  170,  370. 
Longchamp  «.  Denny,  1687. 
Lonsdale  v.  Brown,  9,  576. 

V.  Lafayette  B'k,  561,  897. 
Loomis  V.  Fay,  13 11. 
i\  Maury,  799. 
V.  Ruck,  858. 
Loose  V.  Loose,  1152,  1157. 
Loi'd  V.  Appleton,  1016. 

V.  Hall,  253,  277,  681. 
V.  Ocean  B'k,  793. 
Loring,  e.c  pai'te,  1281. 
V.  Gurnev,  89. 
r.  Hailing,  62G. 
V.  Sleineman,  246. 
Losee  v.  Dunkin,  G08. 
Louisiana   B'k   v.  Citizens'  B'k,  1003, 
1606. 
Ins.  Co.  V.  Shamburgh,  1146. 
State  B'kf.  lUihler.  1074. 
V.  Ellery,  998. 
V.  Gaennie,  824. 


Louisiana  State  B'k  v.  Orleans  Xav.  Co., 
1550,  1555. 
V.      ]^nvell,     1012, 

1014. 
V.  U.  S.  B'k,  1G80. 
Louisville,  &c.  R.  R.  «.  Co.  of  Davidson, 
1535«. 
Man.  Co.  v.  Welsh,  1788. 
Loury's  Adm.  v.  Western  B'k,  899. 
Louviere  v.  Laubray,  1205. 
Love  V.  Nelson,  615. 

V.  Wells,  69. 
Lovejoy  v.  Whipple,  65,  69. 
Lovcland  v.  Shepherd,  17G9, 
Lovell  V.  Evcrston,  1182,  1192,  1195. 

V.  Martin,  1461. 
Lovett  «.  Cromwell,  1587,  1596. 
Low  «.  Ar<frove,  1394. 
V.  Blodgett,  1 1 99. 
V.  Chifney,  814. 
V.  Coj)estake,  1193. 
V.  Howard,  1152,  1161. 
v.  Treadwell,  157. 
Lowe  V.  Beckwith,  1785. 
V.  Bliss,  54. 
v.  Murphv,  38. 
v.  Peers,  196. 
Lowell  i\  Boston,  1522. 
1).  Daniels,  243. 
V.  Gage,  700,  1757. 
Lowery  v.  Murrell,  737,  1260,  1777. 

V.  Sc-Jtt,  1030,  1031. 
Lowes  V.  Mazaredo,  753,  760,  763. 
Lowndes  v.  Anderson,  822, 1080. 
Lowry  v.  Adams,  1785. 

V.  Steel,  1092. 
Loyd?).  McCaffrey,  1644. 
Lubbering  r,  Kohlbrecher,  1373,  1416. 
Lucas  V.  Dorrien,  1713. 

V.  Haynes,  695,  1468. 
e.  Ladew,  449,  617,633. 
v.  Pitney,  383,  385. 
V.  San  Francisco,  387. 
Ludlow  «.  Van  Rensselaer,  913. 
Ludwig  V.  Liglehart,  1321. 
Ludwick  V.  Hutsinger,  1458a. 
Luff«.  Pope,  451,  1636. 
Luke  V.  Lyde,  10. 
Lullen  V.  Hare,  144. 
Lumley  v.  ]Musgrave,  1 266. 

«.  Palmer,  504. 
Lundie  «.  Robertson,  1158. 
Lunt  V.  Adams,  003,  1210. 
Luqueer  r.  Prosser,  1779. 
Lycomint;  I".  Union,  1556. 
Lyman  r.  B'k  U.  S.,  1373. 
Lynch  v.  Bragg,  1431. 

V.  Kennedy,  859. 
V.  Morse,  125. 
V.  Reynolds,  1307. 


TJu  references]        TABLE     OF     CASES.        ['> re  to  the  Hectiom.  \y\\ 


Lynde  v.  Winnebago  Co..  1492,  1497, 

1527,  1529,  15:J0,  loST,  1550. 
Lyon  V.  Ewing,  700,  824. 

v.  Holt,  i;}24. 

v.  Marshall,  100. 

v.  Lyman,  1219. 
Lyons  v.  Miller,  284,  305,  731,  1358. 
Lysaght  v.  Bryant,  667,  '.)87,  989. 
Lytle  «.  Wheeler,  172. 

Maas  V.  M.  K.  &  T.  R.  R.  Co.,  1502. 
Maber  i-.  Massias,  161. 
Mabie  v.  Johnson,  775. 
Macaltimer  v.  Croasdale,  193. 
Macara  «.  Watson,  1390. 
Macown  v.  Atchafalava  B'k,  960. 
Macferson  v.  Thoytes,'  1219. 
Macgregor  v.  Dover,  &c.,  R.  R.,  377. 

V.  Rhodes,  1357. 
Macheath  v.  Haldimand,  445. 
Machell  c.  Kinnear,  1193. 
Mahier  v.  Succession  of  Henrie,  46. 
Matteson  v.  Elsworth,  1410. 
Mattison  v.  Marks,  43. 
MacKay  ».  Ramsey,  344. 
MacKintosh  v.  Eliot,  1370. 
Madry  v.  Sulphur  Springs,  861. 
M' Arthur  v.  Bloom,  245. 
McBean  v.  Morrison,  4(>0. 
McBride  v.  FaiTaers'  B'k,  339,  344. 
McBrown  v.  Corporation   of   Lebanon, 

101. 
McCabe  v.  Raney,  859. 
McCall  V.  Clayton,  404. 

V.  Taylor,  92. 
McCann  v.  Lewis,  812. 
McCarty  v.  Roots,  703. 
McCoughey  v.  Smith,  1388. 
McCaughy  v.  Berg,  678. 
McCausland  v.  Rulston,  194. 
McCherd  v.  Ford,  50. 
McClae  ».  Sutherland,  94,  361. 
McClane  v.  Fitch,  581,  588,  1043. 
McClaraghan  v.  Hines,  80. 
McClellan  v.  Reynolds,  418. 
McClintock  v.  Cummiugs,  815. 
McCluny  v.  Jackson,  1260. 
McClure  v.  Bennett,  306,  307,  406. 

V.  Township  of  Oxford,    1498, 
1503,  1538,  1544,  1550. 
McComb  V.  Kittridge,  1317. 
V.  Thompson,  713. 
McConiber  v.  Dunham,  1458a. 
McConnell  ®.  Hector,  216. 

V.  Ilodsan,  775. 

V.  McConnell,  24. 

V.  ^Murray,  24. 

V.  Thomas,  1189. 
McCord  V.  Ford,  1245. 
McCormack  r.  Trotter,  56. 


McCoy  V.  Washington  Co.,  1491,  1720. 
McCracken  v.  German    Fire    Ins.    Co., 
834^/. 
V.  San  Francisco,  318. 
McCramer  v.  Thompson,  855,  1387. 
McCrary  v.  Caskey,  76. 
McCrillis  v.  How,  225. 
M'Crummen  v.  M'Crummen,  1005. 
McCuUis  r.  Bartlett,  212. 
McCulloch  T.  Hoffman,  174. 
McCuUough  V.  Cook,  643. 

V.  Moss,  387,  389,  393. 
V.  State  of  Maryland,  126. 
McCune  v.  Belt,  703,  980. 
McCurbin  v.  Turubull,  1378. 
McDade  v.  Mead,  1424. 
McDoal  V.  Yeomans,  1769. 
McDonald  v.  Bailev.  899,  1099. 

«.  Lee,  633. 

V.  Magruder,  703,  1304. 

v.  Muscatine  Nat.  B'k,  850. 

V.  Rankin,  267. 
McDowall  V.  Chambers,  74. 

V.  Cook,  531. 

V.  Goldsmith,  728. 
McDuffie  V.  Dame,  1437. 
McEldery  v.  Chapman,  262. 
McElvain  v.  Mudd,  127,  172,  173. 
McElwee  v.  Collins,  765. 
McEvers  v.  Mason,  502,  550,  552. 
McEwan  v.  Smith,  1712. 
McEwin  v.  Gordon,  1390. 
McFarlandc.  Pico,  500,  963,  983,  1212. 
McGavock  v.  Puryear,  200. 
M'Gee  v.  Prouty,  1330. 
McGee  v.  Connor,  710. 

v.  Riddlesgarber,  748. 
xMcGoon  V.  Shirk,  ^247. 
McGovern  v.  Hosenback,  125. 
McGrath  v.  Clark,  142,  1385, 1406,  1408. 
McGraw  v.  Gentry,  1 1 2. 
McGregory  «.  McGregory,  1185. 
McGruder  v.  B'k  of   Washington,  571, 

635,  1145,  1146. 
McGuire  «.  Bosworth,  713. 

V.  Gadsby,  1260,  1266. 
McGuirk  «.  Cummins,  90. 
McHenry  v.  Dutlield,  307. 
V.  Hazard,  727. 
V.  Ridgelv,  687. 
McHugh  V.  County'of  Schuylkill,  1352. 
Mclntire  v.  Oliver,  374. 
Mcintosh  V.  Haydon,  072,  1379. 
Mclntyre  v.  Kennedy,  1260. 

V  Preston,  385. 
McKee  v.  Varninles,  1492. 
M'Kenny  v.  Waller,  1311. 
McKenzie  t.  Durant,  1209. 
V.  Hunt,  1437. 
■».  Scott,  314. 


Iviii  Tfte  re/erencex]        TADLE     OF     CASES.       [are  to  tfie  sections. 


McKessou  V.  Stanl)errv,  81."). 
McKewer  v.  Kirklanci  Gil.  99G. 
M'Kiniiell  r.  Kol)inson,  200. 
McKinney  r.  Crawford,  Oil,  99G. 

V.  A\' hippie,  G4G. 
McKleroY  v.  Soutliern  B'k  of  Ky.,  1362. 
McKuight  r.  Knisley.  832. 
M'Laclilan  r.  Evans,  1G87. 
McLaren  v.  Hall,  12G0. 

V.  Watsou's   Ex.,    1774,   1775, 
1777. 
McLean  v.  Hertzog,  1483. 
McLemore  r.  Powell,  1316. 
M'Lugbau  v.  Bovard,  12G0. 
3IcMarchey  v.  Robinson,  624,  926. 
McMasters  r.  Reed,  382. 
McMean.r.  Little,  1085. 
McMenomy  v.  Ferrers,  21. 
McMicken  v.  Beauchamp,  1418. 
M'Millan  v.  M'Neil,  875. 
McMillen  v.  County  Judge,  1535,  1560. 
McMinn  v.  Owen,  81. 

V.  Riclinionds,  225. 
McMurtie  v.  .Tones,  1019. 
McNair  v.  Gilbert,  1472. 
McNairy  v.  Bell,  643. 
McNamara  v.  Condon,  205. 
McNeal  v.  IMcCamlev,  1260. 

V.  Wyatt,  995. 
McNealy  v.  Gregorv,  172, 173. 
M'Neila"ge  v.  Hollowav,  254, 1184. 
M'Neilly  v.  Patchin.  1340. 
McNinch  v.  Ramsey,  49, 
McPeters  t\  Philips,  1454. 
McRae  v.  Rhodes,  1074. 
McRaven  v.  Crislen,  1403. 
McSlierry  v.  Brooks,  724. 
McVaugliters  v.  Elder,  261. 
McVean  v.  Scott,  1387,  1388. 
McVeigh  v.  Allen,  1032. 

V.  B'k  of  Old  Dominion,  90, 
218,  1048,  1060,1062,1070, 
1085. 
V.  Cantrell,  248. 
McWirt  v.  McKee,  721. 
Mackay  v.  Holland,  859. 
Macleod  v.  Snee,  51,  108. 
Maclin  i).  Critcher,  363. 
Maddox  r.  Graham,  1489 
Madison,  &c.  Plankr.  Co.  v.  Watertown 
Plankroad  Co.,  384,386. 
R.  R.  Co.  V.  Norwich  Sav. 
Soc'y,  386. 
Magee  v.  Badger.  775,  814. 
Magill  V.  Manson,  170. 
V.  Merrie,  350. 
Magoun  v.  Walker,  962,  969. 
Magruder  r.  B'k  of  Georgetown,  1177. 
V.  Peter,  1281. 
r.  Union  B'k,  591,1175,1179. 


Mahaiwe  B'k  v.  Douglass,  1378,  1387. 
Mahan  v.  Sherman,  80. 
Maher  v.  Brown,  1644. 
V.  Overton,  411. 
Mahier  v.  LeBlanc,  630. 
Mahone  v.  Central  B'k,  142. 
Mahoney  v.  Ashlin,  8. 
Mahorner  v.  Hooe,  866. 
Mahurion  v.  Pearson,  1431. 
Maiden  v.  Webster,  94. 
Maillard  v.  Duke  of  Argyle,  1267. 
Mainer  v.  Spurlock,  979. 
Mainwaring  v.  Newman,  354. 
Maitland  v.  Citizens'  JSat.  B'k,  775,  831, 

832. 
Major  V.  Symmes,  248. 
Makepeace  v.  Harvard  College,  154. 

r.  Moore,  265. 
Malbon  r.  Southard,  267,  G80. 
Mald-en  B'k  r.  Baldwin,  649. 
Male  V.  Roberts,  874,  892. 
Mallet  V.  Thompson,  1296,  1333, 1334. 
Malone  v.  Keener,  17G3. 
Maloncy  v.  Stephens,  222. 
Mammon  v.  Hartman,  713. 
Manchester  B'k  v.  Fellows,    1003,  1005, 

1039,  1045,  1212. 
Mauchet  v.  Cason.  1398. 
Maudeville  r.  Union  B'k,  107. 

V.  AVelch,  15,  17,  18,  21,  22, 
450,  451,1636. 
Manegold  r.  Dulan,  1183. 
Manhattan  Ins.  Co.  v.  Warwick,  222. 
Maniott  «.  Roberts,  1194. 
Manley  v.  Boycott,  720, 1336, 1337, 135&. 

V.  Geagan,  566. 
Mann  v.  Chandler,  403,  405. 
V.  King,  274. 
V.  Lant,  1G7. 
V.  Moors,  1023,  1029. 
V.  Sutton,  32. 
Manning  t.  Hayes,  369. 

r.  McClure,  829,  830. 
Manrew  v.  Durham,  1759, 
Mansfield  r.  Corbin,  185. 
Manson  v.  Felton,  259. 
Manufacturers'  Nat.  B'k  v.  Barnes,  288. 
&c.,  B'k  V.  Winship,  363. 
Mare  v.  Charles,  412. 
Margetson  v.  Aitken,  1167. 
Marine  B'k  v.  Clements,  394. 

v.  Fulton  B'k,  325,  334. 
V.  Wright,  1734,  1748. 
&  Fire  Ins.  B'k  v.  .Jauncv,  20. 
Nat.  B'k  V.  Nat.  City  B'k,  1661. 
Marion  v.  Logans])ort  R.  R.  Co.,  425. 
B'k  v.  Smith,  657. 
&c.  R.R.  Co.®.  Dillon,  428. 

V.  Hodge,  425,482. 
T.  McCullum,  758. 


Tfie  referencesi        TABLE     OF     CASES.        [are  to  the  sections.  lix 


Marion  K  B'k  v.  Nat.  City  B'k,  540. 
Markham  v.  Hazt'n,  487. 
jMarkle  v.  Hatfield,  731. 
Marr  v.  .Johnson,  l!87,  1027. 
Marrett  v.  Equitable  Ins.  Co.,  53. 
Marrigan  v.  Page,  36,  38. 
Marryatts  r.  White,  1252. 
Marsh  v.  Fulton  Co.,  1538, 1544. 
t\  Gold,  358. 
V.  Low,  174. 
V.  Marshall,  782. 
V.  Maxwell,  1053. 
V.  Newell,  1199,  1201. 
V.  Pedder,  740,  1271. 
V.  Small,  775. 
V.  Ward,  94. 
Marshall  v.  Bait.  &  O.  R  R.  Co.,  188. 
V.  Clarv,  513. 
V.  Gougler,  1391. 
V.  Marshall,  1260. 
V.  Mitchell,   1104,  1110,  1133, 

1135. 
V.  Russell,  69. 
r.  Ruttin,  213. 
County  V.  Cook,  1551. 
Marson  v.  Pett,  1378. 

V.  Pritchard,  1030,  1124. 
Marston  v.  Allen,  667,  748,  1468. 
Martendale  v.  FoUett,  1386,  1411. 
Martin  v.  Bacon,  507. 

V.  B'kU.  S.,  1479,  1695,  1696. 
V.  Boure,  6. 
V.  Boyd,  713. 
V.  Chauntry,  60. 
V.  Coles,  1748. 
V.  Franklin,  1454. 
V.  Ingersoll,  993,  1041,  1043. 
v.  Kirk,  370,  373. 
V.  Martin,  891,  892,  1226. 
V.  Mayo,  231. 
V.  Morgan,  1596,  1630. 
V.  Penuock,  1269. 
t!.  Smvlee,  851. 
V.  Trowbridge,  1437. 
V.  Wade,  196. 
T.  Walton,  373. 

V.  Winslow.  607,  609,1147,  1155. 
Martineau  v.  McCoUum,  834. 
Marton  v.  Cole,  713,  721. 
Marvin  v.  McCallum,  63,  1190. 
Marvine  v.  Hymers,  385. 
Marzetti  v.  Williams,  479. 
Mason  v.  Barflf,  499. 

V.  Bradley,  1387. 

V.  Burton,  679. 

V.  Dousay,  552,  867,  888. 

V.  Franklin,  640,  651. 

V.  Hunt,  509,  551. 

V.  Hyde,  07. 

V.  Morgan,  240,  254,  681. 


Mason  v.  Noon  an,  728. 
V.  Peters,  1327. 
V.  Pritchard,    640,    1030,    1124, 

1755,  1772. 
V.  Race,  1087. 
V.  Rumsey,  302,  488. 
V.  Waite,'l469,  1687. 
Massachusetts  B'k  v.  Oliver,  1000. 
Massey  v.  Turner,  713. 
Massie  «.  Bel  ford,  46. 
Massman  v.  Holcher,  855. 
Maspero  ?■.  Pedesclaux,  1000,  1001. 
Master  ?;.Miller,  23, 1373, 1376, 1379, 1410. 
Masters  «.  Ibberson,  803. 
Mather  v.  Lord  Maidstone,  1353,  1371. 
Mathews  v.  Allen,  1147. 

v.  Haughton,  55. 

V.  Haydou,  588. 

r-.  Poytheress,  775,   814,  1462^ 

1463. 
v.  Redwine,  102. 
V.  Rutherford,  758«. 
Mathewson  v.  Strafford,  1000. 
Mathey  v.  Galley,  1086. 
Matlock  V.  Livingston,  199. 
Matteson  i\  Ellsworth,  1413. 

r.  Moulton,  500. 
Matthews  v.  Dare,  1275. 
Mauldin  v.  Branch  B'k,  366,  753. 
Maule  V.  Crawford,  104. 
Maull  V.  Vaughn,  186. 
Maurain  v.  Bullus,  17-"i5. 
Maurin  v.  Lambert,  1230. 
Maury  «.  Coleman,  860. 

V.  Rogers,  640,  1726. 
Maux  Ferry  Gravel  R.  Co.  v.  Branegan^ 

424. 
Mawson  r.  Blane,  236. 
Maxwell  i'.  Vansant,  728. 
May  «.  Boissean,  1109,  1128,  1130, 1140, 
1141,  1184. 
v.  Campbell,  751. 
«.  Chapman,  795. 
V.  Coffin,  1144,  1170,  1172. 
V.  Cooper,  616. 
V.  Hewitt,  303. 
V.  Kelly,  295,  362,  485. 
V.  Miller,  92. 
V.  Quimby,  832. 
Mayberry  v.  Boynton,  1788. 
Mayer  i'.  Isaac,  1755,  1770,  1772. 

».  Jadis,  1196,  1197. 
Mayhew  v.  Boyd,  1311. 

V.  Crickett,   1311,   1321,  1340^ 

1789. 
V.  Prince.  311. 
Maykin  v.  Kirby,  747. 
Maynard  v.  Fellows,  361. 
T.  Johnson,  125. 
Mayo  V.  Chenoweth,   102. 


Ix 


77ie  references]       TA  I>LE     OF     CASES.         [are  to  ifie  sectlom. 


MayorofAlexaiuliiar.  Patten,  1250,1251. 
v.  Escliback,  440. 
V.  Ilammond,  128. 
'V.  Johnson,  1475,  1479,  1695. 
V.  Lord,  15:^7,  1542. 
&c.  r.  Potomac  lus.    Co.,   1493, 

1500,  1510. 
V.  Ray,  420. 
Mays  V.  Callison,  070. 
Meacherr.  Fort,  538,  1354,  1356. 
Meachum  v.  Dow,  190. 
jMead  v.  Caswell,  1590. 
V.  Engs,  331,  992. 
V.  Merchaut's  B'k,   134,  390,  391, 

1010. 
V.  Munson,  850. 
V.  Small,  1242. 
v.  Young,  092,  1345. 
Meader  v.  Scott,   1428. 
Meadow  v.  Bird,  188. 
Means  v.  Swormstedt,  408. 
Hears  r.  Graliam,  8G,  403,  406. 

V.  AVaples,  1731,  1734. 
Mechanics'  Ass'n  v.  Ferguson,  824. 

B'k  V.  B'k  of  Columbia,  299, 
392,  398,  419. 
V.  Earp,  312,  344. 
V.  Griswold,  1132,  1170. 
r.  Livingston,  490. 
f.  Merchants'  B'k,  598. 
V.  K  Y.  &  N.  IL  K.  R. 
Co.,  273,  1503,1708. 
1).  Straitor,  99. 
V.  Stratton,  1571. 
V.  Townsend,  802. 
Mechanics'  &c.  B'k  v.  Baruett,  832. 

V.  Crow,  183^,  814. 
V.  Farmers'  &c.  B'k, 

1731. 
V.  Schaumburg,  282 
V.  Schuyler,  83,  030. 
j\Iechanics'  B'k  Asso.  r.  Place,  1017. 
Mecorney  v.  Stanley,  715. 
Medbury  v.  Watrous,  229. 
Medenhall  v.  Davis,  719. 
Medlin  v.  Platte,  etc.,  1373. 
Medway  Cotton  Mnn.  v.  Adams,  399. 
]\Ieech  i\  Smith,  1703. 
Meed  v.  Keller,  382. 
Meeker  v.  Jackson,  1478, 1480. 
Meggadow  v.  Holt,  1170. 
Megginson  v.  Harper,  99. 
Metrgot  V.  Mills,  1252. 
l\le]il!jerg  r.  Fisher,  1260,  1276. 
i\Ieiswinkler  r.  Jung.  1317. 
Melau  V.  Fitzjames,  886. 
Melanottc  v.  Teasdale,  40. 
Melledge  v.  Boston  Iron  Co.,  399. 
Mellersh  v.  Rippen,  978. 
Mellish  V.  Rawdon,  405,  473,  012. 


Mellish  i\  Simeon,  1448. 
Melvill  t'.  Glendinning,  1331. 

V.  Hayden,  1770. 
Mendez  v.  CaVreroou,  575,  1229,  1230. 
Mendizabel  v.  ^Machado,  509. 
Menifee  v.  Clark,  1319. 
Menkens  v.  Heringhi,  252,  254. 
Mentross  v,  Clark,  790. 
Mercantile  B'k  v.  Cox,  303. 
Mercer  v.  Lancaster,  1022. 

Co.  V.  Hacket,  10,389,1495,1496, 
1500,  1501,  1530,  1537, 
1541. 
V.  IIubi)ard,1511,1512,1545, 

1550. 
V.  Pittsburg,  &c.  R.  R.  Co., 
1535. 
Merchants'  B'k  v.  Birch,  1001. 

V.  Central  B'k,  301,  392. 
t\  Easley,  1084. 
V.  Elderkin,  656. 
■».  Evans,  043. 
V.  Griswold,  551. 
V.  Marine  B'k,  395. 
V.  Spicer,  74,  088,  1567, 
1586,  1587,   1590, 
1652. 
V.  State   B'k,    389,   390, 
391,392,412,1536, 
1572,    1001,   1602, 
1603,  1010. 
Nat.  B'k  V.  Comstock,    177, 
293,  781. 
V.  New  Brunswick 
Sav.Inst.1652. 
V.  Stafford  NatB'k, 
327. 
Merdock  r.  Aradh,  719. 
Merle  v.  Wells,  1772. 
Mcrrett  v.  Duncan,  509,  781^,  813. 
Merriam  v.  Moody's  Ex.,  1525. 
V.  Rockwood,  854. 
V.  Rundlett,  800,  1379. 
V.  Walcott,  284,  731. 
Merrick  v.  Bourv,  12(!0,  1208,  1410. 

V.  Butler,  724. 
Merrill  v.  Duncan,  775. 
t.  Fleming,  190. 
Merritt  v.  Anderson,  1048. 
V.  Benton,  933. 
V.  Todd,  009,  1702. 
Merteus  v.  Withington,  1254. 
Merz  V.  Kaiser,  570,  1017. 
Messenger  i\  Southey,  979,  983. 
Metcalf  V.  Douglas,  'l590. 
Metcalfe  ■«.  Richardson,  972,  985,  1158, 

1160. 
Meyer -y.  City  of  Muscatine,  1500,  1523, 
1532,  1537,  1540,  1547. 
V.  Haworth,  240. 


Tlie  references]       TABLE     OF     CASES,        [are  to  the  section b.  1x1 


Meyer  v.  Hibscher,  639,  G40,  1180. 

V.  Huiieke,  1410,  1412. 
Meyers  v.  Staiidart,  515. 
Meyerstein  v.  Barber,  1731,  1737. 
Michigau  B'k  v.  Elclred,   104,  367,  868, 
369,  843. 
Ins.   Co.  V.  Leavenworth,  83, 

142,  267,  599. 
State  B'k  v.  Leavenworth, 562, 
831,1329,1330. 
V.  Pecks,  501. 
Mickles  ».  Colviu,  187. 
Middlesex  v.  Thomas,  1260,  1276. 
Middleton  v.  Allegheny  Co.,  1527. 
V.  Pollock,  1428. 
B'k  V.  Morris,  1586,  1592. 
Miers  r.  Brown,  973,  985,  1175. 
Milburn  v.  Guyther,  1425. 
Miles  V.  Hall,  1019. 

V.  Williams,  681. 
Millaudon  v.  Aruons,  1305. 
Miller  v.  Austen,  1703. 

V.  Board  of  Education,  319. 

v.  Butler,  497. 

V.  Consolidated  B'k,  369. 

V.  Delamater,  252,  681. 

V.  Fichaus,  504,  797. 

r.  Finley,  214,  1389. 

V.  Fitchin,  856. 

V.  Gilleland,  1377. 

V.  Hackley,  9,  960,  961,1021,1054, 

1056,  1110,  1163. 
v.  Helm,  265. 
V.  Hughes,  368. 
«.  Larman,  125. 
V.  Lumsden,  1260,  1268,  1275. 
v.  Miller,  24. 
V.  Morrow,  125. 
v.  Ord,  748. 

V.  Race,  771,  1503,  1672,  1687. 
V.  Ray,  1520. 
».  Reed,  1390. 
V.  Reigne,  261. 
V.  Rutland,  &c.  R.  R.  Co.,  1491, 

1492. 
V.  Stem,  1319. 

V.  Thompson,  129,  481,  482. 
V.  Tiflany,  922,  923. 
v.  Trevillian,  1250. 
V.  Weeks,  130. 
V.  White,  81. 
V.  Williamson,  235. 
Milliken  v.  Brown,  1290. 
Mills  V.  B'k  of  U.  S.  615,  622,  623,  661, 
662,  979,  983. 
V.  Barber,  165,  177,  814. 
V.  Barney,  1702,  1703. 
V.  Beard,  1098. 
V.  Charleston,  1556,  1563. 
«.  Fowlkes,  1252. 


Mills  V.  Gleason.  1522,  1529,  1530. 
V.  Kuykendale,  50. 
V.  Mills,  18S. 
«.  Porter,  78lrt. 
V.  Rense,  110(i. 

V.  Town  of  Jefferson,   1500,  1513, 
1514. 
Millspaufjh  v.  Putnam,  24. 
Milne  v.  Graham,  903. 
Milncr  v.  Gray,  96. 
Milnes  v.  Duncan,  1226. 
Minis  ?).  Macon,  &c.  R.  R.  Co.,  1281. 
Minard  v.  Mead,  253. 
Minell  v.  Read,  800. 
Miner  v.  Hovt,  1437. 
Mineral  Point  R.  R.  Co.  v.  Barron,  890. 
Minet».  Gilson,  136,  1571. 
Minor  «.  Mechanics'  B'k  of  Alexandria, 
304,  687. 
r.  Minor,  1452. 
«.  Rogers,  24. 
Minot  V.  Curtis,  399. 
Minturn   v.   Fislier,    1103,    1106,  1574, 

1576,  1634. 
Miranda  v.  City  B'k,  1106. 
Miser  v.  Trooinger,  999,  1074. 
Misher  v.  Carpenter,  672. 
Missouri  Loan  B'k  v.  Garner,  1289. 
MitchelU-.  Baring,    508,  523,   635,051, 
652,  935. 
V.  Burlington,  1523,  1525. 
V.  Byrne,  63. 

V.  Cross,  1039,  1041,  1045. 
V.  De   Grand,    454,   589,    619,, 

626. 
V.  Hewitt,  56. 
V.  Mitchell,  125. 
V.  Rome  R.  R.  Co.,  38,  386. 
V.  Sellman,   1428. 
Mitchinson  r.  Hewson,  258. 
Mitford  V.  Walcot,  491,  529,  547, 
Mix  V.  Ely,  1282. 

V.  Madison  Ins.  Co.,  924. 
Moakley  v.  Riggs,  1769. 
Mobley  v.  Clark,  424,  1082. 

V.  Ryan,  728. 
Moers  v.  City  of  Reading,  1523. 
Moifat  V.  Edwards,  41. 

i\  Van  Milligau,  354. 
Moffett  V.  Bickle,  674. 
Mogadara  r.  Holt,  1170. 
Moge  V.  Herndon,  1416. 
Moggridge  v.  Jones,  203. 
Mohawk  B'k  i\  Broderick,  1578,   1587, 
1594,  1607,  1651. 
V.  Corev,  790,  793. 
Moires  v.  Bird,  707,  1760,  1765. 
Moise  V.  Chapman,  1689. 
Molbin  V.  Southard,  685. 
Moline,  ex  parte,  1002,  1036,  1285. 


Ixii 


The  re/erencex]        TAIJLE     OF     CASES.        [are  to  the  seciions. 


Molton  r.  Cramroux,  210,  214. 
Monroe  v.  Cooikt.  :M)0,  816,  819. 

V.  Hoft",  737,  l-,'65. 
Monseaux  r.  Urquhart,  222. 
Monsoii  V.  Drakeley,  94,  1387. 
;Monta«ruo  r.  Perkins,  143,  490,  517. 
Montcliine  v.  Cliarles,  472. 
Mont'^omerv  v.  Budge,  918. 
V.  Elliott,  047. 
V.  Kellogg,  1785. 
V.  Tutt,  043. 
V.  Wiiitl)eck,  234. 
Co.    B"k   r.    .Alarsb,   1022, 

1035. 
Co.    B'k    V.  Alhanv    City 
irk,  341,344,345,402. 
B.  R.  Co.  r.  Trebles,  997, 
1-238,  1242. 
Montpelier  B'k  t'.  Dixon,  1311. 
Monumental  Nat.  B'k  v.  Globe  "Works, 

386. 
Moodalay  v.  East  India  Co.,  1527. 
Moodie  v.  Morrall,  590,  640,  1031,  1180. 
Moody  V.  Findley,  703. 
V.  Mack,  lu73. 
V.  Mark,  1580. 
V.  Rowcll,  1219. 
V.  Threlkeld,  99,  490. 
Moon  V.  Foster,  217,  218. 
Moore  v.  Baird,  757,  707. 
V.  Barthrop,  1023. 
v.  Candell,  181. 
V.  Clopton,  807. 
r.  Cofficld,  1123. 
V.  Denslow,  083. 
V.  Fall,  1484,  1485. 
V.  Hoi  low  man,  1209. 
V.  Holt,  1755. 
V.  McClure,  305. 
V.  Moore,  122,  125. 
V.  Quirk,  122,  125. 
V.  Eider,  758.  791,  793,  826. 
i:  AVaitt,  058. 
V.  Ward,  794. 
V.  Warren,  1262. 
V.  Wilby,  497. 
Moorman  v.  B'k  of  Alabama,  980. 
Moran  r.  Miami  Co.,  317, 389,  1500, 1503, 

1537. 
Mordecai  r.  Dawkins,  200. 

V.  Gilmer,  3<i7. 
Morclicad  v.  Paikersburg  Nat.  B'k,  144, 

1378. 
Morey  v.  Wakefield,  608. 
Morford  v.  Davis,  074. 

V.  Farmers'  B'k,  381. 
Morgan  v.  B'k  of  Louisville,  lOGO,  1070, 
1071,  10t)3. 
T.  Creditors,  1266. 
V.  Davison,  603. 


Morgan  v.  Jones,  1458  '. 
V.  Reintzel,  1478. 
V.  Richardson,  201. 
V.  Van  Ingen,  900,  9(11. 
Morgner  v.  Bigelow,  724. 
Morley  v.  Boothby,  1704. 

V.  Culvcrwell,  781^/,  1233. 
Mornycr  v.  Cooper,  803. 
Morrell  r.  Codding,  400. 
V.  Cowan,  1770. 
Morrill ».  Brown,  1072. 
Morris  ».  Bethel,  1353. 
V.  Cleaslev,  314. 
t).  Faurot,'722. 
V.  Husson,  1023. 
V.  Lee,  35. 
D.  McMorris,  125. 
V.  Summcril,  330. 
V.  White,  834. 

B'king&  Can.  Co.  v.  Fisher,1500. 
V.  Lewis,l496, 
15'  3,  1517. 
Morrison  v.  Bailey,  1508, 1569,1574, 1576, 
1587,  1590,   1000,  1638. 
■V.  Buchanan,  404,  492. 
V.  Hurtman,  1311. 
V.  Lovell,  219,  733. 
V.  Perry,  370. 
r.  Smith,  1401. 
V.  Taylor,  291. 
Morrow  v.  Whitesides,  258. 
Morse  v.  Clayton,  204,  265. 
V.  Green,  299. 
V.  Huntington,  1322. 
V.  AVheeler,  235. 
Mortee  v.  p]dwards,  49. 
Morton  v.  Burn,  827. 

V.  Nay  lor,  21,  451. 
V.  Preston,  700. 
«.  Rogers,  177. 
T.  Westcott,  1024. 
Moseley  v.  Hanford,  80. 
Mosely  v.  Graydon,  260. 
Moses  V.  Comstock,  852. 
?).  Ela,  1131. 

V.  Franklin  B'k,  1507,  1000,  1636. 
«..  Trice,    205,  1228,  1200,    1478, 
1482. 
Mosher  v.  Allen,  1197. 

V.  Indian  School  Dist.  1542,1563. 
Moss  V.  Adams,  1252. 
v.  Averill,  382. 
V.  Livingston,  413. 
«.  Oaklev,  382,  428. 
Mossop  V.  Eadon,  1475,  1479,  1484. 
Mott  V.  Hicks,  302,  382,  383,  408,  700. 
Moule  r.  Brown,  332,  1592,  1598. 
Mountford  v.  Harper,  1048. 
Mountstephcn  v.  Brooke,  98. 
Mt.  Sterling  Turnpike  Co.  v.  Looney,395. 


The  references]        TABLE    OF    CASES.        [are  to  tlie  sectiom.  Ixiii 


M.  &  F.  B'k  V.  F.  M.  B'k,  1734. 

Mt.  Vernon  B'k  v.  Holden,  1054. 

Mower  v.  Pcabody,  1731, 

Mox  V.  State  B'k,  901. 

Moxon  V.  Pulling,  689. 

Mudd  V.  Reeves,  1675. 

Mudger  v.  Bullock.  25,  1253. 

Mudgett  y.  Day,  335. 

Muhling  ®.  Sattler,  130. 

Muilman  v.  D'Eguiuo.  466, 467,  469,  471, 

1037,  1046. 
Muirw.  Crawford,  1322. 
V.  Demaree,  1388. 
V.  Rand,  1687. 
Muirhead  r.  Kirkpatrick,  196,  1311. 
Muldon  V.  Wliitlock,  1267,  1268,  1300. 
Muldrow  V.  Caldwell,  130,  663,  1397, 
Mullt'.  Van  Frees,  186. 
Mullen  V.  Morris,  898,  901,  920,  945. 
Muller  V.  Pondin,  67. 
Mullick  V.   Radakissen,   465,  466,  470, 

473,  474,  475. 
Mumford  v.  Hawkins,  393. 
Muncy  Borough   School  Dist.  r.  Com- 

monwealtli,  605,  612, 
Munger  'i\  Shannon,  50. 
Munn  «.  Baldwin,  1021. 
V.  Birch,  1571,  1638. 
V.  Commissioners'    Co.,    383,    751, 

•     760,  766. 
v.  McDonald,  824, 
Munroe  v.  Bordier,  175,  178. 
Munro  v.  King,  81. 
Murcbie  v.  Macfarlaue,  1373, 
Murdock  v.  Lee,  1377. 
Mure,  ex  parte,  1311. 
Murphy  v.  Keyes,  174. 
Murray  v.  Beckwith,  775. 
V.  Burling,  1483, 
V.  East  India  Co.,  264,  290. 
V.  Glasse,  241. 
V.  Judah,072,  1081,  1355,  1586, 

1587,  1596,  1620,  1652, 
V.  Larduer,  681,  775,  776,  814, 

1469,  1500,  1503, 
V.  Pate,  1687, 
V.  Todd,  747, 
V.  Township  of  Oswego,    1542, 

1596. 
V.  Snow,  1289. 
Murrell  v.  Jones,  170. 
Murrey  v.  Jones,  748,  834, 
Murrill  v.  Handy,  86. 
Muscatine  v.  Sterneman.  125. 
Musgrave  v.  Drake,  369. 
Musselman  v.  Logansport,  1564, 

V.  Oakes,  103, 
Mussey  v.  Eagle  B'k,  1610. 

V.  Rayner,  1755,  1785. 
Musson  V.  Lake,654, 896, 898,953,970, 983, 


Mutual  B'k  V.  Rotge,  1604, 
Muzzy  D,  Knight,  156. 
Myatt  V.  Bell,  373,  1260,  1301. 
Myers  v.  Byington,  1289. 

V.  Friend,  441,  663,  741. 

«.  ITuggins,  373, 

V.  Nell,  1401. 

V,  Willis,  13;9. 

v.  York,  &c.  R.  R.  Co.,  747. 
Myrick  v.  Hasey,  1782, 

Nagel  V.  Mignot,  1471,  1478. 
Nagle  V.  Homer,  508, 
Naglee  v.  Lyman,  823. 
Nailor  v.  Bowie,  654,  969. 
Nance  v.  Lary,  845. 
Napier  «.  Elam,  827. 

V.  Sciineider,  1449. 
Narragansett  B'k  v.  Atlantic  Silk  Co., 

388, 
Nash  V.  Brown,  181. 
V.  Fugate,  856. 
V.  Harrington,    611,    1152,    1170, 

1172, 
v.  Hodgson,  1252. 
i\  Nash,  257. 
Nashville  B'k  v.  Bennett,  1005. 
Nathan  v.  Giles,  1730. 
Nat,  B'k  V.  City  of  lola,  1520. 
».  Fassett,  322. 
V.  Norton,  370,  373. 
V.  Smoot,  869. 
v.  Tappan,  1370. 
e.  Texas,  724, 

of     Bellefonte    v.    McManigle, 
287. 
Commerce   v.  Nat.  IM,  B, 
Ass'n,      1166,      1301, 
1369,  1654. 
Fort  Edward  v.  Washing- 
ton County  Nat.  B'k, 
1698,  1702, 
Michigan   v.    Green,    767, 

899. 
N,  A,  V.  Bangs,  1361, 1367, 
1369,  1657. 
V.  Kirby,  1506. 
Pittsburg  V.  Wheeler,  674, 
Nat.  Exchange  B'k  r.  Hartford  R.  R. 
Co.,    1489,  1500,  1509,    1510, 
1513. 
Gold  B'k  V.  McDonald,  1632, 1623. 
Mechanics'  B'k  v.  Nat.  B'k,  284. 
Newark   B'k   Co.  v.    Second  Nat. 

B'k,  472. 
Park  B'k  v.  Ninth  Nat,  B'k,  1361, 

1654,  1061. 
Pemberton  B'k  v.  Longee,  713. 
V.  Porter,  769. 
Nave  V.  Richardson,  588,  953, 


Ixiv 


The  reference^       TABLE     OF     CASES.        lareto  the  aeetiona. 


Naylor  v.  Moodv,  1317. 
Nazro  v.  Fuller,  1378,  1379. 
Neal  i\  Erving,  21)0,  2«JU. 
V.  Wood,  101)7. 
V.  AVyatt,  1)92. 
Neale  v.  Turtou,  354. 
Neate  v.  TIarting,  1372rt. 
K  E.  B"k  V.  Lewis,  1209,  1212. 
Nebecker  v.  Catsinger,  852. 
Needles  v.  Needles,  254:. 
Neff's  Appeal,  1311. 
Neff  r.  Horner,  1385. 
Neiffer  v.  B'k  of  Knoxville,  393. 
Nelson  V.  Cowinc,  145. 

V.  Dubois'.  1705,  1707. 

v.  First  Nat.  B'k,501,100G,1799. 

V.  Fotterall,  457,  580,   588,  002, 

945,  955,  959,  904. 
V.  Whittall,  112. 
V.  Woodruff,  1729. 
Nesmitb  v.  Drum,  1044. 
Nevins  r.  B'k    of  Lansingburgh,  1016, 
1782. 
V.  De  Grand,  1415. 
New  T.  Swain,  1280. 
Newberry  r.  Armstrong,  1764. 

V.  Trowbridge,    1147,    1108, 
1165. 
Newcomb  v.  Raynor,  1303. 
Newell  V.  Mayberry,  1410. 

V.  Salmons,  1431. 
Newhall  v.  Clark,  517. 

V.  Dunlap,  311,  411. 
N.  H.  Savings  B'k  v.  Colcord,  1324. 
New  Haven  Co.  B'k  v.  Mitchell,  1052, 

1050. 
New  Hope  D.  &  B.  Co.  v.  Perry,  646, 

1080. 
New  Jersey  v.  Wilson,  446. 
Newman  t.  Frost,  78,  187. 
V.  Gozo,  1450. 
V.  Kerson,  894. 
r.  Williams,  750,  762,  767. 
New  Orleans,  &c.  c.  Abmtgomery,  728, 

784,  m\<i. 

B'k  r.  Harper,  1152. 
Canal  r.  Tompleton,  728. 
V.  Clark,  1502. 
Newsom  v.  Thornton,  1731,  1748, 
Newton  v.  Jaekson,  157. 

r.  Kennedv,  1458^/. 
New  York  B'k  t.  Gibs(m,  1630. 

Firemen's  Ins.    Co.  v.   Ely, 

S84 
M.  Iron  Works?'.  Smith,  827. 
&.  N.  II.  R.  R.  Co.  r.  Schuyler, 

390,  391,  1011. 
<fcc.  Co.  T.  Meyer,  1080. 

V.  Selma  Sav.  B'k, 
998. 


New    York,   etc.  R.  R.   Co.  v.  Hawks, 
1074. 
&  Va.  State  B'k  v.  Gilson,  19. 
Niagara  B'k  r.  Roosevelt,  1689. 

Dist.  B'k  c.  Fairman,  515,  1380, 
1381, 1089. 
Nichol  V.  Bate,  142,  1200. 

1).  Mayor  of  Nashville,  1523. 
Nicholas  v.  Cheairs,  1299. 
Nicholls  V.  Diamond,  413,  488. 

v.  Lefevre,  173(1. 
Nichol's  Ex.  v.  Porter,  902. 
Nichols  V.  Blackmore,  400,  472,  474.488. 
V.  Cross,  1187. 

V.  Goldsmith,  036,  656,  1057. 
V.  Norris,  1322,  1335. 
V.  Pearson,  750,  759,  760,  707. 
v.  Pool,  044. 
v.  Rodgers,  884. 
V.  State  B'k,  283. 
V.  Webb,  945,  967,  968,  1057. 
Nicholson  v.  Gouthit,  1171,  1172. 
V.  Paget,  1755,  1770. 
V.  Patton,  775. 
V.  Revill,  1290,  1294,  1295. 
V.  Sedgwick,  1098. 
Nickerson  v.  Sheldon,  02. 
Nicolay  v.  Fritschle,  1192. 
Nightingale  v.  Meginnis,  1317. 

V.  Withingtou,  227,  682. 
Nimick  v.  Martin,  017. 
Nixon  «.  English,  U37. 

T.  Palmer,  291. 
Noble  V.  McClintock,  300. 

V.  Walker,  753,  763,  766. 
Noblest'.  Bates,  196. 
Noe  «.  Christie,  23. 
V.  Hodges,  81. 
Noel  V.  Murray,  1202,  1204. 
Norman  v.  Cole,  188. 
Norris  v.  Aylette,  1273. 

V.  Badger,  570,  1227. 

V.  Crummey,  1321. 

V.  Cummings,  1318. 

v.  Dcspard,     713,    1000,     1070, 

1590,  1000. 
V.  Langley,  808. 
V.  Solomau,  73. 
Northam  r.  Latouche,  808. 
Northampton  F/k  v.  Pepoon,  394. 
North  B'k  r.  Al)l)0tt,  650,  658,  1048. 
British  Ins.  Co.  v.  Loyd,  1309. 
Peon.  R.  R.  Co.  v.  Adams,  1513, 

1514,  1515. 
River  B'k  v.  Aymar,    280,   283, 
284. 
Northrop  «.  Sanborn,  80,  1580. 
Korthumberhind  Co.  B'k  c.  Eger,  1776. 
Norton  v.  Eastman,  1785. 
V.  Lewis,  010,  1048. 


The  refer eneeB]        TABLE     OF     CASES.        [are  to  the  sections.         IxV 


Norton  v.  Pickering,  1077. 

X.  Rose,  5. 

V.  Sevmour,  361,  I'llS. 

r.  Wiiite.  832. 
Xott  V.  Beard,  953. 
Norvell  v.  Huflgins,  789,  795. 
Norwich  B'k  v.  Hyde.  86. 

Town  Co.,  ill  re,  1616. 
Noxon  V.  De  Wolf,  728. 
Noyes  v.  Price,  1687. 
Nunez  v.  Dautel,  45. 
Nunnemaker  v.  Lanier,  1590. 
Nurre  v.  Chittenden,  710,  713. 

Oakey  v.  Beauvais,  635. 

V.  Wilcox,  1379. 
Oaklev  i\  Oodd-een,  799. 
Oaks  \\  Weller,  1785. 
Oaste  V.  Taylor,  6. 
Obbard  r.  Bethani,  201, 
Ober  i\  Gallego,  834«. 

T.  Goodrich,  670,  728,  1199. 
O'Brien  v.  Gilchrist,  1729. 

V.  Smith.  1590. 
O'Callaghan  v.  Tliomond,  883. 
Ocean  Nat.  Bank  «.  Carll,  1057. 
13.  Fant,  833. 
V.  Williams,  581,  587. 
Ocean  Tow  Boat  Co.  v.  Ship  Ophelia, 

1623. 
O'Connell  v.  McQueen,  1248. 
Odam  V.  Beard,  719. 
Oddie  V.  Nat.  City  B'k,  1621. 
Odiorne  v.  Sargent,  155. 

t.  Woodman,  725,  746. 
Ogden  v.  Astor,  350. 

V.  Conley,  1049. 

V.  Dobbin,  656,  991,  992. 

v.  Marchand,  322,  769. 

V.  Saunders,   014,  616,  671,  672, 
874. 
Ogilby  V.  Wallace,  1185. 
Ogle  V.  Graham,  1384. 
Oglesby  v.  Steamboat  Co.,  1148. 
Oglivie  v.  Moss,  267. 
O'Hara  v.  Haas,  1343. 
Ohio  Ins.  Co.  v.  Edmonson,  866. 
Ohio  Lite  &  Trust  Co.  v.  Debolt,  1525. 
Okie  V.  Spencer,  1329. 
01cott».  Rathbone,  1195,  1266.  1623. 

V.  Supervisors,  1521,  1523. 
Olendorf  ».  Swartz,  1110. 
Oliver  v.  Andros,  672. 

V.  B'k  of  Tenn.,  1074,  1076. 
Olmstead  v.  Winstead,  1680. 
Olney  v.  Chadsey,  395. 
Omohundro  v.  Crump,  56,  87. 
Onondaga  Co.  B'k  v.  Bates,  580,  584. 

V.  DePuy,  357,  936. 
Ontario  B'k  v.  Worthington,  827,  984. 
Vol.  1.— E 


Ord  «.  Portal,  1193. 
Orear  v.  McDonald,  1076,  1078,  1082. 
Oridge  v.  Sherborne,  599,  617.  621. 
Oriental  B'k  i\  Biake,  1000,  1177,  1179. 
Orleans  v.  Whittcmore,  1180. 
Ormsby  t.  Kendall,  306. 
Orouo  B'k  y.  Wood,  963. 
Orr  V.  LaceV,  1217. 

v.  Magginnis,  454,    926,   940,  942, 
1081. 
Orrick  v.  Colston,  144,  147,   666,  709, 

713,  84.3. 
Orvis«.  Kimball,  231. 
O.sbom  V.  Hawley,  61. 

V.  Moncure,  1209. 
V.  Nicholson,  170,  172. 
t).  Bobbins,  1306. 
Osgood  V.  Pearson,  103. 
Osmond  v.  Fitzroy,  211. 
Oswego  B'k  V.  Knower,  1107. 
Other  V.  Iveson,  1298. 
Otis  'V.  Galium,  734a. 
v.  Hussey,  1149. 
Otsego  Co.  B'k  v.  Warren,  955,  1140. 
Otto».  Bedden,  1118. 
Oulds  V.  Harrison,  725,  1436. 
Outhouse  V.  Outhouse,  1469. 
Outhwaite  e.  Luntlev,  1376,  1377. 
Overman  r.  Hobokeu  City  B'k,  491, 1619. 
Overseer  ot  the  Poor  t\  Bank  of  Va.,  326. 
Overton  v.  Bolton,  868,  1458a. 

V.  Hardin,  750,  751,  753. 
V.  Tyler,  1,  61. 
Owen  r.  Barrow,  1230. 

T.  Branch  B'k,  1725. 
V.  Homan,  1322. 
V.  Iglanor,  513,  514. 
v.  Lavine,  514. 
V.  Moody,  883. 
V.  Van  Uster,  488,  489. 
Owens  V.  Dickinson,  248. 
Owensou  v.  Morse,  1272,  1672,  1679. 
O wings  r.  Arnot,  1376. 

V.  Speed,  388. 
Oxford  B'k  V.  Haynes,  1787,  1788. 
V.  Lewis,  1328. 
•   Iron  Co.  V.  Spradley,  200. 

Pace  V.  Robertson,  1342. 
Pacific  B'k  v.  Mitchell,  1221. 
Pack  i\  Thomas,  81,  1586. 
Packard  v.  Lvon,  637,  1115. 
T.  Nye,  406. 
r.  Richardson,  1764. 
Pack"wood  r.  Grindley,  801. 
Pagan  v.  Wylie,  1409.' 
Page  V.  Gilbert,  982. 

V.  Morrell,  143. 

V.  Newman,  112. 

V.  Page,  898,  1478. 


Ixvi 


The  references]       TABLE     OF     CASES.       [are  to  the  sections. 


Page  V.  Prentice,  10:U. 
V.  Warner,  1400. 
V.  Webster,  049,  650. 
Paige  V.  Stone,  294,  805. 
Pain  V.  Packaul,  lo39. 
Paine  v.  Noelke,  713. 
Palfrey  v.  Baker,  1274. 
Palmer  v.  Dodge,  ;57<>.  373. 
V.  Crant,  94,  1780. 
V.  Hughes,  043. 
V.  Hummer,  44. 
r.  Largent,  850. 
i\  Logan,  1471. 
V.  Marshall,  709. 
V.  :\Iinor,  199. 

V.  Nassau  B'k,  693,  812, 1191. 
V.  Pratt,  41. 
V.  Richards,  827. 
V.  Stephens,  74,  688. 
v.  Ward,  47. 
V.  Whitney,  812. 
f.  Yarrington,  807. 
Papple  v.  Day,  185. 
Parcel  v.  Barnes,  422. 
Pardee  ».  Fish,  50,  1702, 1703,  1700. 
Parham  v.  Murphee,  1197. 
Parish  v.  Stone,  25,  201. 
Park  T.  Koss.  443. 
Park  B"k  v.  Watson,  827. 
Parke  r.  Smith,  1217. 
Parker  v.  Burgess,  308. 
V.  Carter,  179. 
V.  City  of  Syracuse,  21. 
V.  Cousins,  370,  373,  1300. 
V.  Davis,  1248. 
t.  Gordon.  404.  1038. 
V.  Greele,  501,001. 
V.  Leigh,  545. 

V.  Macomber,  370,  372,  873,  683. 
V.  Marston,  24. 
V.  Nations,  1305. 
Parkersburg  Nat.  B'k  v.  Als,  1653. 
Parkhurst  r.  Vail,  713,  1310. 
Parkin  v.  Carruthers,  353. 

.     '0.  Moon,  728. 
Parks  V.  Duke,  32. 

V.  Ingram,  1335. 
Parmelee  v.  Lawrence,  1565. 
Parnell  v.  Price,  1319. 
Pair  «.  Jewell,  726. 

V.  Eliason,  700. 
Parsons  v.  Alexander.  197. 

V.  Phipps,  1217. 
Partridge  v.  Badger,  382,  394. 

V.  B'k  of  England,  1570,1651 

1710. 
V.  Colby,  94,  1388. 
V.  Court,  208 
r.  Davis,  688,  1781. 
V.  Stockton,  250. 


Passmore  v.  Nortli,  85. 
Passumpsic  B'k  v.  Goss.  854. 
Pate  V.  Grav,  1425, 1429. 

V.  McClurc,  1148.  1151. 
Pates  V.  St.  Clair,  1431. 
Paton  v.  Coit,  198,  808. 

V.  Lent,  1012. 
Patience  v.  Townlev,  1000,  1008. 
Patrick  v.  Beazlcy,  1005,  1014. 
Pattee  v.  McCrillis,  963. 
Patten  v.  Ash,  1646, 1048. 
V.  Gleason,  790. 
V.  Merchants'  Ins.  Co.,  802. 
V.  Moses,  1191. 
Patterson  v.  Hardacre,  167,  1483. 
V.  McNeely,  1385. 
V.  Poindexter,  1703,  1705. 
V.  Todd,  611. 
Pattison  v.  Hull,  1250,  1251. 

r.  Supervisors,  1524. 
Patten  «.  Shanklin,  1317. 

V.  State  B'k,  1482, 1095. 
Patts».  Bell,  221. 
Paul  V.  Berry,  318. 
Paulette  v.  Brown,  829. 
Payne  v.  Bensley,  824,  827. 
V.  Clark,  80. 
V.  Commercial    B'k,   1311,   1316, 

1328. 
v.  Flournoy,  268. 
V.  Jenkins,  35. 
Paysant  v.  Ware,  83. 
Peabody  i\  Harvey,  1157. 
V.  Peters,  1437. 
V.  Pees,  726.  803. 
Peacock  «.  Purcell,  828,  993, 1276. 
Pearce  v.  Austin,  1185, 1200. 

V.  Davis,  1623,  1646,  1648. 
V.  Madison,  &c.  R.  R.  Co.,  377. 
V.  Wren,  1765. 
Pearl  r.  McDowell,  212. 
Pearsall  v.  Dwight,  800,  867,  883. 
Pearson  v.  B'k  of  Metropolis,  661. 

V.   Crallan,    1015,   1033,    1034, 

1057,1457. 
V.  Cummings,  123. 
V.  Garrett,  41. 
T.  Peais(m,  179. 
V.  Stoddard,  76,715. 
Pease  v.  Cornish,  430,433. 
V.  Dwight,  706,  1404. 
V.  Gloahec,  1750. 
V.  Hirst,  741,1197, 
i\  Morgan.  287. 
V.  Pease,  303. 
V.  Warner,  326,  575. 
Peaslee  v.  Robins,  93,  536. 
Peasley  v.  Boatwriyht,  32,  102. 
Peck  T.  Cochran.  505. 
V.  Hozier,  886. 


T}ie.reference><\        TABLE     OF     CASES.        \.are  to  the  aectionii.         \\\\\ 


Peck  V.  Mayo,  918,  920. 

V.  Regina,  190. 
Pecker  <'.  Sawyer,  1217. 
Peckham  v.  Gilnian,  713. 
Peden  v.  Moore,  203. 
Peele  v.  Nortlicote,  514. 
Peet  V.  Zanders,  1121. 
Peets  ».  Bratt,  63. 
Pekin  r.  Reynolds,  1479. 
Pender  v.  Kelly,  853. 
Pendleton  v.  B'k  of  Kentucky.  392. 
Pendleton  Co.  v.  Amy,  1520,1523,1537, 

1545,  1547. 
Penkwil  v.  Connell,  298. 
Penn  v.  Edwards,  1199. 
r.  Harrison.  1678. 
Penniman  v.  Meigs,  875. 
Pennington  ».  Bselir,  74,  1492. 

V.  Gittings,  179. 
Pennock  v.  Coe,  1493. 
Penny  n.  Graves,  81. 

V.  Innes,  705,  714.  1202. 
Pentz  V.  Simeon,  248. 

V.  Stanton,  303,  305,  311. 
People  V.  Baker,  1623,  1648. 
■y.  Batchellor.  1556. 
V.  Bostwick,  856, 
V.  Brigham,  1316. 
V.  Gamer.  1335cr. 
r.  Gates,  122. 
v.  Getchell,  1348. 
v  Gray,  422,  427. 
V.  Halden,  1555a. 
V.  Howell,  1648. 
V.  Lawrence,  1556,  1557. 
V.  McDermott,  108. 
V.  Mead,  1495.  1.552. 
V.  State  Treasurer,  1685,  1686, 
V.  Sup.    of    Eldorado    Co.,  422, 

427,  1536. 
V.  Tazewell  Co.,  1497,  1535. 
V.  Township    Board    of     Salem, 

1528. 
v.  Warfield,  1335a. 
r.  Weant,  1335a. 
People's  B'k  v.  Brooke,  656,  952. 

V.  Keech,  999. 
Peoria  R.  R.  Co.  v.  Neill,  533. 
Pepoon  v.  Stagg,  39,  1395. 
Percival  ».  Frampton,  165,  183. 
Perfect  v.  Murgrave,  1330. 
Perkins'  Case,  75,  76. 
Perkins  v.  Barstow,  713. 
t'.  Catlin.  1765. 
t\  Challis,  796. 
V.  Clements,  1181. 
V.  Commonwealth,  1346. 
V.  Camming.  204. 
V.  Franklin  B'k.  622,633,  1671. 
V.  Hawkins,  1428. 


Perkins  v.  Lymans.  196. 

V.  Prout,  815. 
Perreira  v.  Jopp,  116,  463. 
Perrin  v.  Broadwcll,  1304. 

v.  Keene,  370. 
Perring?;.  Hone,  361,  1390. 
Perry  ».  Barrett,  1750. 

t\  Crammonds,  64. 
V.  Green,  607,  609. 
V.  Hadnett,  1338. 
V.  Harrington,  513. 
V.  Mays,  1437. 
V.  Taylor,  1458a. 
Peru  v.  Farnsworth,  56. 
Peters  v.  Anderson,  1252. 
V.  Beverley,  1200. 
V.  Hobbs,  1023,  1071. 
Petersen  v.  Union  Nat.  B'k,  1596. 
Peterson  r.  Mayor  of  New  York,  317. 
Petit  V.  Benson,  516. 
Peto  V.  Reynolds,  96. 
Petrie  v.  Feeter,  1 309. 
Pettee  v.  Prout,  1200,  1431,  1437. 
Pettilon  %\  Noble,  834. 
Petty  V.  Fleispel,  80. 

V.  Hinman,  758,  778. 
Peyton  v.  Hallett,  21,  23. 

V.  Harman,  76. 
Pfiel  V.  Vanbatenberg,  1206,  1227. 
Phelan  t.  Moss,    773,    775,    779,    1407, 

1409. 
Phelps  V.  Alfred  B'k,  1536. 
«.  Moorman,  48. 
T.  Northrup,  505. 
V.  Phelps,  179. 
V.  Vischer,  713. 
T.  Younger,  190. 
Philadelphia  r.>ield,  1556. 
Philadelphia  Loan  Co.  v.  Towner,  384. 
Philadelphia,  &c.  R.  R.  Co.  v.  Northam, 

1738. 
Philipe  X.  Harberlee.  1007. 
Phillips  V.  Alderson,  1016. 
V.  Astberg,  590. 
V.  Bullarcl,  1623. 
t'.  Dugan,  1247. 
V.  Frost,  497. 
V.  Gould,  972,  983. 
V.  Im.  Thura,  908. 
«.  Inthun,  136. 
t.  Mcl'urdy,  930,  1157. 
V.  Paget,  227. 
V.  Poindexter,  964. 
V.  Preston,  187. 
V.  Thurn.  528. 
Philliskirk  v.  Pluckwell,  254,  256,  6Sil. 

1184. 
Philpott  T.  Bryant.  454,  591,  1316. 

V.  Jones,  1250. 
Phipps  V.  Milbury  B'k,  331. 


Ixviii  Tlte  references]        TA1)LE     OF     CASES.        [are  to  the  sections. 


Pliipps  V.  Tanner,  86. 

I'hcL'nix  B'k  v.  Ilussey,  9. 

Phoenix  Ins.  Co.  v.  Allen,  472,12.72,1276. 

r.  Gray,  472. 
Phipson  r.  Kneller,  1094. 
Pliren  v.  Royal  B'k  of  Liverpool,  1449. 
Pickard  r.  Bankes,  1 087. 
Pickiii  V.  Graham,  1158. 
Picqnet  v.  Curtis,  57G,  643. 
Pierce  u.  Cate,  1144,  1210. 
v.  Drake,  1209. 
V.  Goldshcrry.  1317. 
V.  Kittredge,'  504. 
V.  Pendar,  1005. 
V.  Strathers,  1030. 
v.  U.  S„440. 
V.  Whitney,  1109. 
Piercy  p.  Piercy,'lo91,  1418. 
Piersol  v.  Grimes,  1:173. 
Pierson  v.  Dmilap,  503,  552,  554. 
v.  Ilutcliinson,  1475,  1482. 
V.  AVallace,  1672. 
Pike  V.  Irviu,  568,  569. 
V.  Street,  717,  720. 
Pilkinton  t.  Commissioners   of  Claims, 
1244. 
V.  Woods.  449. 
Pillans  V.  Van  IMierop.  176,529  ,553,  567. 
Pillow  V.  Hardeman,  1000. 
Pilmer  v.  Branch  B'k,  56. 
Pinard  r.  Klockman,  115. 
Pinckney  v.  Kevler,  1428. 
Pindall  v.  B'k  of  Marietta,  1250. 

V.  N.  W.  B'k,  1675. 
Pindar  t\  Barlow,  145. 
Pine  V.  Smith,  787,  894. 
Piner  v.  Clary,  599,  005,  929. 
Pinkcrton  <■.  Bailev,  728. 
Pinkham  r.  Macy,'983. 
Pinknev  ';.  Hall,  6,  488. 
Pinnel's  Case,  1289. 
Pinnes  v.  Ely,  688. 
Piutard  r.  Tackino-ton,  1472,  1484. 
Pitcher  v.  Barrows,  354. 
Pitman  v.  Brecken ridge,  970. 
V.  Crawford,  50. 
V.  Kentner,  306,  402,  408. 
Pitt  V.  Chappelow,  242. 

r.  Pussord,  1340,  1341. 
V.  Smith,  214. 
Pitts  t\  Keyser,  1198. 
Plant  V.  Voeglin,  859. 
Planters'  B"k  v.  Bradford,  1032. 
V.  Douglass,  532. 
V.  Housen,  719. 
V.  Keese,  1567, 1568,  1569, 

1636. 
V.  Mark  ham,  601. 
f.  Merrit,  1636. 
V.  Sharp,  385. 


Planters'  B'k  v.  White,  1000. 

&c.  v.  Ervin,  387. 

1).  Evans,  128,  668. 
Piatt  V.  Beebe,  183«. 
V.  Drake,  983. 
t\  Jerome,  861. 
1).  Smith,  1388. 
Platzer  v.  Norris,  73, 
Plets  V.  Johnson,  130,  139. 
Plummer  v.  Lyman,  566. 
Pogue  V.  Clark,  94. 
Poirier  v.  Morris,  827,  1192. 
Polhill  V.  Walter,  64,  65,  307,  362,  485. 
Police  Jury  v.  Britton,  420,  422. 
Polk  i\  Spinks,  1064. 
Pollard  V.  Bowen,  1586,  1600. 

V.  Herries,  1453. 
Pollock  «.  Bradbury,  721. 

V.  Glassel,  34. 
Pomeroy  v.  Ainsworth,  879. 
r.  Rice,  1266,  1267. 
V.  Tanner,  1313,  1329. 
Pond  V.  Underwood,  1615. 
Pons  f.  Kelly,  1082. 
Poole  i\  Dicas,  580. 

V.  Rice,  305,  1260. 
V.  Tolleson,  611. 
Pooley  V.  Harradine,  1334,  1330,  1387. 
Poore  V.  Magruder,  284. 
Poorman  r.  Mills,  1195. 
Pope  V.  Askew,  1219. 

V.  B'k  of  Albion,  392,  1261,  1606, 

1610. 
v.  Burnset,  119. 
v.  Huth,  23,  513. 
r.  Linn,  69,  70. 
Poplewell  i\  Wilson,  108.  186. 
Popley  V.  Ashlin,  736,  1269. 
Porter  v.  Cumings,  287. 

i\  Cushmau,  574,  694,  1230. 
V.  Havers,  196. 
V.  Jones,  196. 
v.  Judson,  1116. 
V.  Kemball,  1094,  1095. 
v.  Ncckervis,  687,  1429. 
V.  Talcott,  1264. 
Porthouse  ?).  Parker,  1086. 
Portland, &c.  R.R.  Co.  v.  Hartford,  1551. 
Posey  v.  Decatur  B'k,  392,  654,  1478. 
Fetter  1).  Merchants'  B'k,  892. 
V.  Ray  worth,  1110,  1158. 
V.  Tallman,  922. 
V.  Tyler,  663. 
Potts  V.  Blackwell,  mia. 

V.  Road,  699. 
PowelU-.  Charless,  1299,  1300. 
V.  Commonwealth,  1844. 
v.  Duff,  142. 
V.  Feeley,  125. 
V.  Hogue,  1429. 


27i.e  refere!ice.s]       TABLE     OF     CASES.       [are  to  the  sections.  ]xix 


Powell  V.  Jones,  506. 

T.  Monmer,  14,  06,  552. 
v.  Roach,  1475. 

V.  Waters,  65,  630,  726,  751,  790, 
793,  1190,  1326. 
Power  r.  Finnie,  698. 

V.  Hathaway,  884. 
Powers  V.  Briggs,  403. 
V.  French,  175. 
t\  Lynch,  678. 
V.  Neeson,  724. 
Poydras  v.  Delamere,  23. 
Pratt  «.  Beaupre,  418. 

V.  Chase,  875,  1283,  1331. 
«.  Coman,  183«. 
t\  Foote,  1206,  1621. 
V.  Parkman,  1731. 
V.  Topeka,  1188. 
Prayne  v.  Milwaukee,  1458a. 
Prentice  v.  Zane,  803,  828. 
Prentiss  v.  Danielson,  1143. 
V.  Graves,  828. 
V.  Savage,  879,  921. 
Prescott  i'.  Flinn,  290,  296. 
V.  Hull,  740. 
V.  Ward,  187. 

B'k  ».  Caverly,  242,  466,   472, 
675,  719. 
Preston  v.  Dunham,  47. 

V.  Hull,  148,  1499. 
t\  Jackson,  206. 
v.  Mo.,  &c.  Lead  Co.,  387. 
T.  Morris,  834. 
V.  Whitney,  51. 
Prestwick  v.  Marshall,  252,  681. 
Prettyman  v.  Tazewell  Co.,  1497,  1523, 

1524,  1536. 
Price  V.  Barker,  1295. 
V.  Cannon,  1289. 
t\  Dunlap,  14^1,  1484. 
V.  Edmunds,  1319,  1335,  1336. 
V.  Lavender,  715,  716. 
V.  Neal,  533,  1225. 
V.  Page,  898. 

«.  Price,  1260,  1269,J272,  1475. 
V.  Taylor,  402. 
«.  Teal,  54. 
t\  Torrington,  1057. 
v.  Truadell,  703. 
r.  Young,  591,  1036,1111. 
Prideaux  v.  Collier,  1075,  1107,  1163. 
Pridgen  v.  Andrews,  1458rt. 
Pridgeon  v.  Cox,  502. 
Prigeon  v.  Smith,  170. 
Prince  t\  Boston,  &c.  R.  R.  Co.,  1733. 

V.  Brunatte,  242,  681. 
Pring  V.  Clarkson,  i  328. 
Pringle  V.  Philliijs,  775,  814. 
Proctor  r.  Sears,  233. 

«.  Webber,  403. 


Prouty  1-.  Wilson,  1321. 

Protection  Ins.  Co.  v.  Hill,  47. 

Puffer  V.  Smith,  849. 

Puget  de  Bras  v.  Forbes,  174,  178. 

FuUen  v.  Shaw,  1420. 

Pulsifler  v.  Hotchkiss,  203. 

Purcell  V.  AUemoug,  1508,  1580,  1587, 

1596,  1636. 
Purchase  v.   Mattison,  792,  1049,  1105, 

1596. 
Piiryear  v.  McGavock,  200. 
Putnam  v.  Dike,  884. 

V.  Lewis,  1267,  1272,  1273. 

V.  Schuyler,  1309. 

V.  SuUivan,  143,  147,  843,  847, 
1144. 

v.  Tash,  1758. 
Putney  v.  Farnham,  596. 

Quimby  v.  Buzzell,  112. 
Quin  V.  Hanford,  569. 

V.  Sterne,  688.  710,  715. 
Quinby  «.  Merritt,  55,  103. 
Qiiincy,  &c.  R.  R.  Co.  v.  Morris,  1523. 
Quinn  v.  Hard,  1190. 
V.  Tuller,  190. 

Raborg  v.  Peyton,  534. 
Rae  V.  Halbert,  1426. 
Raggett  V.  Axmore,  1333. 
Rahm  v.  Philadelphia  B'k,  656. 
Railroad  Co.  v.  Chamberlaine,  176,  180. 
V.  Evansville,  1527. 
V.  Howard,  1708. 
V.  Johnson,  1248. 
t\  Otoe  Co.,  1521,  1523. 
Railway  v.  Cleneay,  1489,  1500. 
Raiubolt  v.  Eddy,  1400. 
Raine  v.  Rice,  902. 
Ralston  v.  Bulitts,  1083,  1106. 
Rait  V.  Watson,  1483. 
Ramdulloday  v.  Darieux.  1083. 
Ramsdale  v.  Horton,  1075. 
Ramsdell  v.  Morgan,  807. 
Ramsey  v.  Anderson,  1189. 

V.  Peoria,  386. 
Ramuz  v.  Crowe,  1484. 
Rand  v.  Dovey,  31,  664,  1196. 
V.  Hale,  403. 
V.  Hubbard,  261,  680. 
V.  Reynolds.  1028. 
V.  State  of  K  C,  797. 
Randolph  v.  Parish,  128. 
Raney  v.  Winter,  298,  411. 
Ranger  v.  Carey,  746. 

V.  Sargent,  1771. 
Rankin  v.  Childs,  1785. 

V.  Roler,  34. 
Ranklin  v.  Weguelin,  24. 
Ransom  v.  Mack,  984,  1014,  1115. 


Ixx 


Tlie  referencei<-\        TABLE     OF     Cx\SES.        {are  to  the  sections. 


Rapcleye  r.  Barley,  1785. 
Raper  i\  Birkbeck,  549. 
Raphael  r.  B"k  of  Euo-laud,  774,  IGSO. 
Rastell  V.  Draper,  1580. 
Ratelirt'r.  Planters'  B'k,  1144. 
Raun-ht  i\  Black,  1319. 
Rawlinson  v.  Stone,  242,  G80. 
Rawson  v.  Walker,  80,  81. 
Ray  V.  Indianapolis  Ins.  Co.,  93. 
T,  Faulkner,  513. 
r.  McMillan,  764. 
V.  Smith,  1128,  1143. 
Raymond  v.  Baar,  1675. 

V.  Holmes,  898,  901,  909,  910. 
V.  Mann,  128. 
V.  Merchant,  1275. 
V.  Middletcn,  106. 
Rayne  «.  Dills,  670. 
Rea  t.  Dorrance,  1083. 

t.  Owens,  1280. 
Read  v.  B'k  of  K'y.,  934. 
V.  Cutts,  1786. 
V.  Marsh,  55i,  553. 
V.  McNulty,  54. 
V.  Norris,  1342. 
V.  Wheeler,  36,  39. 
V.  Wilkinson,  508,  1162. 
Reakert  v.  Sanford,  254,  681,  1253.   • 
Reamer  v.  Bell,  692. 
Reavis  v.  Blackshear,  170. 
Reddick  v.  Jones,  832. 
Redington  r.  Wood,  677,  915, 1654, 1061. 
Redlick  v.  Doll,  143,  842, 843, 1406, 1498. 
Redman  v.  Adams,  51. 

V.  Deputy,  1317. 
Redmayne  v.  Burton,  1696. 
Redmond  ».  Stansburv,  1200. 
Reed  r.  Batclielder,  223,  230,  231. 
V.  Boardman,  1251. 
V.  Boshears,  233,  235. 
V.  Evans,  1764. 
V.  Roark,  74,  1400. 
V.  Trent  man,  792. 
«.  White,  1299. 
V.  Wliituey,  1428. 
Reedy  v.  Seixas,  979. 
Rees  V.  Abbott,  94. 

V.  Berrington,  1336. 

V.    Conococlieague   B'k,    145,  663, 

694,  695,  1195. 
T.  Warwick.  506. 
Reeve  v.  Pack,  643. 
Reeves  v.  Howe,  996. 
V.  Scullv,  834. 

V.  State  B'k  of  Ohio,  328,  841,844. 
Regina  t.  Coulsen,  1348. 
V.  Ilawkas,  96. 
v.  Keith,  1346. 
V.  Sewell,  207. 
V.  Watts,  1649. 


Regina  r.  Wilson,  1344. 
Reichert  r.  Koerner,  726. 
Reid  V.  Coats,  971. 

V.  Furnivai,  l81,  668. 

V.  Morrison,  1144,  1145. 

V.  Payne,  1022,  1025. 

V.  Reid,  1595. 

r.  Smart,  1254. 
Reigart  v.  White,  1753. 
Reinbath  v.  Pittsburgh,  1527,  1532. 
Relyea  v.  N.  H.  Rolling  Mill  Co.,  1729.. 
Renick  v.  Robbins,  991. 
Renner  v.  B'k  of  Columbia,   622,   623,, 
1472,  1473,  1481. 
V.  U.  S.,  622. 
Renshaw  «.  Triplett,  987. 
Requa  v.  Collins,  1032. 
Revel  V.  Revel,  256. 
Rew  ■».  Barber,  1264. 
Rex  1).  Atkinson,  1347. 

V.  Beckett,  1350. 

V.  Begg,  688. 

v.  Box,  101,  104. 

V.  Burke,  1346. 

V.  Elliott,  86. 

V.  Hales,  1344. 

V.  Hall,  1346. 

V.  Hart,  1344. 

V.  Hunter,  133. 

V.  Lambton,  63,  67,  667. 

V.  Palmer,  1350. 

i\  Parke,  1345. 

V.  Pateman,  1346. 

V.  Plumer,  1052 

V.  Post,  70,  1346,  1347,  1350. 

V.  Randall,  145. 

«.  Reculist,  1346. 

T.  Richards,  1316. 

v.  Rogers,  1345. 

V.  Shukard,  1350. 

V.  Treble,  1346,  1377. 

T.  Webb,  1345. 
Rey  V.  Kennear,  481. 

1).  Simpson,  703,  710,  712,  715. 
Reynolds  v.  Appleman,  969,  976,  984. 
r.n.'heltle,  588,  656. 
V.  Douo-lass,  1147,  1788. 
V.  Fren'ch,  1468. 
V.  Peto,  96,  506. 
Rheuistron  v.  Cone,  124. 
Rhett   V.   Poe,   999,    1058,    1081,   108G,. 

1788. 
Rhode,  ex  parte,  1144. 
V.  Allev,  728. 
V.  Proctor,  1001. 
Rhodes  v.  Lindley,  55. 

V.  Seymour,  608. 
Rice  V.  Gove.  401. 

V.  Hogan.  128. 

V.  Ragland,  80. 


The  references]       TABLE     OF     CASES.        [are  to  the  secii'ma.  IxXl 


Rice  V.  Stearns,  700. 
Rich  V.  Errol,  422. 

V.  Lambert,  1729. 
V.  Starbuck,  99.  142,  Uo. 
i\  Toppine:,  1217. 
Richards  v.  Daily,  6G3,  725. 
V.  Darst,  63. 
V.  Doe,  1742. 
V.  Frankuui,  112. 
V.  Globe  B'k,  922. 
V.  Richards,  80,  254,  256,  686, 
1184. 
Richardson  r.  Carpenter,  50. 
V.  Dao-gett,  255. 
V.  Ellett,  88. 
V.  French,  359. 
V.  Lincoln,  63,  66,  700,  1201. 
V.  Mellish,  196. 
V.  Merrill,  250. 
V.  Parker,  1432. 
V.  Rice,  830. 
V.  Rickman,  1260. 
V.  Schirtz,  850. 
V.  Scobie,  751. 
Richie  v.  Bradshaw,  1590. 

V.  McCoy,  1082. 
Richmond  v.  Heapy,  354. 

Mfg.  Co.  V.  Davis,  1387. 
Richmond,  Pot.  &  Fred.  R.  R.  Co.  v. 

Snead,  418. 
Richterr.  Seliu,  1140,  1142,  1148. 
Ricliwine  v.  Keirn,  257. 
Ricketson  v.  Wood,  1304. 
Ricketts  v.  Pendleton,  721,  959. 
Rickford  v.  Ridge,  331,  1590,  1592. 
Ricord  v.  Bettenham,  221, 
Rideout  v.  Bristol,  80,  827. 
Ridgeway  v.  Day,  1106. 
Ridgwav  v.  Farmers'  B'k,  392,  897. 
Ridley  v.  Taylor,  366. 
Riegel  v.  Cunningham,  726,  786. 
JX'ighj,  ex  parte,  1615. 

V.  Noi-wood,  1764. 
Riggin  X.  Collier,  1 1. 
Riggs  V.  Lindsay,  565,  1450. 

V.  Waldo,  713. 
Riker  v.  Cosby,  694. 
Riley  v.  Dickens,  86. 

V.  SchaAvliacker,  803. 
Rindskott'  v.  Barrett,  1706. 
Ringgold  V.  Tyson,  1217. 
Ringo  y.  Trustees,  1683. 
Riptev  0.  Greenleaf,  1329. 
Ritcliie  V.  Moore,  694,  1128,  1439. 
Ritteuhouse  v.  Ammerman.  263. 
Ritter  v.  Singmastcr,  205,  1274.  1369. 
Rivers  v.  Moss,  170. 

V.  Parmlev,  960,  962. 
Roach  V.  Ostler,  "128,  482. 

T.  Roanoke  Classical  SeminarT,80. 
Roak  V.  Turner,  767. 


Robarts  v.  Tnckor,  1571,  1058,  16G3. 
Robb  V.  Bailey,  683,  1183. 

r.  Ross  Co.  B'k,  392. 
Robbing  v.  Eaton,  231,  234. 

V.  Pinkard,  1057. 
Robinson  v.  Leavitt,  1492. 
Roberts  v.  Austin,  19,  313,  1567,  1037, 
1038,  1639,  1643. 
V.  Bethel,  63,  493,  494. 
V.  Bradshaw,  1051,  1160. 
t\  Fisher,  737. 
V.  Hall,  781. 
V.  Hardy,  216. 
V.  Jacks,  51. 
V.  Lane,  736,  803,  815. 
t.  McGrath,  854. 
v.  Manson,  1119. 
^^  Masters,  707,  713,  716. 
V.  Peake,  41. 
V.  Roberts,  196. 
v.  Wood,  834. 
Robertson  v.  Allen,  675. 

r.  Banks,  262,  271. 
V.  Burdekin,  905. 
V.  City  of  Rockford,  1524. 
V.  Kensington,  697,  6'.)8. 
V.  Parks,  1428. 
V.  Robertson,  190. 
V.  Smith,  1294,  1296. 
V.  Stewart,  101. 
V.  Williams,  189,  790. 
Robins  v.  Bacon,  17,  21,  22,  1721. 

«.  Gibson,  940,  943,  1076,  1078. 
Robinson's  Adm'rs  v.  Allison,  1353. 
Robinson,  ex  jxirte,  313,  314. 
V.  Abel,  713. 

'c.  Ames,  454,  471,1076,1313. 
V.  B'k  of  Darien,  1478,  1693. 
V.  Bartlett,  713. 
V.  Beall,  1683. 
V.  Bland,    86,   128,  204,  213, 

740,  866,  879. 
V.  Blen,  598. 
i\  Gardiner,  1681,  1691. 
v.  Hamilton,  1030. 
V.  Hawks,  1638. 
V.  Lair,  184. 
V.  Law,  123. 
«.  Lyle,  1331. 
1).  Read,  740,  1271. 
V.  Reynolds,  174,  803. 
V.  St.^Louis,  1522. 
V.  Taylor,  373. 

V.  Yarrow,  290,  536,  538,  539, 
1225,  1364. 
Robson  V.  Bennett,  9!i2,  1590. 
V.  Curlewis,  983. 
V.  Early,  1198. 
Rock  B'k  V.  Hewitt,  623. 

Co.   Nat.   B'k    V.   Hollister,  698, 
721,  1192. 


Ixxi 


ne  references]        TAIjLE     OF     CASES.        [nre  to  the  seciiann. 


Rockhill  r.  Mnnrc,  722. 

Rockwell  r.  Hunt,  122. 

Rodab:ui<i-li  v.  Pitkin,  1787. 

Rockn  r.  Kydc,  1218. 

Rocks  V.  Patillo,  170. 

Rodick  V.  Gandelle,  1G45. 

Roehncr  v.  Knickerbocker  Life  Ins.  Co., 

G21. 
Roger  V.  Keystone  Nat.  B'k,  827. 
Rogers  v.  Eatchelor,  3()6.  o69, 

V.  Burlington,  1522,  1523,  1532, 

1547. 
V.  Colt,  088. 
V.  Gibson,  101. 
«.  Hackett,  1110,  1162. 
V.  Had  ley,  193,  770. 
V.  Lano-ford,  1119,  1679. 
'/).  Miller,  1484. 
■V.  Morton,  816. 
i\  Posters,  1882. 

V.  Stephens,  942,  971,  986,  1102. 
v.  Walker,  213. 
V.  Ward,  248. 

V.  Ware,  136,  138,  139,  140,  163. 
V.  Warner,  1770. 
V.  Waters,  1 86. 
Rogerson  ».  Hare,  991. 
Roget  y.  Merritt,  1269. 
Rohan  v.  Hanson,  1252. 
Rohde,  ex  parte,  1144. 
Rohrer  v.  Morningstar,  1217. 
Roland  v.  Logan,  254. 
Rolfe  V.  Wyatt,  1335. 
Rolin  V.  Stewart,  1638,  1642. 
Rolk'ston  V.  Hibbert,  744. 
Rollins  «.  Riirtlett,  1393. 

V.  Gilson,  986. 
Rolt  V.  Watson,  1475. 
Rome  V.  Cal)at,  1522. 
Roof  r.  Stadbrd,  229. 
Roosa  V.  Crist,  663,  904. 
Roosevelt  v.  Draper,  1528. 

r.  Wood  hull,  1066. 
Root  V.  Franklin,  ()40. 

V.  Taylor,  1432. 
Roquette  v.  Oveniian.  898,  908. 
Roscoe  r.  Hardy,  1224. 
Rose  V.  City  of  Bridgeport,  1489. 
V.  Hurley,  859. 
V.  Laffan,  1187. 
V.  Learned,  81. 

V.  San  Antonio  R.  R.  Co.,  188.        ' 
V.  Sims,  187,  744. 
V.  Williams,  1310,  1338. 
Rosher  v.  Kiernan,  990. 
Ross,  ex  parte,  1424. 

V.  Bedell,  165,  198,  814,  909, 1085. 

V.  Drinkiud,  815. 

V.  Donald,  850. 

V.  Espy,  103,  703,  716. 


Ross  V.  Planters'  B'k,  979. 

V.  Terry,  731. 
Rossiter  v.  Rossiter,  281,  306,  308. 
Rothschild  v.  Corney,  1506,  1634. 

V.  Currie,  908,  911,  936,  970. 
V.  Leavitt,  1492. 
Rounds  V.  Smith,  1626. 
Roundtree  r.  Baker,  173. 
Routh  «.  Robertson,  984. 
Row  V.  Dawson,  23. 
Rowan  v.  Odenheimer,  979. 
Rowe  V.  Tipper,  988,  1044,  1045. 

V.  Young,  459,  519,  641,  1381. 
Rowland  v.  Bigelow^  1746. 
V.  Roke,  1763. 
®.  Sprinjett,  983. 
Rowley  v.  Ball,  1478,  1484. 
Rowlinson  v.  Stone,  265. 
Rowt  ®.  Kyle,1219. 
Roxborough  v.  Messick,  827. 
Roylston  Nat.  B'k  «.  Richardson,  1369. 
Rucker  «   Hearing,  1245. 

V.  Hiller,  971,  1076,  1081. 

V.  Wadlington,  263. 
Ruddell  r.  Landers,  728. 
Rudderow  v.  Huntington,  193. 
Ruff  V.  Webb,  35. 
Ruffin  V.  Armstrong,  762. 
Rugely  V,  Davidson,  611. 
Ruggles  V.  Patten,  643,  1296. 
Rundel  v.  Keeler,  224. 
Rundle  v.  Moore,  330. 
Runniou  v.  Crane,  1418. 
Runyon  v.  Mountfort,  1025. 
Rushforth,  ex  parte,  1342. 
Russell  «.  Clark,  1785. 

V.  Drumniond,  294. 

V.  Hadduck,  775. 

V.  Hankev,  1624. 

V.  Langstaffe,  142,  144,  145,372, 
694,  843,  1037,  1172. 

«.  Lee,  224. 

«.  McNab,  1376. 

■y.  Moseley,  1766. 

V.  Phillips,  450,  479,  516, 

V.  Russell,  54. 

V.  Swan,  664,  683,  684. 

v.  Wiggins,  551,  561,  897,  1799. 

V.  Whipple,  38. 

&  Erwin  Man.  Co.  v.  Carpenter, 
1284. 
Rustw.  Gott,  195. 
Rutherford  v.  Mitchell,  1187. 
Rutland  B'k  v.  Buck,  793. 
Rutland,  &c.  R.  R.  Co.  r.  Cole,  1187. 
Ryland  v.  Brown,  774,  789. 

Sackett  v.  Kellar.  797,  861. 
V.  Palmer,  46. 
1).  Spencer,  38. 


Vie  references]        TABLE    OF    CASES.        [are  to  the  sections.        Ixxiii 


Sackley  v.  Furse,  221. 

Sackridei-  v.  Brown,  581,  582,  580. 

Saco  Nat.  B'k  v.  Sanborn,  1024,  1032, 

1050. 
Saflford  v.  Wyckoff,  382,  389,411,  991. 
Sage  V.  Wilcox,  1764. 
St.  John  «.  riomans,  1595,  1620. 
V.  McCounell,  1217. 
V.  Kedmoud,  297. 
V.  Roberts,  997,  1238. 
St.    Joseph  Township  v.  Rogers,  1520, 
1523,  1535rt,  1537,  1550,  1557,  1561. 
St.  Louis  V.  Alexander,  1559. 

&c.  Ins.  Co.  V.  Horner,  81. 
Salanions  v.  Hoyt,  90. 
Salinas  v.  Wright,  41. 
Salisbury  v.  Renick,  1147,  1149. 
Salter©.' Burt,  627,  1578. 
Saltmarsh  «.  Planters^  &c.  B'k,  751,  753, 
763. 
V.  Tuthill,  983,  1217. 
Salt  Springs  Nat. B'k  ?). Burton,  600, 602. 
B'k  V.  Syracuse  Sav.  Ins., 
528. 
Sammons  v.  Ilalloway,  122. 
•San  Antonio  v.  Lane,  1500,  1513,  1514, 
1523,  1527. 
V.  Meharty,  1495,  1537. 
Sanborn  v.  Neai,  406. 
Sanders  v.  Anderson,  75. 
V.  Bacon.  152. 
V.  Blaine,  266. 
■».  Gillesiiie,  723. 
V.  Vanzeller,  1748. 
Sanderson  v.  Bowes,  519,  642,  645. 
V.  Colman,  535. 
V.  Judge,  635,  642,  652,  657, 

1021,  1049. 
V.  Oakey,  1119. 
V.  Reiustadler,  1016. 
San  Diego  v.  San  Diego,  &c.  R.  R.,  282. 
Sands  t).  Clarke,  1119. 

V.  Smith,  894. 
Sanford  v.  Allen,  1769. 

V.  Dillaway,  1172. 
V.  Mickles,  370,  683. 
V.  Norton,  775. 
«.  Sanford,  255. 
Sanger  v.  Stimpson,  56,  979. 
Sankland  v.   Corporation  of  Washing- 
ton, 277. 
Sansome  v.  Bell,  1771. 
Sargent  v.  Appleton,  1306. 
Sarsfield  v.  Witherly,  6. 
Sasportas  v.  Jennings,  856.* 
Sasscer  v.  Farmers'  B'k,  969. 

V.  Whitely,  1031. 
Satterlee  v.  Mathewsou,  1565. 
Saul  v.  Creditors,  875. 
V.  Jones,  519. 


Saunders  I'.  Wakefield,  1704. 

1).  White,  1690,  1691. 
Saunderson  t\  Jackson,  74. 

V.  Pii)er,  86. 
Savage  v.  Aldren,  697. 

V.  King,  242,  681. 
V.  Merle,  1221. 
V.  Walshe,  385. 
Savings  B'k  v.  Benton,  3'.'3. 

Co.  V.  New  London,  391. 
Sawyer  v.  Bradford,  1311. 
V.  Parker,  124,  125. 
V.  Prickett,  834«. 
V.  Wisewell,  176,  205,  805. 
Sayre  v.  Frick,  684,  999. 
v.  Nichols,  411. 
V.  Reynolds,  1418. 
V.  Wheeler,  69. 
Scaife?).  Tobin,  1738. 
Scarborough  v.  Harris,  1083. 
Scarpelliui  »,  Atcheson,  254,  257. 
Schafer  v.  Farmers'  &  Mechanics'  B'k, 

713. 
Schenley  v  Commonwealth,  1560. 
Schepp  r.  Carpenter,  184,  791,  792,  793. 
Schimmelpenuich  v.  Bayard,  451,  524, 

551,  560,  561,  17119. 
Schley  v.  Merritt,  713. 
Schlussel  V.  Warren,  1317. 
Schmidt  v.  Schmaelter,  74. 
Schnebly  v.  Ragan,  1281. 
Schneider  v.  Non-is,  74. 

V.  Schiffman,  712,  713,  715. 
Schnewind  v.  Hacket,  1385. 
Schofield  V.  Bayard,  526,  1068. 

V.  Day,  917,  918. 
Scholefield  v.  Elchelberger,  1060. 
Scholey  v.  Ramsbottom,  1235,  1631. 

V.  Walsby,  1229. 
Schollenberger  ».  Seldenridge.  1301. 

V.  Nehf,  715. 
School  Directors  v.  Fogleman,  877,  429. 
Dist.  V.  Sippy,  290. 

V.  Thompson,  819. 
Schooner  Freeman  v.  Buckingham,  1729. 
Schryver  v.  Hawkes,  143. 
Schuchardt  v.  Hall,  1074. 
Schultz  V.  Ashley,  490. 

V.  Astley,  142,  144. 
Schoer  v.  Houghlin,  286. 
Schuylkill  County  v.  Copely,  847. 
Schwalni  v.  Mclntire,  1386. 
ScoUeins  v.  Flyn,  195. 
Scott  V.  Baker,  403. 

v.  Bevan,  917,  1454. 

V.  Colmisuil,  350. 

V.  Commonwealth,  1672. 

V.  Crews.  286. 

V.  Gillmore,  204. 

V.  Greer,  1107. 


Ixxiv  Tlie  reference>i\        TABLE     OF     CASES.        {are  to  the  sectiom. 


Scott  V.  Ilal],  1318. 

T.  Letlbrd,  1290. 

V.  Lill'ord,  992,  995. 

t.  Llov'l,  1217. 

i\  >[cLellan,  295. 

V.  Nat.  B'k,  28G. 

T.  Ocean  B'k.  333. 

V.  Scarles,  265. 

V.  State  B'k,  855. 

V.  Trents,  1430. 

V.  Waken,  1395. 
Scoville  r,  Canfiekl,  882. 
T.  Landon,   812. 
Scruggs  V.  Cass,  737,  1677. 
Scudder  v.  Thomas,  205. 

T.  Union  Nat.  B'k,  504,  8G7. 
Scull  V.  Edwards,  130,  663. 

V.  :\Ias()n.  1096. 
Seabury  ».  Ilungcrford,  708,  1099. 
Seacord  ».  Miller,  1134. 
Searight  x.  Callriglit,  874. 
Searle  v.  Norton,  1587. 
Sears  r.  Brink,  1764. 

V.  Winsrate,  1728,  1729,  1733. 

r.  Wriglit,  43,  81. 
Seaton  ».  Scoville,  62,  995. 
Seaver  v.  Coburn,  403. 

f.  Lincoln,  572,  604,  009. 
t.  Phelps,  210,  685. 
Sobag  f.  Abithol,  515. 
Sebree  r.  Dorr,  653. 
Second  Nat.  B'k  v.  Gavlord,  1787. 

T.  Miller,  248. 
Security  Nat.  B"k  v.  Nat.  B'k,  1603,1661. 
Sedgwick  v.  Lewis,  357, 
Selby  V.  Eden,  642. 
Seldenridgc  v.  Connable,  83. 
Selfridge  v.  Nortiiamptou  B'k,  1GG9. 
Selser  r.  Brock,  1314. 
Semple  v.  Turner,  713. 
Seneca  Co.  B'k  v.  Neass,  644,  657,  962, 

969,   1025. 
Sentance  t.  Poole.  210. 
Serle  v.  Norton,  85. 

■y.  Waterworth,  685. 
Sergeson  v.  Sealev,  213. 
Serrell  i.  Derbyshire  R.  R.  Co.,  1016. 
Sessions  ®.  Moseley,  24,  26,  1181. 
Seventh  Nat.  B'k  v.  Cook,  1636,  1663. 
Seventh  Ward  B'k  v.  Ilanrich,  1041. 
Sewanec  Mining  Co.  t.  McCali,  260,291, 

292. 
Sewell  v.  Evans,  1218. 
Sevbel  v.  Nat.  Currency  B'k,  441,  775, 

776,  1500. 
Seybert  v.  City  of  Pittsburgh,  1523, 1533. 
Seymour  t).   Continental  Lile  Ins.  Co., 
1458rt. 
V.  Farrell,  710,  713. 
v.  Mickey,  713. 


Shamburgh  v.  Cammagere,  635,  1217. 

Shank  v.  Butsch,  74. 

Shankland  v.  Corp.  of  Washington,  277. 

Shanklin  v.  Cooper.  901,  936. 

Shannon  ?•.  Langhorne,  187. 

Sharp  V.  liailev,'^  90,  1085. 

V.  Eniniett,  314. 
Sharpen.  Bagwell,  1393. 

v.  Bellis,  305. 
Sharpless  v.  Mavo,  1523. 
Shaver  I'.  Ehle,"ll2,  1220. 

V.  Ocean  Mining  Co.,  400. 
n.  Western  Union  Tel.  Co.,  508. 
Shaw  V.  Craft,   990, 

v.  Dennis,  1556,  1557. 
V.  Emery,  252. 
r.  Gardner,  1740. 
V.  Knox,  703. 
%\  M.  E.  Soc,  79,  154. 
V.  Neal,   1060.  1070. 
«.  Reed,  644,  653,  1144. 
«.  Stone,  424. 
Shavlor  ».  Mix,  l(il2. 
Sheboygan  Co.  v.  Parker,  1523. 
Shed  V.  Brett,  572,  592,  979,  991,  1050, 

1051,  1118,  1209,  1212. 
Sheehy  ®.  Mandeville,  1260,  1261,  1297, 

1299. 
Sheets  v.  Pabody,  268. 
Sheffield  t\  Larue,  307.  308. 
Shelburne  Falls  Nat.  B'k  r.  Townsley, 
1003,  1005,  1006,  1014,  1021.  1038, 
1044,  1045. 
Sheldon  v.  Benliani,  584,  992. 
v.  Button,  26. 
V.  Chapman,  1103. 
V.  llorton,  1104. 
T.  Kendall,  1431. 
V.  Parker,  753«. 
Shelton  v.  Braitlnvaite,  974,  983,  ln2G. 
r.  Bruce,  41. 
r.  Darling,  413. 
e.  Gill,  6-i. 
Shepard  v.  Hawley,  999. 
Shepherd  ».  Evans,  1184. 
V.  Graves,  83 
V.  Temple,  203. 
Sheppard  v.  Harrison,  1734. 
Sherer  t.  Easton  B'k,  959,  11 05. 
Sherman  v.  Comstock,  1586. 
T.  Gill^ert,  749. 
V.  Mclntyre,  71. 
Sherrard  v.  Lafayette  County,  1549. 
Sherrill  v.  Hopkins,  875. 
Siierrington  v.  Yates,  357,  1184. 
Sherrod  r.  Rhodes,  1163. 
Sherwood  v.  Archer,  207. 
V.  Roys,  1181. 
V.  Snow,  357,  366. 
v.  Stone,  314. 


Tlie  referencesl        TABLE     OF     CASES.        \(ire  to  the  HecUons.        IxxV 


Shenrll  r.  Knox.  1785. 
Shields  ».  Middleton,  568. 
Shipley  «.  Carroll,  8:37. 
Shiprufin  v.  Cook,  971. 
Shireffy.  Wilks,  489. 
Shirley  v.  Fellows,  1048,  1077. 
».  Howard,  177. 
V.  Todd,  1437. 
Shirts  VI.  Overjohn,  850,  851. 
Shivers.  Johnson, 112. 
Shoe  &  Leather  Nat.  B'k  v.  Doe,  407. 
Shoemaker  v.  Goshen  Township,  1545. 

V.  Mechanics'  B'k,    1008. 
Shoemakers'  B'k  r.  Street,  56. 
Shook  ».  Shute,  1789. 
Short  V.  City  of  New  Orleans,  422,  429, 
431. 
r.  Trabue,  880,  899. 
Shortbridges'  Case,  1615. 
Shortrede  «.  Cheek,  1766. 
Shotwell  v.  McKown,  400. 
Shrewes  ®.  Allen,  775. 
Shrieve  v.  Duckman,   985,  1590. 
Shriner  v.  Keller,  1265. 
Shumway  «.  Reid,  1267. 
Shuler  e.  Gillette,  1380. 
•Shute  V.  Robins,  466,  471,  472,  474. 
Shuttleworth  -o.  Noyes,  242. 

v.  Stevens,  133. 
Sibree  t\  Tripp,  1703,  1707. 
Sicard  v.  Whale,  886. 
Sice  «.  Cunningham,  607,  609,  611,  612, 

1163. 
Siebel  «.  Vaughan,  1406. 
Sifl'kin  V.  Walker,  360. 
Sigerson  «.  Mathews,   1103,  1147,  1149, 

1162. 
Sigouruey  v.  Lloyd,  698. 

V.  Wetherell,  1328,  1788. 
Sill  V.  Leslie,  717. 
Silliniau  ».  Fredericksburg,  &c.  R.  R., 

1498,  1550. 
Simeon  Leland  in  Bankruptcy,  1487. 
Simo  r.  Hammond,  834^^. 
Simon  v.  Hust,  800. 
Simonds  v.  Merritt,  803. 
Simons  v.  Steel,  1764. 
Simpson  v.  Davis,  1418. 

^^  Field,  1298. 

V.  Fullen wider,  751. 

V.  Griffin,  1459. 

V.  Ingham,  1250,  1253. 

V.  Meneden,  56. 

v.  Pacific,  tfcc.  Ins.  Co.,  1590. 
1593. 

V.  Stackhouse,  1417. 

V.  Turney,  1044,  lu45. 

».  Vanglin,  1298. 

v.  White,  963. 
Simmons  v.  Taylor,  1585«. 


Simms  v.  Clark,  1675. 

V.  Stillwell,  262. 
Sims  ».  Bice,  851. 

%\  Bond,  1614. 
Sinclair  v.  Baggalev,  65. 

T.  Lynch,  983. 
Sisson  V.  Tomlinson,  1083. 
Sistermans  v.  Fields,  198,  815. 
Sizer  v.  Heacock,  1319. 
Sketoe  ®.  Ellis,  1426. 
Skilbeck  v.  Carbett,  1024. 
«.  Gar1)ett,  1054. 
Skilding  i-.  Warren,   789. 
Skillman  v.  Titus,  1633. 
Skinner  v.  Church,  699,  719. 
r.  Somes,  743. 
V.  Tinker,  913. 
Skowhcgan  B'k  v.  Baker,  1197. 
Slack  V.  Kirk,  704. 

®.  Marysville  R.  R.  Co.,  1523, 1524. 
Slagle  V.  B'k  of  Vallev,  704. 

%\  Rust,  704. 
Slawson  v.  Loring,  241,  303,  410,  413, 

414,  686. 
Slayback  v.  Jones,  1431. 
Slaymaker  «.  Gundacker,  126'3. 
Slipper  v.  Stidstone,  1428. 
Sloan  V.  Union  B'k  Co.,  814,  815. 
Slocum  ».  Hooker,  238. 
V.  Lizardi,  999. 
V.  Pomeroy,  678.  899,  921. 
Slocumb  r.  Holmes,  1268. 
Sloman  v.  B'k  of  England,  1612. 

V.  Cox,  1411. 
Slotts  V.  Byers,  824. 
Small  V.  Clark,  1099. 

V.  Clewley,  81. 

t.  Franklin  Mining  Co.,  1623. 

«.  Sloan,  1776. 

%\  Smith,  790. 
Smalley  v.  Bristol,  159. 

V.  Wright,  130,  741. 
Small's  Adm'r  i\  Lumpkin,  222. 
Smallwood  v.  Vernon,  104. 
Smead  v.  Indianapolis  R.  R.  Co.,  383. 

r.  Trustees  of  Union  ToTvnship, 
1524,  1550. 
Smedes  r.  B'k  of  Utica,  331,  991. 
Smilie  «.  Stevens,  45,  1707. 
Smith  v.  Abbott,  508,  509. 

V.  Alesworth,  1209. 

«.  Allen,  39. 

V.  B'k  of  Washington,  1212. 

«.  Bean,  69. 

■y.  Becket,  1172. 

V.  Boehm,  55. 

v.  Boulton,  983. 

«.  Braine,  166.808,  814,  815,1469. 

V.  Brooks,  199. 

V.  Brown,  502. 


Ixxvi  Tlie  references]       TABLE     OF     CASES.       [are  to  the  sections. 


Smith  V.  Buclmnan,  875. 
«.  Carter,  720. 
V.  Case,  69. 
V.  Chester,  533,  1235,  12C0,  1360, 

1364. 
V.  Childress,  721. 
V.  Clark  Co.,  1512. 
V.  Chirke,  606. 
V.  Clopton,  53,  728. 
V.  Cutr,  1!)4. 
V.  Curlee,  926,  1147. 
V.  Dann,  1755,  1785. 
V.  Diiiiliain,  l:j93. 
V.  Eureka  Flour  Mills,  382,  383. 
V.  Fisher,  1116. 
V.  Foley,  724. 
V.  Gibljs,  653. 
V.  Gibson,  294. 
V.  Harper,  1266,1311. 
i\  Hawkins,  1321. 
D.  Hill,  963. 
V.  Hiscock,  727,  803. 
V.  Hyde,  1317. 
V.  Ide,  1764. 
V.  Inhabitants  of  Cheshire,  422, 

427.434. 
D.  Isaacs,  184. 
v.  Jay,  1311. 
V.  Johnson,  671. 
V.  Jones,  1587,  1592. 
V.  Kendall,  54,104,  620,  1181. 
V.  Kittridge,  179. 
V.  Knox,  1307, 
V.  Law,  382. 
V.  Little,  928,  983,  1043. 
V.  Lockridge,  485, 1092. 
V.  Lockw'ood,  1275. 
V.  Lord,  80. 
v.  LovingstoD,  775. 
V.  Loyd,  1252. 
V.  Mace,  1410. 

V.  Marsack,  93,  228,  242,  535,  536. 
V.  Mayo,  232,  234. 
V.  McClure,  63,  64,  65,  105,  493, 

1482, 1483. 
V.  McLean,  644. 
T.  Mead,  867,  879. 
V.  Mercer,   676,    1225,  1360,  1371, 

1654,  16.^8. 
D.  Merrill,  703. 
V.  Miller,  452,  971,    1276,    1330, 

1590,  1623,  1625. 
t\  Moberlv,  854. 
i\  Mullctt,  1008. 
V.  Muncie  Xat.  B'k,  62,  532. 
V.  Nightingale,  53. 
V.  Nissen,  506,  1254. 
V.  Owens,  1260. 
V.  Pedlev,  253. 
V.  Philbrick,  640,  1180. 


Smith  V.  Pickering,  200. 

v.  Roach,  449,  454,  1045. 

V.  Rockwell,  1473,  1480. 

v.  Rowland,  1081. 

V.  Sac  County,  815. 

V.  Sawyer,  1254. 

V.  Screven,  1251. 

V.  Shaw,  1454. 

V.  Silvers,  62. 

V.  Sloan,  358. 

V.  Smith,  86,  875,  918, 1398,  1580. 

V.  Spinolla,  886. 

V.  Strader,  366. 

V.  Stranger,  288. 

V.  Union  B'k,  1585a. 

V.  Vertue,  509. 

V.  Walker,  87,  1479. 

V.  Weld,  1387. 

V.  Whiting,  266,684,685,979,980. 

V.  AVinter,  1321. 

V.  Wood,  1247. 
Smithwick  r.  Anderson,  1217. 
Smyley  v.  Head,  1314. 
Snaith  v.  Mingay,  12,  65,  869. 
Snead  v.  Coleman,  262,  263. 
Snee  v.  Prescott,  698,  1730,  1744. 
Sneed  «.  Mitchell,  684. 

v.  White,  1311. 
Snellgrave  v.  Bailey,  24. 
Snevely  v.  Read,  182. 
Snively  v.  Johnson,  1759. 
Snow  V.  Peacock,  772,  1463. 

V.  PerkiQs,  909,  910,  979,  980. 
Snyder  v.  Oatnian.  728. 
V.  Reno,  731. 
«.  Riley,  784. 
V.  Studebaker,  93. 
V.  Willey,  204. 
Scares  v.  Clyn,  697. 
Society  for  Savings  v.  New  London,  889, 

1500,  1509. 
SoflFe  V.  Gallagher,  1262,  1265. 
Solarte«.  Palmer,  981,  985. 
Soloman  v.  Turner,  193. 
Solomons  v.  B'k  of  England,   285,  822, 
1680,1683. 
V.  Jones,  157. 
Solser  ®.  Brock,  1309. 
Soper  V.  Henry  Co  ,  1519. 
Soule  i\  Bonney,  196. 
v.  Chase,  1283. 
South,  ex  ]>u)-te,  23. 

South  Boston  Iron  Co.  v.  Brown,  176. 
Southard  v.  Porter,  745. 
South  Carolina  B'k  v.  Case,  363,  364. 
Southerland  v.  Whitakcr,  1309. 
Southern  B'k  v.   Mechanics'   Sav.  B'k, 
1198. 
Life  Ins.,  &o.  Co.  v.  Gray,1188, 
1189. 


The  references']        TABLE     OF     CASES.        [are  to  the  Kecfionfi.   Ixxvil 


Sowerby  v.  Butcher,  300. 
Spadine  r.  Reed,  568. 
Spalding  ».  Vandercook.  202. 
Spann  i\  Balzell,  1048. 
Spartali  v.  Benecke,  1279. 
Spaulding  v.  Andrews,  501,  567,  568. 

r.  Evans,  103. 
Spear  v.  Ladd,  394. 
V.  Pratt,  497. 
Specht  i\  Howard,  70. 
Spencer  v.  Ballou,  331,  791. 
V.  Blaisdell,  1673. 
V.  B'kof  Salina,  1121. 
v.  Harvev,  1092,1104,1131,1133, 
■  1135. 
Sperry  i\  Horr,  61,  62,  123. 

V.  Spaulding,  815. 
Spies  i'.  Gil  more,  713,1180. 

V.  Newberry,  983. 
Spiller  V.  Creditors,  1252. 
Spinette  v.  Atlas  Steamship  Co.,  1741. 
Spitler  V.  James,  90,  144. 
Spooner  i\  Gardiner,  1077. 

V.  Holmes,  441,  775,  776,  1489, 
1500. 
Sprague  v.  Tyson,  962, 1030. 
Spratt  V.  Hobhouse,  1687. 
Sprickill  v.  Martin,  12')0. 
Sprigg  V.  B'k  of  Mt.  Pleasant,  1332. 

V.  Cuny,  576,  1198. 
Spring  V.  Lovett,  81. 
Springfield  B'k  i\  Merrick,  150, 154,1410. 
Sproat  V.  Mathews,  504,  511,  549. 
Spurgin  v.   McPheeters,   110,   173,  174, 

ISO. 
Spurlock  V.  Union  B'k,  1147,  1149. 
Spyker  v.  Spence,  395. 
Staats  v.  Howlett,  361. 
Stacy  V.  Baker,  895. 

V.  Dane  Co.  B'k,  341,343. 
Stafford  «.  Bacon,  182. 
«.  Rice,  1217. 
V.  Yates.  987. 
Stahlv.  Berger,  1401. 
Staiuback  «.  B'k  of  Va.,  280,  282,  283, 
457,  587,  955,  964,  969, 
1046. 
V.  Read,  276,  280.      , 
Stalker  v.  McDonald,  758,  827. 
Stam  V.  Kerr,  1260,  1263. 
Standage  v.  Creighton,  1109,  1158,1167. 
Stanford  v.  Pruet,  868. 
Stanton  «.  A.  &  C.  R.  R.,  1491. 

V.  Blossom,  987,  988,  990,  992, 
1075,  1212. 
Stanwood  i\  Stanwood,  257,  1184. 
Staples  V.  Franklin  B'k,  1209,  1671. 

V.  O'Kines,  1075,  1172. 
Starin  «.  Town  of  Genoa,   1520,  1523 
1532, 1533, 1552. 


Starke  r.  Cheeseman,  128. 
Starr  i-.  Metcalf,  1383. 

V.  Richmond,  1252. 
Staylor  v.  Williams,  640,  1180. 
State  V.  Cardoza  &  Richardson,  442. 
V.  Cilley,  1386. 
«.  Dubuclet,  438. 
V.  Given  s,  1345. 
V.  Green,  1524. 
V.  Humphreys,  1346. 
V.  Huif,  427. 
V.  Madison,  1523. 
V.  Peck,  856. 
v.  Polk,  1387.     • 
V.  Potter,  856. 
V.  Saline  Co.,  1535. 
v.  Stratton,  1395. 
V.  Sullivan,  1534. 
».  Sutterfield,  1535a. 
V.  Taylor,  62. 
i\  Town  of  Clark,  1524. 
V.  Trustees   of  Union   Townslu}), 

1545. 
V.  Van  Home,  1545,  1548,  1685. 
V.  Wenkelmeier,  1535a. 
B'k  V.  Ayres,  1034. 

■V.  B'k  of  Capitol,  331. 
V.  Coquillard,  767, 
«.  Evans,  856. 
r.  Fearing,  672,  1357. 
v.  Hayes,  9. 
V.  Heuneu,  1016. 
V.  Hurd,  639. 
«.  Kain,  392. 
®.  McCoy,  214. 
V.  Napier,  656,  657. 
V.  Slaughter,  999. 
v.  Stratton,  150. 
«.  Wheeler,  392. 
of  Arkansas  v.   Little  Rock,    &c. 
R.  R.,  1551. 
la.  V.  Wappelo  Co.,  1523, 1560, 
111.  V.  Delafield,  441,  442,444. 
Me.  V.  Boies,  443,  1189. 
Mo.  i\  B'k  of  Mo.,  441. 
Capitol  B'k  v.  Thompson,  69,  70. 
Savings  Association  v.  Hunt,  834. 
Steadman  v.  Duhamel,  14. 
Steamboat  Charlotte  v.  Hammond,  1260, 

1267,  1282. 
Stearns  v.  Burnham,  884. 
Stebbing  v.  Spicer,  100. 
Stedman  v.  Gooch,  1019,  1273. 
Steel  V.  Davis  Co.,  430. 
Steele  v.  Curie,  885. 

V.  McDowell,  263. 
Stein  v.  Mobile,  1533,  1533. 

V.  Yglesias,  734,  735,  736. 
Steines  v.  Franklin  Co.,  1 536,1559,1548, 
1550,1551,  1558,  1560,1564. 


Ixxviii        TJie  references]       TABLE     OF     CASES.        {are  to  the  sections. 


Steinbeck  r.  Treasurer,  &c.,  437. 
Steinman  v.  Masjuus,  1381. 
V.  Moi>ilc.  1523. 
Steinweg  v.  Eric  K.  K.  Co.,  1733, 1740. 
Steraan  r.  Harrison,  .'550,  551. 
Stephen  r.  Thompson,  1295. 
Stephens  v.  Spiers,  196. 
Stephenson  v.  Dickson,  1041. 

r.  Primrose,  1018,1133. 
Sterling  v.  Marietta.  &c.  Co.,  393,  1324, 

1S26. 
Sterry  r.  Robinson,  929 
Stevens  v.  Androscoggin  Water  Power 
Co..  513. 
V.  Beals,  254,  681. 
V.  Blunt,  43. 
V.  Boston,  &c.  R.  R.  Co.,  1732, 

1737. 
V.  Campbell,  833. 
V.  Chadwick,  1381. 
V.  Graliam,   1376,   1384,   1886, 

1401. 
r.  Lynch,  1148,1158,1161,1321. 
T.  Stevens,  24. 
T.  Strong,  139. 
Stevenson  v.  O'Neil,  700. 

r.  Unkefer,  766. 
Stewart  v.  Ahrenfeldt,  196. 
t.  Allison,  587. 
V.  Earl  of  Gallowav,  188. 
«.  Eden,  588,    640,  1001,  1035, 

1(139,1049,1310,1333. 
X  Ellice,  930. 
T.  Hidden,  1285. 
«.  Jenkins,  349. 
V.  Kennett.  988,  990. 
r.  Lispenard,  311. 
V.  Lord  Kirkwall,  347. 
v.  Salanion,  87. 
r.  Smith,  738,  1587,  1652. 
Stickney  r.  Mobler,  187. 
Stiles  T.  Eastman,  1335. 
Stilwell  V.  Craig,  47. 
Stivers  r.  Prentice,  590,  635. 
Stix  r.  Mathews,  879,  995,  1045. 
Stocken  r.  Collin,  983,  1053. 
Stockman  r.  Parr,  978. 
Stockwcll  r.  Braml)le,  491. 
Stoddard  r.  Kimball,  757,  790,  827,  832. 

r.  Pcnniman,  176. 
Stokes  r.  Lewis,  183. 
Stone  V.  Chamberlaine,  370,  1300. 
V.  Marsh,  1613. 
V.  Metcalf,  113,  153,  154. 
r.  Peake,  303. 
V.  Seymour.  1152. 
V.  Smith,  207. 
V.  Talbot.  ]  252. 
Stoneman  v.  Pvle,  62. 
Stoner  t-.  Ellis,"  1418. 


Stoney  ».  American  Life  Ins.  Co.,  3S9. 
Stontenburg  v.  Lvbrand,  196. 
Storerr.  Logan,  550,  551,  553.  554,561. 
Story  V.  Atkins,  163. 
Stothart  v.  Parker,  611,  1173. 
Stott  V.  Alexander,  1035. 
Stout  t'.  Ashton,  1479. 
V.  Bendish,  1700. 
V.  Benoist,  1301. 
V.  Cloud,  1401. 
Stover  V.  Hamilton,  88. 
Stow  V.  Yarwood,  1433. 
Stowell  V.  Raymond,  713.  ' 
Strachan  v.  Muxton,  79. 
Straker  v.  Graham,  466,  474. 
Strang  r.  Wilson,  1317. 
Strange  t.  Wigney,  1463. 
Stratton  v.  Allen,  383. 
Strawbridge  v.  Robinson,  13. 
Street er  v.  Poor,  384. 
Strick(5r  t.  Tinkham,  879. 
Strickland  r.  Railroad  Co.,  1533. 
Stroh  V.  Hickman,  396. 
Strohecker  v.  Co  ben,   508. 
Strong  V.  Foster,  1337. 
V.  Hart,  1371. 
V.  Jackson,  835. 
Struthers  r.  Kendall,  1399. 
Stubbs  V.  Goodall,  719. 
Stuber  v.  Schack,  1317. 
Stump  V.  Napier,  1317. 
Stuckert  v.  Anderson,  654. 
Studenmire  v.  Ware,  185. 
Sturdivant  r.  Hull,  404. 
Sturdy  v.  Henderson,  626,  1071. 
Sturges  V.  Keith,  286. 
Sturgis  V.  B'k  ot  Circleville,  392. 
V.  Crowninshield,  875. 
».  Derrick,  1115,  1120. 
V.  Fourth  Nat.  B'k,  504. 
Sturtevant  v.  Citv  of  Alton,  1522. 
V.  Ford,  726. 
r.  Liberty,  435. 
Succession  of  Weil,  674. 
Suckley  v.  Furse,  1328. 
Suffolk  Bank  1-.  Lincoln  B'k,  1685,  1686. 
Sullivan  ».  Deadman,  698,  963,  1084. 

V.  Morrow,  1311. 
Summerhill  v.  Tappo,  1335. 
Summers  v.  Mills,  918. 
Sumner  r.  Bowen,  968. 
v.  Sumner,  196. 
Supervisors  v.  Schenck,  317,   319,  380, 

389,  391,  1500,  1523,  1537,    1543, 

1545,  1.046.       ^ 
Suse  V.  Pompe,  669. 
Susong  V.  Williams,  127. 
Susquehanna  B'k  v.  Evans,  717. 
Sussex  B'k  v.  Baldwin,  572,   636,   037, 

640,  993,  1039,  1106. 


The  reference.-]        TABLE     OF     CASES.        {are  to  the  sections.      Ixxix 


Sutcliffe  V.  McDowell,  1070,  lOSl. 
Sutlifl'  r.  Attwood,  12G<i. 
Sutton  V.  Toomer,  019,  1385. 

V.  Warreu,  254. 
Suydam  v.  Westlall,  95,  123G. 
Swall  V.  Clarke,  769. 
Swan  V.  Hodges,  1130. 
V.  Nesiiiith.  314. 
x\  North  Brit.  Austr.  Co.,  851. 
V.  Steele,  356. 
Swanell  v.  Watson,  850. 
Svvansey  v.  Breck,  513. 
Swanzey  v.  Parker,  731. 
Swartz  i\  Redtield,  996. 
Swasej^  V.  Vanderhevden,  225. 
Swayne  v.  Britton,  9^29. 
Swayze  v.  Britten,  960,  987,  991. 
Sweat  T.  Hall,  1184. 
Sweeney  v.  Easter,  336,  698. 

e.  Thickston,  61,  62. 
Sweet  V.  Carver  Co.,  429,  432. 
V.  Chapman,  751. 
V.  James,  1282. 
V.  Titus,  1623. 
Sweeting  v.  Fowler,  100. 

V.  Halse,  549. 
Sweetlar.d  v.  Creigli,  56. 
Swift  V.  Stevens,  1471,  1478. 

i.  Tvson,  10,   174,  183,    184,  775, 

"829,  831,  1503. 
V.  Whitney,  56. 
Swilley  v.  Lyon,  95. 
Swinyard  v.  Bowes,  1176,  1262,  1271. 
Swire  v.  Redman,  1312,  1337. 
Swope  V.  Ross,  480. 
Sykes  v.  Giles,  1270,  1271. 

V.  Lewis,  1431. 
Sylvester  v.  Downer,  710,  713. 
Syme  «.  Brown,  708. 
Symonds  v.  Parminter,  1205. 
Syracuse  B'k  v.  Davis,  1565,  1588. 
Syracuse,  &c.  R.  R.  Co.  r.  Collins,  1260, 
1589,  1590,  1591. 

Taber  v.  Cannon,  294. 
Taft's  Case,  1345. 
Taft  V.  Brewster,  307. 
V.  Pittsford,  422. 
V.  Sergeant,  235. 
Talbot  t\  B'k  of  Rochester,  1364. 

V.  Dent,  1523. 

r.  Gav.  1787,  1788. 
Tallcrand  v.  Boulanger,  886,  907. 
TanciU'.  Seaton.  1672,  1674. 
Tannant  v.  Rocky  Mountain  Nat.   B'k, 

298. 
Tanner  v.  Christian,  299. 
Tapley  v.  Martens,  1623. 
Taj^pan  v.  Ely,  152. 
Tarbell  v.  Sturtevaut,  1192, 


Tardy  v.  Boyd,  205,  1064,   1070,    1147, 

1163. 
Tarin  v.  Morris,  1235. 
Tarleton  v.  AUhusen,  1284. 

V.  Southern  B'k,  217,  218. 
Tash  V.  Adams,  391. 
Tassel  v.  Cooper,  1 642. 

V.  Lewis,  616,  627,  743,  1327. 
Tassey  v.  Church,  513. 
Tate-y.  Hilbert,  26,  491,  1618. 

t\  Sullivan,  963. 
Tatlock  V.  Harris,  23,  136,  137,  747. 
Tatum  V.  Kelly,  2t  0. 
Taunton  B'k  v.  Richardson,  1048,  1106. 
Taup  V.  Drew,  1245. 
Taylor  v.  B'k  of  111.,  954. 

V.  Beck,  807,  1217. 

V.  Binney,  1782. 

V.  Bowles,  769. 

V.  Breden,  6]  3. 

V.  Briggs,  740,  1271. 

V.  Bruce,  191,  752,  762. 

«.  Burgess,  1334. 

V.  Craig,  854. 

■B.  Croker,  93,  227,  238,  535,  682 

V.  Curry,  797. 

V.  Dobbins.  74. 

V.  Drake,  569. 

V.  French,  1106,  1134,  1139. 

V.  Higgins,  1205. 

V.  Hillyer,  366,  369. 

V.  Jacoby,  626. 

V.  Jones,  1152,  1158. 

i\  McCuue,  713. 

V.  Moselev,  1379. 

V.  Page,  834. 

V.  Reese,  1190,  1197,  1251. 

V.  Ross,  1765. 

V.  Sanford,  1250. 

V.  Shelton,  307. 

V.  Sip,  1578,  1587. 

V.  Snyder,  640,  1123,  1145,1180. 

V.  Surgit,  267. 

«.  Taylor,  1535^. 

r.  Thomas,  68. 

V.  Wetmore,  1785. 

V.  Williams,  1623. 

V.  Young,  1086,  1595. 
Tebbetts  r.  Dowd,    1148,    1152,   1156, 

1157. 
Teed  v.  Elworth,  227. 
Temple  r.  Seaver,  683. 
Ten  Evck  v.  Vaiulerpoel,  270. 
Tenncy  v.  Prince,  694,  1760. 
Tensen  v.  Francis.  726. 
Terbell  r.  Jones,  1055. 
Terry  r.  .A  His,  741. 
v.  Farago,  294. 
r.  llazlewood,  1373. 
T.  Parker,  1047. 


Ixxx 


T7ie  refer  encei^l 


TABLE     or     CASES.       VaretothesecUom. 


B'k,  189, 


388. 


Tevist).  Young,  92. 

Texas  v.  Hardeubcrg,  441,  i24,  <8. 

?;.  White,  441. 
Texirar.  Evans,  148. 
Thackeray  i>.  Blockett,  1079,  1172, 1404. 
Thame  r.  Boast,  1235. 
Thatclier  ^^  B'k  of  the  State   389 

r.  Dinsmore,  186,  271,  12G(). 
V.  West  River  Nat, 
790. 
Thayer  r.  BulTinn,  1183.^ 
V.  (."rossman,  1217. 
V.  Elliott,  807. 
V.  King,  1478,  1482. 
V.  Manlv,  770. 
t-.  Middlesex  Mut.  Ins.  Co, 
v.  Montgomery  Co.,  1492. 
The  Confederate  Note  Case,  87. 
David  and  Caroline,  1741. 
Distilled  Spirits,  802. 
Hampton,  218. 
Invincible,  1741. 
.Tuniata  Patou,  1741. 
J   W.  Brown,  1729. 
Kimball,  1200. 
Lady  Franklin,  1729. 
Loan,  1733. 
May  Flo\v(!r,  1732. 
Olbers,  1742. 
Onrust,  1742. 
Oritiamme,  1742. 
Prize  Cases,  218. 
Rebecca,  1748. 
Sally  Magee,  1743. 
Santee,  1739. 

Thames,  1735,1740,1751. 
Vaughn,  1751. 
Venice,  218. 
William  Bagaley,  218. 
Thetford  r.  IMcClintock,  200 
Thicknesse  v.  Bromelo\ye,  301. 
Thiedemann  i.  Goldsmith,  174. 
Thiel  V.  Conrad,  043. 
ThiuiV)leby  v.  Barron,  1291. 
Thing  ».  Libbey,  234 
Third  Nat.  B'k  .>.  Allen,  13J2  16G1. 
V.  Ashvvorth,  1148. 
V.  Clark,  721. 
Tliomas  v.  Bishop,  413. 
V.  llewes,  3(i0. 


V.  Kinsey,  724. 

V.  Leland,  1556. 

V.  Mayo,  1095. 

V.  Newton,  816. 

r.  Fort  Huron,  1523. 

V.  Shoemaker,  024. 

V.  Thomas,  174. 

V.Todd,  737,  1072,1075,  1670. 

V.  Watkins,  007. 
Thomason  v.  Boyd,  234. 


Thompson  v.  Armstrong.  810. 
r.  Briggs,  1300. 
v.  Brown,  1253. 
V.  City  of  Peru,  1524. 
v.  Commercial  B'k,  057. 
«.  Cumniing,  930. 
v.  Downing,  1748. 
V.  Emery,  747. 
«.  Flower,  570,  1205. 
V.  Gray,  1328. 
V.  lloagland,  70. 

V  Ketchum,  80,  88,  599, 
039,  879,  880,  892. 

V.  Lay,  233. 

V  Lee  Co.,  389,  391,  1489, 
1497,  1500,  1509,  1513, 
1514,  1520,  1523,  1527, 
1557,  1500,  1501. 

V.  Percival,  1289,  1299. 

t\  Perkins,  315. 

V.  Pickel,  145Hrt. 

•«.  Pitman,  1640,  1048. 

v.  Posten,  790. 

V.  Powles,  918,  923. 

V.  Shepherd,  726. 

V.  Sloan,  58. 

V.  Warren,  172. 

t).  Wharton,  188. 

«.  Williams,    972,   973,   975, 
979,  990. 

V.  Wilson,  884. 
Thorington  n.  Smith,  87,  109. 
Thorn  v.  Rice,  1013. 
Thornton  v.  Dick,  490. 

V.  Illingworth,  230. 

V.  Mavnard,  1237. 

t\  Rankin,  271. 

V  Wynn,  202,1091,1147,1149, 

'1153. 
Thorp  V.  Craig,  879. 
Thrall  v.  Horton,  797. 
Thrash  t).  Ely,  1785. 
Thrasher  v.  Everhart,  32,  88o. 
Thrunn  «•  Fielder,  230. 
Thunnan..  Van  Brunt,  1205,  1048. 

Thurston  v.  Munn,  303. 
Ticknor  r.  Roberts,  909  9f ,  ^  149 
Ticonic  B'k  ?'.  Stackpole,  9,  928,  903. 
Tidmarsh  v.  Ciover,  1378 
Tiernan  i\  Commercial  B  k,  di^. 

V.  Jackson,  451.  ^ 

Tiernan's  Exrs.  v.  Woodruff,  1313. 
I  Tiller  v.  Spradley,  298. 
TiUinghast  «.  Wheaton,  24. 
Tillon  r.  Clinton,    &c.   Mut.   Ins.   Co., 

Timin1ns"«.  Gibbons,  740,  1200,  1079. 
Timms«.  Dclisle,  1005.  1015 
Tinrial  r.  Brown,  012,  972,  98o,  98/, 990, 
1037,  1175,  1590. 


77i6  references]       TABLE     OF     OASES.        [are  to  tfte  sections.      IxXXl 


Tinker  iJ.  McCauley,  716,  1776,  1779. 

Titcomb  v.  Thomas,  748. 

Tittle  V.  Thomas,  100. 

Titus   V.    Great    Western    Turnp.    Co., 

1611. 
Tobey  v.  Barber,  1264,  1267, 1273, 1276, 
1278. 
V.  Bcrly,  1048. 
V.  Chipman,  859. 
V.  Lennig,  979. 
Todd  V.  Ames,  249. 

V.  B'k  of  Ky.,  881, 896, 1381, 1382. 

«.  Edwards,  1015. 

V.  Lee,  248,  250. 

V.  Neal's  Adm'r,  9,  908,  909,  911, 

934,  1050. 
1).  Shelburne,  758. 
Toledo  Iron  and  Agr.  Works  v.  Heisser, 

301.  305. 
Tombeckbee  B'k  v.  Dumell,  370. 

V.  Stratton,  1311. 
Tompkins  v.  Ashby,  36,  40. 
«.  Mitchell,  1281. 
V.  Woodward,  365,  366. 
Toms  ».  Powell,  1235. 
Tonee  v.  Parkersburg  R.  R.  Co.  390. 
Took  V.  Tuck,  194. 
Tooke  V.  Bonds,  1251. 

V.  Newman,  832. 
Tootle,  ex  parte,  41. 
Torbett  v.  Worthy,  207. 
Torrey  v.  Baxter,  1260. 

V.  Dustiu  Monument  Ass.,  394. 
V.  Foss,  1085,  1485. 
«.  Hadley,  1264. 
Touchard  v.  Toucbard,  1527. 
Tourner  v.  Dickinson,  1311. 
Tower  v.  Appleton,  1694. 
».  Durell,  1140. 
V.  Richardson,  81, 
Towers  v.  Moor,  1298. 
Town  of  Cicero  v.  Clifford,  1509. 

Coloma  V.  Eaves,  1537,  1520, 

1542. 
Danville  v.  Pace,  1565. 

I).  Sutherlin,752,1533, 
1534. 
Eagle  «.  Kobn,  197,  807,  1551. 
East    Lincoln    v.    Davenport, 

1537,  1550. 
Genoa     v.    Woodrooff,     1513, 

1537,  1552. 
Middleport  v.  ^tna  Life  Ins. 

Co.,  1538. 
Queensburv    v.   Culver,    1521, 

1523,  i556. 
South  Ottawa  v.  Perkins,  1520, 

1538. 
Venice  v.  Murdock,  1537. 
Towne  v.  Rice,  51,  403. 
Vol.  I.— F 


Townsend  v.  B'k  of  Racine,  737,  751, 
1676. 
V.  Derby,  108. 

■y.  Lorain  B'k,  929,  983,  984, 
985. 
Township   of    Burlington    v.    Beasley, 
1522. 
East  Oakland  v.  Skinner, 

1538. 
Elm  wood       V.       Many, 

1525. 
Pine  Grove   ».   Talcott, 
10,  423,  1521,  1523, 
1524. 
Townsley  «.  Sumrall,  184,  449,  454,  465, 

569,  570,  909,  945,  959. 
Trabue  v.  Short,  899. 
Trafford  v.  Hall,  725. 
Train  «.  Jones,  1785. 
Transportation  Co.  ®.  Downer,  1741. 
Trapp  V.  Spearman,  1378. 
Trask  v.  Martin,  617. 
Treadwell  v.  Commiss.,  1550,  1551. 
Trebilock  v.  Wilson,  1245,  1247. 
Trecothick  v.  Edwin,  1382. 
Tredick  v.  Wendell,  654. 
Treuttel  v.  Barandon,  282,  288,  698,  699. 
Trickey  ».  Larne,  203. 
Trier  v.  Biidgman,  162. 
Trigg  V.  Taylor,  1408. 
Trimbey  v.  Viguier,  867,  883,  906. 
Trimble  i\  Thorn,  1152,  1304, 1305,1339. 
Triplett  ».  Hunt,  987. 
Tripp  v.  Curtinus,  1702,  1703,  1707. 

v.  Swanzey  Man.  Co.,  387. 
Tritt  V.  Coldweli,  254. 
Troy  V.  Topping,  263. 
Troy  City  B'k  v.  Lauman,  515,  1380. 
True  V.  Collins,  1029. 
V.  Fuller,  1776. 
V.  Thomas,  1586,  1595,  1629. 
Truemau  r.  Fenton,  182. 
Trufee  v.  Alden,  800. 
Trull  V.  Meneton,  125. 
Truuday  v.  Farrar,  317. 
Trustees  of  Schools  v.  McCaughy,  1565. 
v.  McCormick,  316, 

322. 
V.  Parks,  1188. 
Tryon  v.  Oxley,  262,  1612. 
Tuber  v.  Caverly,  1099. 
Tucker  v.  Bradley,  67. 

V.  City  of  Virajinia,  1527. 
T.  Fairbanks,  "409. 
r.  McCauley,  1779. 
V.  Randall,  1213. 
V.  Rouk,  1 96. 
Tuckerman  v.  French,  1785. 
v.  Hartwell,  154. 
V.  Newhall,  1294. 


Ixxxii  Tfte  references]       TABLE     OF     CASES.        [are  to  the  sections. 


Tiulor  r.  Godloe,  1317. 
Tunno  v.  Laguc,  lOOG. 
Turber  r.  Caverlv,  1099. 
Turk  r.  Kiclimoiia,  196. 
Turnbull  v.  Block,  1327. 
V.  Bowver,  1113. 
V.  Freret,  208. 
t).  Hill,  1152. 
v.  Stroheckcr,  1425. 
t>.  Thomas,  74. 
Turner  t'.  B'k  of  Fox  Lake,  1625. 
V.  liillagram,  1410. 
V.  Browclen,  170,  534. 
V.  Brown,  176,  181. 
V.  Keller,  672,  676. 
V.    Leach,     988,     1045,     1127, 

1224. 
V.  Mead,  655. 
V.  Rogers,  185,  936,  963. 
V.  Stones,  1679. 
Tumiss  V.  Gilchrist,  385. 
Turpin  v.  Thompson,  24. 
Tutt  V.  Hobbs,  1564. 
Tuttle  V.  Bartholomew,  1782. 
V.  Fowler,  257. 
1).  Muvo,  1687. 
v.  Standish,  1476,  1481. 
Twopenny  v.  Young,  548,   1291,  1296, 

1328. 
Tye  w.  Gwynne,  201. 
Tyler  v.  Goukl,  1644. 
r.  Young,  61'. 
Tyson  v.  Oliver,  1007,  1023,  1030. 
v.  School  Directors.  1556. 
V.  State  B'k,  324,  329. 

TJbsdcll  V.  Cunningham,  43. 

Ulster  Co.  B'k  v.  MeFarland,  561,  1756, 

1799. 
Underbill  v.  Phillips,  108. 
Underwood  v.  Simonds,  81. 
Unger  v.  Boas,  674. 
Union  B'k  v.  Beirne,  275. 

D.  Ellicott,  1689. 
V.  Ezell,  611. 
V.  Fowlkes,  953,  959. 
V.  Grimshaw,  1102. 
V.  Hyde,  920.  908,  1095. 
V.  Magruder,  1100. 
V.  Ridgeley,  389. 
V.  Smiser,  1260. 
V.  Stone,  1056. 
V.  Warren,  1478,  1695. 
r.  Willis,  455,594,  999,  1757. 
Union  Ins.  Co.  t.  Greenleaf,  41. 
Nat.  B'k  ?).  Cooley,  1311. 

V.  Marr.  Admr.,  1061. 
T.  Ocean  Co.  B'k,  1637. 
Trust  Co.  r.  Monticello,  &,c.  R. 
R.,  1491. 


U.  S.  V.  B'k  of  Ga.,  1672,  1688. 

V.  B'k  of  IMetropolis,    174,   436, 
437,  512,  516,  547. 

V.  B.  S:  O.  R.  R.  Co.,  1519. 

V.  Barker,  217,438,454,478,  932, 
1039,  1041. 

V.  Boyce,  1189. 

V.  Co.  of  Clark,  1491. 

V.  Cushman,  1290. 

T.  Grossmever,  222,  1000. 

V.  Hodge,  1328. 

V.  Huckabee,  857. 

V.  January,  1250. 

V.  Kirkpatrick,  1250,  1252. 

V.  Lapine,  222. 

V.  Leffier,  1217. 

V.  Linn,  1391. 

V.  Morrison,  1525. 

V.  Rabbitt,  1537. 

V.  Sill,  1696. 

V.  Simpson,  1311,  1339. 

V.  Spalding,  1373. 

V.  White,  99,  104,  100. 
U.  S.  B'k  V.  Binney,  357,  303. 
V.  Carueal,  001. 
V.  Russell,  1374. 
V.  Southard,  1149,  1156. 
U.  S.  Express  Co.  v.  Haines,  125. 
Updegraft  r.  Edwards,  834. 
Upham  V.  Prince,  700,  1782,  1783. 
Urtou  V.  Hunter,  875. 
Usher  «.  Dauncey,  142,  372. 

V.  Gaither,  1472. 
Uther  V.  Rich,  770,  774. 
Utica  B'k  t\  Ganson,  1190. 

Ins.  Co.  «.  Kip,  204. 

Valentine  v.  Foster,  182. 

V.  HoUoman,  686. 
V.  Packer,  283. 
Valette  v.  Mason,  758,  832. 
Valk  V.  Gaillard,  99^. 

V.  Simmons,  1081,  1590. 
Vallett  V.  Parker,  197,  309,  807,808,812. 
Valpy  V.  Oakeley,  1280. 
Van  Alen  v.  American  Nat.  B'k,  326. 
Ames  V.  B'k  of  Troy,  337,  339,  340. 
Auken  ».  Hornbeck,  1472,  1483. 
Vaul)il)ben  v.  B'k  of  Louisiana,  1637. 
Van  lirunt  i\  Singlev,  849. 
Vance  v.  Collins,'  1005,  1387. 
r.  Lowthcr,  1658. 
V.  Wells,  240. 
Vancleef  v.  Therasson,  874. 
Vandenburg  v.  Hall,  350. 
Vauderpool  r.  Brake,  859, 
Vandervoer  y.  Wright,  1784. 
Vandewall  v.  Tyrrell,  580,    941,    1254, 

1258. 
Van  Doren  v.  Tjader,  713. 


The  references]       TABLE     OF    CASES,    {are  to  the  sections.     Ixxxiii 


Van  Duzer  v.  Howe,  147,  540,  1405. 

Eman  v.  Stanchfield,  741. 

Epps  V.  Dillaye,  1272,  1299. 

Hoesen  v.  Van  Alstyne,  996. 

Hostrup  V.  Madison  City,  1540. 

Keuren  v.  Parmelee,  B74. 

Ness  V.  Forrest,  1189. 

Patton  0.  Beals,  210. 
V.  Marks,  212. 

Raugh  V.  Van  Arsdaln,  875. 

Eeimsdyck  v.  Kane,  568. 

Rensselaer's  Ex'rs  v.  Roberts,  1253. 

Schaack  v.  Stafford,  751. 

Schaick  v.  Edwards,  807,  923. 

Steenburgh  v.  Hoffman,  240. 

Vechten  «.  Pruyu,  1010,  1025, 1038. 

Wart  V.  Woolley,  329,  476,  564,  995, 
1176,  1262,  1788. 

Wickle  V.  Downing,  1149. 
Vanzant  v.  Arnold,  877. 
Varin  v.  Hobson,  774. 
Varner    v.    ]S[oblel>orongh,     101,     430, 

1200. 
Varnum  v.  Milford,  802. 
Vastine  v.  Wilding,  1701,  1702. 
Vater  i;.  Lewis,  93,  101,  415. 
Vathir  v.  Zane,  166,  177,  815,  810.    . 
Vatterlien  v.  Howell,  830,  832. 
Vaughn  v.  Ferrall,  859. 
V.  Fuller,  1165. 
Veal  V.  Veal,  24. 
Veazie  «.  Carr,  1305. 
Veazie  B'k  v.  Paulk,  751. 

V.  Winn,  1210,  1590. 
Veeder  v.  Town  of  Lima,  1550,  1552, 

1553,  1555. 
Vere«.  Lewis,  136,  137. 
Vermilye  v.  Adams  Express  Co.,  353. 
Vernon  v.  Manhattan  Co.,  353. 
Vertue  ».  Jewell,  1749. 
Vicarro  v.  Toof,  350. 
Vidal  V.  Thompson,  908,  915. 
Viele  V.  Hoag,  1322. 
Vila«.  Weston,  1199. 
Vilas  V.  Jones,  1317. 
Viles  V.  Moulton,  1471. 
Vincent  «.  Horlock,  688,  1195. 
Vinton  v.  King,  787. 

V.  Peck,  69,  758«. 
Violett  v.  Patton,  189,  694,  843,  1765. 
Va.  V.  Ches.  &  Ohio  Canal  Co.,  1500, 

1513. 
Va.  Sav.  B'k  «.  Gibson,  451. 
Va.  &  Tenn.  R.  R.  Co.  v.  Clav,  1490, 

1494,  1500,  1511,  1512. 
Vischer  v.  Webster,  1406. 
Vogle  V.  Ripper,  1373,  1410. 
Voltz  V.  Harris,  1786,  1788. 
Vore  V.  Hurst,  716. 
Voss  V.  Robinson,  1750.  I 


Vreelaud  v.  Blunt,  23. 

V.  Hyde,  607,  609. 

Wackerbath,  ex  parte,  521,  530,  1255. 
Waddill  V.  Alabama  R.  R.  Co.,  384. 
Wade  V.  New  Orleans  Canal,  &c.  Co., 
1484,  1094. 

V.  Staimton,   1328. 

V.  Wade,  701,  1482. 
Wadlington  v.  Covert,  50. 
Wads  worth  v.  Allen,  1788. 

V.  Sherman,  213. 
Wagman  v.  Hoag,  1 322. 
Wagner  v.  Diedrich,  140,  790. 

V.  Kenuer,  624,  625. 
Wain  V.  Bailey,  1475. 

V.  Walters,  1764. 
Wainwright  «.  Webster,  737,  1076. 
Wait  V.  Pomeroy,  149,  150,  1397,  1407. 
Waithman  v.  Elzee,  39. 
Wake  V.  Tinkler,  1424. 
Wakefield  v.  Greenhood,  576. 
Walbridge  v.  Harron,  182. 
Waldo  B'k  v.  Lambert,  368. 
Waldron  v.  Young,  142. 
Waldrop  ».  Dunlop,  575. 
Wales  V.  Webb,  207. 
Walker  v.  B'k  of  Augusta,  1015. 

V.  B'k  of  Mo.,  979,  1015. 

V.  B'k  of  N.  Y.,  307,  414,  511, 
1341,  1381. 

v.  Christian,  445. 

®.  Clay,  80. 

V.  Dement,  834. 

V.  Ebert,  849. 

V.  Eyth,  1428. 

V.  Forbes,  1785. 

V.  Hamilton.  1449. 

V.  Laverly,  1151. 

V.  McDonald,  696. 

V.  Patterson,  262. 

V.  Rogers,  1147,  1149. 

V.  Stetson,  454,  1026,  1058. 

V.  Tunstall,  1027. 

V.  Turner,  929,  900,  961,  1055. 

^^  Walker,  1133. 

V.  Warfield,  112. 
Wall's  Case,  1346. 

AYall  t.  Bry,  1091,  1093,  1095,  1102. 
Wallace  v.  Agrv,  454,  405,  466,  470,473, 
943,  983. 

V.  Branch  B'k,  283,  753. 

V.  Hard  acre,  196. 

V.  Haimstad,  1410. 

V.  Jewell,  1387. 

v.  Kelsall,  1428. 

V.  Mayor  of  San  Jose,1550, 1551. 

V.  McConnell,  334,  520,  643,645. 
1303. 

V.  Tellfair,  330. 


Ixxxiv         The  references]        TABLE     OF     CASES.        [are  to  the  sections. 


Waller  v.  Tate,  747. 
Walley  r.  Montuomerv,  1736,  1745. 
Wallis  r.  Littell,  721." 
Wallridge  «.  Arnold.  19 C. 
Walmsiey  v.  Acton,  951. 

V.  Child,  1466,  1471. 
V.  Cooper,  1291, 
V.  Rivers,  1)62. 
Walpole  V.  Ellison,  1414. 
V.  PiiltenPA',  544. 
AValrad  i\  Pctrie,  103,  163. 
AValratli  r.  Tlionipson,  1756. 
AValsh  V.  Batcblev,  463. 
V.  Dart,  472,  617. 
Walter  t'.  Cublev,  1399. 
V.  Ilaynes,  1029. 
V.  Kirk,  1209. 
Walters  V.  Brown,  1008, 1009,  1116. 
v.  Munroe,  1140. 
V.  Short,  1418. 
Walton  V.  Bemiss,  1260. 
V.  Hastings.  1376. 
T.  Mascair,  827. 
i).  Shelly,  1217. 
Walton  V.  Williams,  128. 
Walwyn  v.  St.  Quiutin,  1076,1077,1203, 

1237.  1327. 
Walz  e.  Alback,  710,  713. 
Wamsley  v.  Lindeuberger,  225,  230. 
Wanger  v.  Tupper,  926. 
Ward  V.  Allen,  497,  505,  540. 
V.  B'k  of  Ky.,  291. 
v.  Bourne,  1260. 
V.  Churn,  63.  856. 
V.  Evans,  1262,  1623,  1679. 
v.  Howe,  874. 
■V.  Johnson,  1296. 
V.  Lewes,  856. 
V.  Northern  B'k,  656. 
V.  Perrin,  1033. 

r.  Smith,  218,  324,  325,  326,  334. 
V.  Turner,  24,  26. 
7)     ir  n  ^s    1  »5 1 1 
Warden*.  Howell,  792,  794,  826. 
Wardens  of  St.  James'  Church  v.  Moore, 

125. 
Warder  v.  Arell,  9,  874. 

1).  Tucker,  1083,  1148. 
Wardrop  v.  Dunlop,  322. 
Ware  v.  Street,  737,  1677,  1685. 
Waring  r.  Smyth,  1373. 
Warner  v.  Beardsley,  1305. 

V.  Spencer,  1396. 
Warnick  v.  Crane,  584. 
AVarren  v.  Brown,  56. 

r.  Chapman,  204. 

V.  Coombs,  9,  1455. 

V.  Gilman,  985,  1005,  1229. 

V.  Layton,  1411,  1418. 

V.  Lynch,  82,  885. 


Warren  v.  Scott,  105. 

B'k*.  Suffolk  B'k,  341. 
Warrington  v.  Early,  149,  1385,  1397, 

r.  Furbor,  1172. 
Wartman  r.  Yost,  1422,  1426,  1429. 
Warwick  v.  Bruce,  227. 
V.  Nairn,  203. 
V.  Noakes,  287,  314,  1474. 
Washburn  v.  Picot,  202. 
Washington  Co.  Mut.  Ins.  Co.  v.  Miller, 
47. 
Sav.  B'k  V.  Ekey,  1406. 
Waterbury  v,  Sinclair,  713. 
Waterman  v.  Vose,  1385. 
Waters  v.  B'k  of  Ga.,  1693. 

v.  Brown,  1116. 
Watervliet  B'k  v.  White,  417,  1188. 
Watkins  v.  Crouch,  643,  644, 1128, 1130, 
1131,1133,1135,1136,1137,. 
1172. 
V.  Halstead,  240. 
V.  Hill,  1366. 
V.  Hopkins'  Ex.,  1424. 
V.  Maule,  260.  267,  680,685,744. 
Watson  V.  Cabot  B'k,  834. 

V.  Flanagan,  174,  728,  803. 
v.  Heasel,  224. 
V.  Hoag,  861. 
V.  Hurt,  709,  713. 
v.  Kahu,  679. 
V.  Loring,  930. 
V.  Reynolds,  186. 
V.  Tarpley,  449. 
V.  Templeton,  418. 
Watson's  Exrs.  v.  McLaren,  1767,  1797. 
Watt  V.  Riddle,  1450. 
Wattrous  v.  Halbrook,  96. 
Waugh  V.  Russell,  1407. 
Way  V.  Butterworth,  649,  715. 
i\  Lamb,  735. 
V.  Richardson,  813. 
t\  Sperry,  182. 
Waydell  v.  Luer,  1299. 
Wayland  v.  Mosely,  1729. 
Wayman  v.  Bend,  663. 

V.  Torreyson,  125. 
AVeaklv  r.  Bell,  1024,  1116,  1206. 
Weathered  v.  Smith,  809. 
Weatlierwax  v.  Paine,  713. 
Weaver  v.  Borden,  832. 
Webb  V.  Fairmauer,  617,  1208, 

V.  Mears,  454. 
Webber  v.  William's  College,  294. 
Webster  v.  Calden,  728. 

V.  Cobb,  713,  1777. 
V.  De  Tastat,  330. 
V.  Lee,  728. 
r.  Vickers,  1217. 
Weed  V.  Bond,  806. 

V.  Carpenter,  689. 


Thereference»\        TABLE     OF     CASES.        {are  to  the  sectiom.     IxXXV 


Weggersloffe  v.  Kerne,  516. 
Weinstock  i\  Bellwood,  22,  1637. 
Weisser  v.  Dennison,  288,  1370. 
Weismer  v.  Village  of  Douglas,   1523, 

1547. 
Weitli  %\  City  pf  Wilmington,  1500. 
Welby  V.  Drake,  1289. 
Welch  v.  Allington,  1260,  1266. 

V.  B.  C.  Taylor  Mauf.  Co.,  1074. 
v.  Goodwiu,  1369,  1373. 
V.  Lindo,  576,  700,  1198,  1227. 
v.  Sage,  775. 
Weld  V.  Gorham,  658. 
Welland  Canal  Co.  w  Hathaway,  391. 
Wellington  v.  Jackson,  1352. 
Wells  V.  Brigham,  104,  518,  1579. 
».  Evans,  368. 
V.  Hopkins,*  203. 
V.  Jackson,  717. 
V.  Masterman,  362,  488. 
V.  Shoonover,  1192,  1200. 
v.  Tucker,  24. 
V.  Wade,  1483. 

V.  Whitehead,  9, 114,  117,  943. 
Welsh  V.  Barrett,  967,  1057. 
Welton  «.  Adams,  1478,1481,1694,1703. 
Wemple  v.  Dangerfield,  1039,  1041. 
Wendt  i\  Koss,  1353. 
Wenman  v.  Mohawk  Ins.  Co.,  1315. 
Were  «.  Taylor,  137. 
West  V.  Br6wn,  637,  1041. 
V.  Forman,  50. 
V.  Penny,  230,  331. 
Branch  B'k  v.  Fulmer,  323,   337, 

1088. 
St.   Louis,   &c,   B'k    v.  Shawnee, 
&c.  Bank,  392. 
Western  B'k  v.  Mills,  177. 

Boatman's  Benev.  Ass.  ».Wolflf, 
710,  713. 
Westfall  ».  Braley,  737,  1676. 
Westgatei!.  Ilealy,  1181. 
Westminster  B'k  r.  Wheaton,  1573. 
Weston  V.  City  of  Charleston,  125. 
V.  Barker,  747. 
».  Hight,  24,  1473. 
Wetherall  ».  Claggett,  967,  969. 

V.  Ela,  1198. 
Wetherell  v.  Joy,  1251. 
Wethey  ».  Andrews,  608. 
Wctumpka,  &c.  R.  R.  Co.  ».  Bingham, 

425. 
Whaley  v.  Houston,  964,  1596. 
Wharton  ».  Morris,  56. 
Whatley  v.  Trickcr,  543. 
Wheat  v.  Arnold,  1418. 
V.  Kendall,  1338. 
Wheatley  v.  Strobe,  15,  19,  125,  1644. 
Wheaton  ®.  Wilmarth,  983. 
Wheeler  y.  Field,  1058, 1116, 1117, 1145. 


Wheeler  r.  Gould,  1618. 

V.  Guild,  1227, 1238,1233, 1461. 
v.  Johnson,  1191,  1200. 
V.  New  bold,  833. 
t>.  Slocum,  827. 
».  State,  991. 
v.  Warner,  606,  1215. 
®.  Webster,  97,  486,  497,  606. 
v.  Wheeler,  266,  685.  741. 
Wheelock  «.  Freeman,  79,   1347,  1397, 

1410,  1412. 
Whetstone  «.  Colley,  1347. 
Whinston  v.  Stodder,  868. 
Whistler  v.  Foster,  706,  745,  1578. 
Whitaker  v.  B'k  of  England,  603. 
V.  Brown,  359. 
?;.  Edmunds,  165,  814. 
».  Groover,  1250. 
V.  Hartford,  &c.    R.    R.    Co., 

1514. 
'0.  Morrison,  1105,  1168. 
%\  Whitaker,  187,  256. 
Whitcomb  v.  W luting,  374. 

V.  Williams,  1260. 
White  V.  Banister's  Ex'rs,  1433. 
V.  Canfield,  886. 
v.  Casanove.  1281. 
t\  Case,  1769. 

0.  Continental  Nat.  B'k,  533,  538, 
540,  1359,  1361,  1363, 1364, 
1372. 
V.  Dougherty,  1281. 
V.  Ford,  1431. 
V.  Hart,  173. 
X.  Hass,  1418. 
®.  Heylmau,  196,  743. 
t\  Hopkins,  1307,  1335. 
v.  Howard,  1207. 
V.  Rowland,  1780. 
h.  Kebling,  1233. 
V.  Ledwick,  108. 
V.  Madison,  307. 
V.  McNett,  248. 
V.  Palmer,  1231. 
V.  Richmond,  56. 
t.  Smith,  41. 
V.  Springfield  B'k,  827. 
v.  Stacker,  1785. 
V.  Stoddard,  578,  994, 1125,  1126, 

1177. 
%\  Story,  248, 
v.  Trumbull,  1251. 
V.  Tudor,  373. 
«.  Vt.,  &c.  R.  R.  Co.,  148,  1499, 

1500. 
V.  Wardwell,  182. 
V.  Weaver,  713,  728. 
Whiteford  «.  Burckmever,    1003,    1191. 

1200. 
Whitehead  v.  Walker,  724,  725,  1436. 


IxXXvi  The  references]       TABLE     OF     CASES.        {are  to  the  sections. 


AVhitehouse  i\  Hansen,  712,  717. 
"VVhitc'locke  r.  ^lusgrovo,  1218. 
Wliiteman  v.  Sheckle,  125. 
Whiteside  v.  Northern  B'k,  1377. 

V.  U.  S.  440. 
White  Water  Vallev  Canal  Co.,  382. 
Whitfiehl  r.  Savage,  1077. 
Whitlock  V.  Underwood.  88,  599. 
NVliitman  v.  Farmers'  B'k,  983,  1045. 

r.  Leonard.  371,  374. 
Whitmcr  v.  Frye,  1385,  1410,  1412. 
Whituev  i\  Abbott,  1104. 

V.  Bunnell,  533,  1755. 

V.  Dutch,  231. 

V.  Essou,  1625. 

V.  Going,  1329. 

1).  Grost,  1755. 

V.  Merchants'    Union   Express 

Co.,  348. 
r.  National  B'k,  731. 
V.  Snvder,  848,  850. 
Whitridge  v.  Rider,  1116. 
Whittenberger  v.  Spalding,  581. 
Whitt.nhall  v.  Korber,  1198. 
Whittier  v.  Eager,  187. 

«.  Graffam,  1123,  1145. 
V.  Ilavden,  1195. 
Whittle  V.  Skinner,  1289. 
Whitwell  v.  .Johnson,  658. 
Whitworth   v.   Adams,    191,    750,    751, 
752,  753,  756,  757,  760,   762,  703, 
765. 
Wickersham  v.  Jarvis,  1198. 
Wickham  v.  Wickham,  314. 
Widgery  v.  Munroe,  058,  1145,  1140. 
Widoe  V.  Webb,  204. 
Wieman  v.  Anderson,  250. 
Wift'en  V.  Roberts,  740. 
Wiggin  V.  Bush,  775. 

V.  Damrell,  747. 
Wiggle  V.  Thompson,  1212. 
Wigglesworth  v.  Steers,  214. 
Wilbur  r.  Lynde,  282. 

V.  Selden,  1057. 
Wilburn  v.  Greer,  50. 
Wilcombe  v.  Dodcce,  1209. 
Wilcox  V.  Roath,'"232,  998. 
Wilcoxen  v.  Reynolds,  87. 
Wild  V.   B'k  of  Passamaquoddy,  388, 

391,  087. 
Wilda  V.  Armslv,  1418. 
Wilder  v.  DeWolf,  130,  663. 

V.  Seelye,  1481. 
Wildes  V.  Savage,  551,  501,  1785,  1788. 
Wildman,  ex  parte.,  1203. 
Wiley  T.  First  Nat.  B'k,  280. 

V.  Knight,  802. 
Wilkenson  v.  .Jcfi'ers,  725. 
Wilkes  V.  Jacks,  1083. 
Wilkins  v.  Com.  Bank,  998. 


Wilkins  v.  Jadis,  602,  1160. 
Wilkinson  v.  Adams,  982. 
v.  Cook,  172. 
V.  Johnson,    528,    533,    549, 

1257. 
T.  Ludwidge,  j533. 
Willcnberger  v.  Spalding,  586. 
Willets  V.  Pheenix  B'k,  1571. 
Willett  V.  Shepherd,  1418. 
Willey  v.  Greenfield,  432. 
Williams  v.  Ayres.  129. 
V.  Bacon,  303. 
v.  Baker,  76. 
?;.  B'k  U.  S.,  1005,  1016,  1022, 

1117,  1119. 
T.  Brashear,  1076. 
V.  Brobst,  1105,  1110. 
t.  Cheney,  8f)8. 
V.  Drexel,  538,  1365. 
V.  Everett,  19. 
V.  Floyd,  112. 
v.  Gerraaiue,  527,  529,  531. 
^^  Gilchrist,  1425. 
V.  Haynes,  885. 
V.  Hoogewerff,  637. 
V.  James,  1205,  1241. 
1).  Johnson,  688. 
V.  Jones,  884. 

v.  Mathews,  572,  998,  1048. 
V.  Moore,  230. 
V.  Nicols,  186. 
V.  Price,  1311. 

v.  Putnam,  909,  910,  928,  900. 
V.  Robbins,  303,  305, 
r.  Robinson,  1105. 
V.  Sims,  55. 

V.  Smith,  758,  824,  832,  1696. 
V.  Storm,  751. 
«.  Thomas,  358. 
V.  Union  R.  R.,  1149. 
V.  Wade,  899,  900. 
V.  Wallbridge,  366,  309. 
V.  Waring,  1370. 
V.  Winas,  491. 
Williamson  v.  City  of  Keokuk,  1538. 
«.  Harrison,  225. 
».  Johnson,  301,  088,  1013. 
V.  New  Albany  &  Salem  R. 

R.  Co.,  1509. 
V.  Smith.  80,  1244. 
V.  Watts,  225. 
Willis  ».  Barrett,  100. 
V.  Cresey,  1478. 
V.  Green,  455,  594,  999. 
Willison  V.  Pattison,  217,  078,  814. 
Wilmington,  <S;c.  R.  R.  v.  King,  87. 
Willoughby  v.  Moulton,  74. 

V.  Willoughby,  103. 
Wills  «.  Wilson,  1401. 
Willsey  v.  Hutchins,  248. 


The  refereneesl       TABLE     OF     CASES,    [are  to  the  sections.     Ixxxvii 


Wilson  V.  Bartrop,  306. 

V.  Black,  719. 

V.  Casey,  124. 

V.  City  of  ShreTeport,  1530, 1538. 

V.  Clements,  550,  551,  552,  558. 

V.  Codman,  700,  1431. 

V.  Dawson,  326. 

V.  Forder,  370. 

V.  Harris,  1419. 

V.  Jamieson,  1401. 

V.  Keedey,  1429. 

V.  Lazier,  165,  198, 808,  814,  817, 
880,  895. 

V.  Mechanics'  Sav.  B'k,  726. 

r.  Mitchell,  987. 

V.  Senier,  1131,  1185. 

V.  Smith,  344. 

V.  Stubbs,- 100. 

V.  Svvabey,  987,  988. 

r.  Williman,  1209. 
Winchell  v.  Carey,  69. 
Winchester  v.  Hackley,  1431. 
AVindham  B'k  v.  Dales,  207. 

«.  Norton,  598, 1048, 1067, 
1068. 
Windham  Co.  B'k  v.  Kendall,  366. 
Wing  T.  Terry,  95. 
Winn  V.  City  of  Macon,  1523. 

V.  Thomas,  194. 
Whinship  v.  B'k  of  U.  S.,  368. 
Winslow  V.  Norton,  1730. 
Winstead  B'k  v.  Webb,  1266,  1274. 
Winston  v.  Westfeldt,  800. 
V.  Yeargin,  1311. 
Winters.  x\nson,  1281. 

V.  Drury,  20. 
Wintermute  v.  Post,  513,  545. 
Wintersmith  v.  Post,  508. 
Winthrop  r.  Pepoou,  930. 
Wintle  V.  Crowther,  351,  364. 
Winton  v.  Saidler,  1217. 
Wisdom  V.  Becker.  262. 
Wise  V.  Charlton,  5 1 . 
V.  Prowse,  1203. 
V.  Rogers,  448,  1726. 
Wiseman  v,  Chapella,  1118. 
Withall  V.  ]\Iasterman,  1321. 
Witte  V.  Williams,  753.  781a. 
Wittenberijer  v.  Spalding,  581. 
Wittle  V.  Derby  Fishing  Co.,  410; 
Wofford  i\  Board  of  Police,  1479.' 
Wolf  «.  Koppel,  314. 
«.  Jewett,  311. 
Wolfe  V.  Myers,  1729. 
Wolfersberger  ».  Bucher,  1432. 
Wollenleber  v.  Ketterliuus,  1079,  1081. 
Wood  V.  Bodwell,  1200. 

V.  Brown,  1158. 

V.  Bullens,  1247. 

V.  Corl,  622,  919,  1031. 


Wood  V.  Dowry,  112. 
V.  Gibbs,  898. 
V.  Holbeck,  366. 
V.  Jefferson  Co.  B'k,  1305,  1326. 
V.  McMeans,  1084. 
V.  Merchants'  Sav.,  &c.  Co.,  326. 
a.  Mullen,  625. 
V.  Mvtton,  130. 
V.  Piigh,  523,  524,  1258. 
V.  Steele,  1373,  1376. 
V.  Watson,  979. 
v.  Wood,  999. 
Woodbridge  v.  Brigham,  656. 

i\  Spoouer,  80,  180. 
Woodbury  v.  Moulton,  299. 
Woodcock  V.  Houklsworth,  1021,  1053. 
Woodford  v.  Dorwin,  63,  65,  66,  371. 

V.  Whiteley,  1482. 
Woodhull  V.  Holmes.  815. 
Woodin  V.  Foster,  656. 

V.  Frayze.  1596. 
Woodman  v.  Booth y,  713. 

V.  Chapman,  258. 
v.  Churchill,  726,  803. 
V.  Eastman,  1131,  1134,  1135. 
V.  Thurston,  1090, 1092,1094. 
Woodruff  i'.  Heniman,  204, 
V.  Leonard,  713. 
V.  Merchants'  B'k,    617,    622, 

1571. 
V.  Munroe,  1351,  1352. 
V.  Plant,  1598. 
«.  Scruggs,  1565. 
v.  Trapnall,  447,  1725. 
Woods  V.  Bailey,  1281. 

V.  Lawrence  Co.,  1494,  1540. 
V.  North,  62. 
V.  Ridley,  128,  130. 
V.  Schroedcr,  1652. 
V.  Sherman,  1251. 
V.  Viozca,  725. 
V.  Wilder,  217,  218,  1000. 
Woodson  V.  Moody,  1788. 
Woodstock  B'k  v.  Downer,  159. 
Woodthrope   v.   Lawes,  979,  983,  991, 
993.  ^,i 

Woodward  v.  Foster,  273,  719,  720. 
V.  Gunn,  90. 
V.  Severance,  703. 
V.  Sup.  of  Calhoun  Co.,  1524, 

1535. 
V.  Walton,  1311. 
Woodworth    v.   B'k  of    America,    152, 
1397,  1401. 
r.  Huntoon,  803. 
Wookey  v.  Pole,  145,  663,  1504. 
WooUey  v.  Clark,  201. 

V.  Clements,  627. 
V.  Constant,  148. 
V.  Sergeant,  35. 


Ixxxviii      77ie  references]       TiVBLE     OF     CASES.         [are  to  the  aeciwis. 


■Woolsey  r.  Crawford,  1449. 
Wooster  r.  Jenkins,  187. 
Wooten  V.  MauUsby,  728. 
"Worcester   Co.   B'k  v.  Dorchester,  &c. 

B'k,  775,  837,  1680. 
Worcester  Co.  15"k  v.  Wells,  896. 
Ins.,  etc.  V.  Davis,  1788. 
Nat.  B'k  v.  Cheney,  829,  830. 
Wordeu  v.  Bemis,  17;52. 

r.  Dodge,  50. 

r.  Noui-se,  992,  993. 
Work  V.  Tatman,  1574. 
Works  V.  Hershey,  44. 
Woiley  V.  Waldram,  057. 
AVoniiley  v.  Lowrv,  832. 
Worrall  v.  Glieen,'  1408. 
Worsham  v.  Goar,  1326. 
AVorth  V.  Case,  45,  180. 
Wren  r.  Pearce,  1764. 
Wright  r.  Boyd,  1188. 

V.  Brosseau,  368. 

V.  Douglas,  1669. 

V.  Dyer,  1786. 

V.  Hancock,  1472. 

«.  Hart,  56. 

V.  Irwin,  51. 

«.  Laing,  1252. 

V.  Maidstone,   1482. 

i\  Morse,  715. 

V.  Reed,  1672. 

V.  Shaw  cross,  1043. 

T.  Steele,  231. 

v.  Wright,  25,  743,  1472,  1481. 
Wrightson  r.  Pullan,  370,  371. 
Wvant  V.  Pattorf,  62. 
Wyat  V.  Campbell,   808. 
Wyate  v.  Evans,  196. 
Wyatt  V.  Buhner,  198. 
Wyer  v.  Dorchester,  &c.  B'k,  775,  1680. 
Wvke  i\  Rogers,  1322. 
Wylie  V.  Brice,  509. 


Wyllie  V.  Pollen,  802. 
Wyman  v.  Adams,  612. 

V.  Yeomaus,  1377. 
Wynn  v.  Alden,  979. 
Wynne  r.  Callander,  206. 

V.  Jackson,  914. 

V.  Raikes,  491,  503,  552,  563. 

V.  Whesenant,  204. 

Yale  V.  Dederer,  248. 

i\  Wood,  11. 
Yarnell  v.  Anderson,  1260. 
Yates  V.  Bell,  19. 

v.  Donaldson,  1335. 
V.  Hall,  221. 
V.  Shepardson,  1646. 
Yeager«.  Farwell,  1108,  1147,  1158. 
Yeates  v.  Groves,  23. 
Yeatman  v.  CuUen,  895,  899. 
Yeaton  v.  B'k  of  Alexandria,  189. 

V.  Bemey,  643. 

V.  Durgin,  1022. 
Yocum  V.  Smith,  844,  1406. 
York  V.  Pierson,  1328. 
Young  V.  Adams,  55,  737,  1675. 

V.  Bennett,  954. 

V.  Bryant,  926,  968. 

V.  Cole,  733,  1533. 

V.  Grote,  540,  1313,  1405,  1059. 

v.  Harris,  879. 

V.  Ward,  1184. 
Youngling  v.  Kohlkass,  1472. 
Youngs  V.  Lee,  181,  184,  827,  832,  979, 

983. 
Youse  V.  McCrearv,  749. 
Yowell  V.  Dodd,  406. 

Zimmerman  v.  Anderson,  61. 

v.  Rote,  1405,  1407. 
ZoUoman  v.  San  Francisco,  218. 
Zwinger  v.  Samuda,  1713. 


NEGOTIABLE  INSTRUMENTS. 


NEGOTIABLE  INSTRUMENTS. 


BOOK   I. 

THE  MAKING  OF  THE  INSTEUMENT. 


CHAPTER   I. 

NATURE,    HISTORY    AND    USES    OF    NEGOTIABLE    INSTRUMENTS. 


SECTION    I. 

NATURE,     ORIGIN     AND     HISTORY     OF    BILLS     AND     NOTES. 


S  1.  An  instrument  is  called  nesjotiable  wlien  the  legal 
title  to  the  instrument  itself,  and  to  the  whole  amount  of 
money  expressed  upon  its  face,  may  be  transferred  from  one 
to  another  by  indorsement  and  delivery  by  the  holder,  or  by 
delivery  only.  The  peculiarities  which  attach  to  negotiable 
paper  are  the  growth  of  time,  and  were  acceded  for  the  ben- 
efit of  trade. 

It  was  a  mle  of  the  common  law  of  England,  that  a 
chose  in  action — by  which  is  meant  a  claim  which  the  holder 
would  be  driven  to  his  action  at  law  to  recover — could  not 
be  assigned  to  a  stranger,  our  forefathers  conceiving  that  if 
claims  and  debts  could  be  assigned,  "pretended  titles  might 
be  granted  to  great  men,  whereby  right  might  be  trodden 
down  and  the  weak  oj)pressed,  which  the  common  law  for- 
biddeth."\  The  first  relaxation  of  this  rule  was  made  in 
respect  to  bills  of  exchange,  and  was  gradually  extended  to 
notes  and  other  securities,  until  the  rule  itself  disappeared. 

'  Coke,  Litt.  214a ;  Chitty  ou  Bills  [*7],  9 ;  Edwards  on  Bills,  55. 
Vol.  I.— 1 


2  NA.TURE   AND   USES   OF   NEGOTIABLE   INSTRUMENTS. 

But  while  all  clioses  in  action  are  now  transferal )le,  the 
negotiable  insti-ument  is  the  only  species  which  carries  by 
transfer  a  clear  title  and  a  full  measure;  and  like  an  instru- 
ment under  seal  imports  a  consideration.  It  has,  therefore, 
three  peculiar  and  distinguishing  characteristics : 

First.  Respecting  the  title.  If  a  horse,  or  other  personal 
chattel,  or  a  non-negotiable  instrument,  be  stolen,  no  pur- 
chaser, however  innocent  or  ignorant  of  the  theft,  can  acquire 
title  against  the  true  owner,  who  may  at  any  place,  and  at 
any  time,  identify  his  property  and  reclaim  it.  But  if  a  ne- 
gotiable instrument  be  stolen,  and  transferred  by  the  thief 
to  a  third  person  in  the  usual  course  of  business,  before  ma- 
turity, and  for  a  valuable  consideration,  the  person  so  acquir- 
ing it  may  hold  it  against  the  world. 

Second.  Respecting  the  amount.  If  a  bond  or  non-nego- 
tiable note  be  assigned,  the  assignee  steps  into  the  shoes  of 
the  assignor,  and  if  the  bond  or  note  has  been  paid,  or  is  sub- 
ject to  any  counter-claim  or  set-off  against  the  original  maker, 
they  attach  to  and  incumber  it  into  whosesoever  hands  it  may 
fall.  But  a  negotiable  paper  carries  the  right  to  the  whole 
amount  it  secures  on  its  face,  and  is  subject  to  none  of  the 
defenses  which  might  have  been  made  between  the  original 
or  intervening  parties,  against  any  one  who  acquired  it  in  the 
usual  course  of  business  before  maturity.  It  is  a  circulating 
credit  like  the  currency  of  the  country,  and,  before  maturity, 
the  genuineness  and  solvency  of  the  parties  are  alone  to  be 
considered  in  determining  its  value.  It  has  been  fitly  termed 
"  a  courier  without  luG^ofaoie."  ^ 

Third.  Respecting  the  consideration.  By  the  common 
law,  an  instrument  under  seal  imports  a  consideration,  by 
virtue  of  the  solemn  ceremony  of  its  execution ;  and  no  other 
non-negotiable  instrument  does.  A  bill  of  exchange,  how- 
ever, by  the  usages  of  merchants,  also  pi'ima  facie  imports  a 
consideration ;  and  now  by  statute  promissory  notes  of  a  cer- 
tain kind  are  placed  on  the  same  footing.     As  between  im- 


'  Overton  v.  Tyler,  3  Barr,  346,  Gibson,  C.  J. 


NATURE,    ORIGIN  AND   HISTORY  OF  BILLS  AND  NOTES.        3 

mediate  parties,  the  true  state  of  the  case  may  be  shown,  and 
the  presumption  of  consideration  rebutted.  But  when  a  bill 
of  exchange  or  negotiable  note  has  passed  to  a  bona  fide 
holder  for  value,  and  before  maturity,  no  want  or  failure  of 
consideration  can  be  shown.  Its  defects  perish  with  its 
transfer ;  while,  if  the  instrument  be  not  a  bill  of  excliange 
or  negotiable  note,  they  adhere  to  it  in  whosesoever  hands 
it  may  go. 

§  2.  Bills  of  exchange  were  probably  the  first  instruments 
for  the  payment  of  money  that  were  accorded  a  negotiable 
quality,  though  promissory  notes,  being  simpler  in  form,  were 
doubtless  used  as  evidences  of  debt  before  bills  of  exchanore 

o 

<3ame  in  vogue  amongst  merchants.  Certainly  these  two 
securities  were  recognized  as  negotiable  instruments  b'efore 
any  other  paper  representatives  of  money  or  property  passed 
currently  from  hand  to  hand  in  like  manner  as  money ;  and 
from  them,  as  fruitful  parents,  have  sprung  all  the  varieties 
of  negotiable  instruments  now  known.  Of  bills  and  notes, 
therefore,  we  shall  first  speak,  and  after  they  have  been  suffi- 
ciently treated  of,  the  other  varieties  of  negotiable  instru- 
ments will  receive  due  attention. 

§  3.  As  to  the  origin  and  history  of  bills  and. notes. — The 
numerous  commentators  on  the  law  of  bills  of  exchange  and 
promissory  notes  have  generally  enriched  their  pages  with 
the  results  of  their  classic  and  antiquarian  researches  into  the 
origin  and  history  of  those  instruments.  But  notwithstand- 
ing the  number  and  the  diligence  of  the  laborers  in  this  in- 
teresting field  of  inquiry,  it  cannot  be  now  stated,  with  any 
degree  of  certainty,  by  whom  they  were  invented,  or  when 
they  were  first  used.  In  respect  to  bills  of  exchange,  it  is 
said  by  Pothier,  that  there  is  no  vestige  of  them  among  the 
Romans,  or  of  any  contract  of  exchange ;  for  though  it  ap- 
pears that  Cicero  directed  one  of  his  friends  at  Rome,  who 
bad  money  to  receive  at  Athens,  to  cause  it  to  be  paid  to  his 
son  at  that  place,  and  that  friend  accordingly  wrote  to  one 
of  his  debtors  at  Athens,  and  ordered  him  to  pay  a  sum  of 


4  NATURE  AND  USES  OF   NEGOTIABLE  INSTRUMENTS. 

money  to  Cicero's  son,  yet,  it  is  observed,  that  this  mode 
amounted  to  nothing  more  than  a  mere  order  or  mandate, 
and  was  not  that  species  of  negotiation  which  is  conducted 
through  the  medium  of  a  bill  of  exchange.^ 

Chancellor  Kent  seems  to  think  that  a  passage  in  one  of 
the  pleadings  of  Isocrates  indicates  the  use  of  bills  of  ex- 
change amongst  the  Greeks,'-^  but  Story  considers  that  the 
transaction  referred  to  was  little  more  than  the  very  case 
alluded  to  by  Cicero,  and  put  in  the  lloman  law.*^  Sir 
"William  Blackstone,  remarking  upon  this  subject,  says  : 
"  This  method  is  said  to  have  been  brought  into  general  use 
by  the  Jews  and  Lombards  when  banished  for  their  usury 
and  other  vices,  in  order  the  more  easily  to  draw  their  effects 
out  of  France  and  England  into  those  countries  in  which 
they  had  chosen  to  reside.  But  the  invention  of  it  was  a 
little  earlier ;  for  the  Jews  were  banished  out  of  Guienne  in 
1287,  and  out  of  England  in  1290;  and  in  1236  the  use  of 
paper  credit  was  introduced  into  the  Mogul  Empire  in 
China."  ^  And  Chitty  says :  "  Other  authors  have  attributed 
the  invention  to  the  Florentines  when,  being  driven  out  of 
their  country  by  the  faction  of  the  Gebelings,  they  estab- 
lished themselves  at  Lyons  and  other  towns.  On  the  whole, 
however,  there  is  no  certainty  on  the  subject,  though  it  seems 
clear  foreign  bills  were  in  use  in  the  fourteenth  century,  as 
appears  from  a  Venetian  law  of  that  period ;  and  an  infer- 
ence drawn  from  the  statute  5  Ricli.  II,  st.  1,  c.  2,  warrants 
the  conclusion  that  foreign  bills  were  introduced  into  this 
country  previously  to  the  year  1381."^  Macpherson,  in  his 
"  Annals  of  Conmierce,"  speaks  of  letters  of  credit  being  em- 
ployed by  King  John  to  procure  advancements  to  his  agents 
in  Kome  as  early  as  1202.*^  And  there  is  reason  to  believe 
that  bills  of  exchange  were  known  in  England  as  early  as 


'  Pothier  de  Change,  n.  6;  Story  on  Bills,  §  6;    1  Bell  Com.  b.  3,  c.  2,  §  4, 
p.  38G. 

=■  3  Kent  Com.  Lect.  44.  '  Story  on  Pills,  §  G,  note  4. 

*  2  Black.  Com.  4G7.  "  Cbitty  on  Kills  [*11J,  16. 

*  P.  181,  quoted  in  1  Parsons  N.  &  B.  4. 


NATURE,    ORIGIN  AND  HISTORY  OF   BILLS  AND  NOTES.        5 

1307,  since  in  tliat  year  King  Edward  I  ordered  cej'tain 
money,  collected  in  England  for  the  Pope,  not  to  be  remitted 
to  him  in  coin  or  bullion,  but  by  way  of  exchange  (^per  viam 
Camhii)} 

§  4.  The  term  "  bill  of  exchans-e,"  deriv^'d  from  the  French 
phrase  ^^hillct  de  change, ^^  is  suggestive  of  the  use  which  it 
subserves — that  of  perfecting  a  previous  distinct  contract  of 
exchange  or  bargain  between  A.  and  B.  at  one  place,  that  A. 
would  cause  money  to  be  paid  to  B.  or  his  assign  at  another 
jolace,  by  C,  a  debtor  to  A.,  or  supplied  by  him  with  value 
to  the  amount.^  Thus,  if  A.  and  B.  are  in  Enijland,  and  C. 
in  Jamaica  be  indebted  to  A.  one  thousand  pounds,  and  B. 
be  going  to  Jamaica,  B.  may  pay  A.  this  thousand  pounds 
and  take  a  bill  of  exchange  drawn  by  A.  in  England  upon 
C  in  Jamaica,  and  collect  the  amount  from  C.  when  he  comes 
thither ;  and  thereby  A.  receives  his  debt,  at  any  distance  of 
place,  by  transferring  it  to  B.,  and  B.  receives  back  his  money 
at  the  end  of  his  journey — and  the  parties  are  mutually 
benefited  by  avoiding  the  dangers  of  loss  or  robbery  which 
would  attend  the  actual  transmission  of  funds  to  and  fro.^ 

From  this  primitive  use,  bills  of  exchange  became,  in  the 
expansion  of  commerce,  the  evidences  of  valuable  property, 
and  in  a  great  measure  the  equivalent  of  money,  enlarg- 
ing the  capital  stock  of  wealth  in  circulation,  and  thereby 
facilitating  and  increasing  the  operations  of  trade  between 
communities  and  nations.^ 

§  5.  Promissory  notes  have  as  obscure  an  origin  as  bills 
of  exchange.  There  is  no  doubt  that  they  were  in  use  among 
the  llomans,^  but  they  seem  never  to  have  acquired  those 
negotiable  qualities  which  now  impart  to  them  their  chief 
value  as  instruments  of  commerce.  They  were  in  use  upon 
the  continent  of  Europe  before  their  introduction  into  En- 
gland, where  they  first  came  in  vogue  about  the  middle  of 

'  Anderson's  Ilistory  of  Commerce,  Vol.  I,  361. 

'  Chitty  on  Bills,  1.  '  2  Black.  Com.  467. 

'  Gibson  v.  Minet,  1  H.  Bl.  618.  '  Story  on  Notes,  §  5. 


6  IsATURE  AifD  USES   OF   NEGOTIABLE   INSTRUMENTS. 

the  I7tli  century/  although  it  has  been  thought  that  they 
possess  a  more  recent  origin.'^  In  the  earlier  reports  the 
terms  "bill"  and  "note"  appear  to  hav^e  been  used  indis- 
criminately, and  it  is  difficult  to  determine  in  many  cases 
whether  the  particular  suit  was  brought  upon  the  one  instru- 
ment or  the  other.'^  It  has  been  a  much  debated  question 
whether  or  not  the  common  law  of  England  recognized  the 
negotiability  of  promissory  notes ;  and  most  vigorously  was 
the  negative  advocated  by  Lord  Holt,  who  declared  that  the 
eflbrt  to  place  them  on  the  same  footing  as  bills  of  exchange, 
"proceeded  from  the  obstinacy  and. opinionativeness  of  the 
merchants,  who  were  endeavorinaj  to  set  the  law  of  Lombard 
street  above  the  law  of  Westminster  Hall."  ^  This  contro- 
versy was  terminated  by  the  passage  of  the  statute  3  <fe  4 
Anne,  c.  9  [1705]  (made  perpetual  by  the  statute  7  Anne,  c. 
25),  which  made  promissory  notes  "  assignable  or  indorsable 
over  in  the  same  manner  as  inland  bills  of  exchange  are,  or 
may  be,  according  to  the  custom  of  merchants."  ^ 

This  statute  has  been  adopted  in  some  of  the  States  of 
the  United  States,  or  in  its  lieu  other  statutes  prescribing 

'  story  on  Notes,  §  6.  '  Duller  v.  Crips,  6  Mod.  29. 

'  Grant  v.  Vauglian,  3  Burr.  1525. 

*  Gierke  v.  Martin,  1  Lord  Raymond.  757. 

'  The  statute  of  Anne  (3  &  4  Anne,  c.  9)  provides:  "That  all  notes  in  writ- 
ing that  shall  be  made  and  signed  by  any  person,  &c.,  whereby  such  person,  &c., 
shall  promise  to  pay  to  any  other  person,  his,  her,  or  their  order,  or  unto  bearer, 
any  sum  of  money  mentioned  in  such  note,  shall  be  taken  and  construed  to  be, 
by  virtue  thereof,  due  and  payable  to  any  such  person,  &c.,  to  whom  the  same  is 
made  payable;  and  also  every  such  note  payable  to  any  person,  &c.,  his,  her,  or 
their  order,  shall  be  assignable  or  indorsable  over,  in  the  same  manner  as  inland 
bills  of  exchange  are  or  may  be,  according  to  the  custom  of  merchants;  and  that 
the  persons,  &c.,  to  whom  such  sura  of  money  is  or  shall  be  by  such  note  made 
payable,  shall  and  may  maintain  an  action  for  the  same,  in  such  manner  as  he, 
she,  or  they,  might  do  upon  any  inland  bill  of  exchange,  made  or  drawn  accord- 
ing to  the  custom  of  merchants,  against  the  person,  &c.,  who  signed  the  same; 
and  that  any  person,  &c.,  to  whom  such  note  that  is  made  payable  to  any  person, 
&c.,  his,  her,  or  their  order,  is  indorsed  or  assigned,  or  the  money  therein  men- 
tioned ordered  to  be  paid  by  indorsement  thereon,  shall  and  may  maintain  his, 
her,  or  their  action,  for  such  sum  of  money,  either  against  the  person,  «&c.,  who 
signed  the  note,  or  against  any  of  the  persons  that  indorsed  the  same,  in  like 
manner  as  in  cases  of  inland  bills  of  exchange." 


rOSEIGN   AiJD  INLAND  BILLS.  7 

the  criteria  and  conditions  of  negotiability.  It  is  not,  there- 
fore, at  this  time  a  question  of  much  practical  consequence 
whether  at  common  law  promissory  notes  were  negotiable  or 
not ;  though  occasionally  the  point  is  presented  in  States 
where  the  statute  law  on  the  subject  fixes  other  criteria  of 
negotiability  than  those  established  by  the  statute  of  Anne. 
By  some  authorities  it  is  contended  that  the  statute  of  Anne 
was  only  declaratory  of  their  then  existing  status,^  while  by 
others  the  result  of  Lord  Holt's  reasoning  is  concurred  in.'^ 
Professor  Parsons  concludes  that  "  these  notes  were  at  the 
time  the  statute  was  made,  negotiable  by  the  law  merchant 
of  England,  which  was  and  is  as  much  a  part  of  the  law  of 
England  as — to  use  the  strong  language  of  Christian — the 
laws  relating  to  marriage  or  murder.''^ 

SECTION  11. 

FOREIGX    AND   INLAND   BILLS. 

§  G.  Bills  of  exchange  at^e  either  foreign  or  inland, — 
foreign  when  drawn  in  one  state  or  country,  and  made  pay- 
able in  another  state  or  country;  inland  when  drawn,  and 
made  payable,  in  the  same  state  or  country.  Inland  bills  are 
of  later  origin  than  foreign  bills,  not  having  been  in  use  in 
England  at  a  much  earlier  period  than  the  reign  of  Charles 
II.*  The  advantages  derived  from  employing  foreign  bills 
for  remittance  of  money  induced  merchants  universally  to 
adopt  them,  and  originally  deriving  their  sanction  from  the 
custom  of  merchants,  they  were  subsequently  recognized  and 
approved  by  the  judicial  tribunals,  and  the  engagements  of 
the  various  parties  to  them   enforced.^     Inland   bills,  like 

'  Irvin  V.  Maury,  1  Mo.  194 ;  Dunn  v.  Adams,  1  Ala  527 ;  Edwards  on  Billa, 
51,  52;  1  Parsons  N.  &  B.  10-13. 

^  Caton  V.  Lenox,  5  Rand.  31 ;  Davis  v.  Miller,  14  Grat.  18;  Norton  v.  Rosb, 
2  Wash.  (Va.)  233. 

'  1  Parsons  N.  &  B.  13.  ■•  Cbitty  on  Bills  [*11],  16. 

=■  Chitty  on  Bills  [*11],  16;  Martin  v.  Boure,  Cro.  Jac.  6  (1602);  Oaste  v. 
Taylor,  Cro.  Jac.  306  (1613);  Hussey  v.  Jacob,  Lord  Raymond,  87  (1606);  Cliitty, 
Jr.  157,  158,  189. 


8  NATURE   AND   USES   OF    NEGOTIABLE   INSTRUMENTS. 

tbeni,  were  at  first  more  restricted  in  their  operation  than  at 
present,  for  it  was  deemed  essential  to  their  validity,  that  a 
special  custom  for  the  drawing  and  accepting  them  should 
exist  between  the  towns  in  which  the  drawer  and  acceptor 
lived  ;  or  if  they  lived  in  the  same  town,  tliat  such  a  custom 
should  exist  therein."  At  first,  also,  effect  was  only  given  to 
tlie  custom  when  the  parties  were  merchants,  though  after- 
wards extended,  as  in  the  case  of  foreign  bills,  to  all  persons 
whether  traders  or  not.^ 

§  7.  The  chief  difference  between  foreign  and  inland  bills 
is  this :  that  the  former  must  be  protested  in  order  to  charge 
the  drawer,  while  the  latter  need  not  be.^  But  there  are 
other  differences  important  to  be  observed.  Every  contract, 
as  to  its  validity,  nature,  interpretation  and  effect,  is  governed 
by  the  laws  of  the  place  where  it  is  made,  unless  it  is  to  be 
performed  in  another  place,  in  which  case  it  is  governed  by 
its  laws;  and  as  the  drawer,  acceptor,  and  each  indorser  is  a 
several  and  distinct  contracting  party,  his  liabilities  are  to  be 
ascertained  by  the  law  of  the  place  where  his  engagement  is 
to  be  performed.  This  subject,  and  also  the  interesting  ques- 
tions which  arise  when  a  bill  or  note  is  signed  or  dated  in 
one  place  and  delivered  in  another,  will  be  discussed  else- 
where.*^ 

§  8.  In  England,  whence  comes  the  distinction  between 
foreign  and  inland  bills,  a  bill  drawn  in  Ireland  and  payable 
in  Enfjland  is  deemed  a  foreis^n  bill.'^  And  where  a  bill  was 
drawn  in  London  upon  a  merchant  in  Brussels,  payable  to  the 
drawer\s  order  in  London,  it  was  held  an  inland  bill,  Bolland, 
B.,  saying :  "  An  inland  bill  is  a  bill  drawn  in  and  payable 
in  Great  Britain,  which  this  bill  is."^ 

•  BuUer  v.  Crips,  6  Mod.  29  (1704);  Pinkney  v.  Hall,  Lord  Raymond,  175; 
Chitty  on  Bills  [*11,  12],  16;  Chitty,  Jr.  222. 

^  Bromwicli  V.  Lloyd,  2  Lutw.  r,85;  Sarsfield  v.  Witherly,  Carth.  82;  Chitty 
on  Bills  [*11,  12],  16. 

'  See  Vol.  II,  chapter  xviii,  on  Protest. 

•  See  chapter  xxvii,  on  the  Conflict  of  Law.s,  §  868  et  seq. 
'  Mahoney  v.  Ashlin,  2  B.  &  Ad.  478. 

•  Amner  v.  Clark,  2  Cromp.  M.  &  R.  468. 


FOREIGN  AKD   INLAND   BILLS.  9 

§  9.  States  foreign  as  to  each  other. — ^There  is  no  doubt 
that  tlie  several  States  of  the  United  States  are  foreign  as  to 
each  other ;  for  though  in  the  aggregate  they  form  a  confed- 
erated government,  yet  the  several  States  I'etain  (theoreti- 
cally) their  individual  sovereignties,  and,  with  respect  to 
their  municipal  regulations,  are  foreign  to  each  other/  Thus, 
if  a  drawer  and  drawee  reside  in  Kentucky,  and  the  bill  be 
payable  in  New  Orleans,  Louisiana,  it  is  a  foreign  bill;'^ 
though  if  it  be  drawn  in  Kentucky  on  a  New  Orleans  mer- 
chant, and  be  payable  in  Kentucky,  it  would  be  inland.^ 

§  10.  In  the  Federal  courts  of  the  United  States,  the  de- 
cisions are  sometimes  in  conformity  with  those  of  the  State 
courts  of  last  resort  in  respect  to  the  liabilities  of  parties  to 
bills  and  notes,  but  not  uniformly.  The  34th  section  of  the 
judiciary  act  of  1789  2:)rovides  that  "the  laws  of  the  several 
States,  except  where  the  Constitution,  treaties,  or  statutes  of 
the  United  States  shall  otherwise  require  or  provide,  shall  be 
regarded  as  rules  of  decision  in  trials  at  common  law,  in  the 
courts  of  the  United  States,  in  cases  where  they  apply."  But 
this  section  has  been  held  to  be  limited  in  its  application  to 
the  laws  of  the  several  States  of  a  strictly  local  character, 
that  is  to  say,  to  the  positive  statutes  of  the  States,  and  their 
interpretation  by  the  local  tribunals,  and  the  rights  and  titles 
to  things  having  a  permanent  locality,  such  as  real  estate,  and 
not  to  extend  to  questions  of  general  commercial  law.  There- 
fore, where  any  controversy  arises  as  to  the  liability  of  a  party 
to  a  bill  of  exchange,  promissory  note,  or  other  negotiable 
paper,  in  one  of  the  Federal  courts  of  the  United  States, 
Avhich  is  not  determined  by  the  positive  words  of  a  State 


'  Warder  v.  Aroll,  2  Wash.  (Va.)  298;  Brown  v.  Ferguson,  4  Leigh,  37 ;  Buck- 
ner  v.  Finley,  2  Peters,  586;  Lonsdale  v.  Brown,  4  Wash.  C.  C.  86,  153;  Cheno- 
with  V.  Chamberlin,  6  B.  Monroe,  60;  Duncan  v.  Course,  3  Const.  R.  (So.  Car.) 
100;  State  Bank  v.  Hayes,  3  lud.  400  ;  Warren  v.  Coombs,  20  Me.  139;  Ticonic 
Bank  v.  Stackpole,  41  Me.  302;  Phoenix  Bank  v.  Hussey,  12  Pick.  483;  Carter  v. 
Union  Bank,  7  Humph.  548;  Carter  v.  Burley,  9  N.  H.  558;  Wells  v.  Whitehead, 
15  Wend.  527;  Todd  v.  Neal's  Adm.  49  Ala.  266;  Donegan  v.  Wood,  49  Ala. 
242;  contra,  Miller  v.  Hackley,  5  Johns.  375,  Vanness,  J. 

=  Buckner  v.  Finlej-,  2  Peters,  586.      '  Amner  v.  Clark,  2  Cromp.  M.  &  R.  468. 


]0         NATURE  AND   USES  OF  NEGOTIABLE  INSTRUMENTS. 

statute,  or  by  its  raeauing  as  construed  by  the  State  courts^ 
the  Federal  coui'ts  will  apply  to  its  solution  the  general 
princij)les  of  the  law  merchant,  regardless  of  any  local  de- 
cision.^ 

§  11.  Whether  or  not  a  bill  is  foreign  or  inland,  and  by 
what  laws  the  liabilities  of  parties  to  bills  and  notes  are  to 
be  governed,  may  often  be  not  sufficiently  disclosed  by  the 
date  of  place  on  the  instrument  itself,  as  the  courts  of  the 
several  States,  as  of  different  countries,  upon  settled  princi- 
ples, do  not  take  judicial  notice  of  the  divisions  of  foreign 
States  into  counties,  towns  and  cities.  Thus,  in  England,  the 
averment  that  a  bill  was  drawn  in  Dublin  was  not  considered 
equivalent  to  averring  that  it  was  an  Irish  bill.  Abbott,  C. 
J.,  said :  "  The  framer  of  the  declaration  has  not  said  that 
Dublin  is  in  Ireland,  and  we  cannot  assume  it,  whatever  may 
be  our  belief  on  the  subject;  "  and  Bailey,  J.,  said :  "  There 
may  be  a  Dublin  in  America  or  Scotland."  '^  So  the  Sui)reme 
Court  of  Texas  have  held  that  they  could  not  judicially  know 
that  a  note  payable  in  New  Orleans  was  payable  in  Louisi- 
ana,^ or  a  bill  dated  there  was  drawn  in  Louisiana;'^  or  that 
a  note  dated  "  Philadelphia"  was  made  in  Pennsylvania.^    Sa 

•  Swift  V.  Tyson,  16  Peters,  1,  Story,  J.,  saying:  "We  liave  not  now  tiie 
slightest  difficulty  in  holding  that  this  section,  upon  its  true  intendments  and 
construction,  is  strictly  limited  to  local  statutes  and  local  usages  of  the  character 
before  stated,  and  does  not  extend  to  contracts  and  other  instruments  of  a  com- 
mercial nature,  tlie  true  interpretation  and  effect  whereof  are  to  be  sought,  not 
in  the  decisions  of  the  local  tribunals,  but  in  the  general  principles  and  doctrines 
of  commercial  jurisprudence.  Undoubtedly,  the  decisions  of  the  local  tribunals 
upon  such  subjects  arc  entitled  to  and  will  receive  the  most  deliberate  attention 
and  respect  of  this  court;  but  they  cannot  furnish  positive  rule?,  or  conclusive 
authority,  by  which  our  own  judgments  are  to  be  bound  up  and  governed.  The 
law  respecting  negotiable  instruments  may  l)e  truly  declared,  in  tlie  language  of 
Cicero,  adopted  by  Lord  Mansfield  in  Luke  v.  Lyde,  2  Burr.  R.  883,  887,  to  be 
in  a  great  measure,  not  the  law  of  a  single  country  only,  but  of  the  commercial 
world :  "  Non  erit  clia  lex  Eomce,  alia  Atlienis,  alia  nunc,  alia  posthac,  scd  tt  ajmd 
omnes  gcntes,  et  omui  ten^jore,  itna  eaclemque  lex  oUinebit.''''  Mercer  County  v. 
Ilacket,  1  Wall.  96;  Township  of  Pine  Grove  v.  Talcott,  IS)  Wall.  667.  See  on 
this  sulject  article  in  American  Law  Review  for  April,  1875,  and  Gelpcke  v.  Du- 
buque, 1  Wall.  175. 

'  Kearney  v.  King,  18  E.  C.  L.  R.  28.  '  Andrews  v.  Iloxie,  5  Texas,  171. 

*  Yale  V.  Wood,  30  Texas,  17.  '  Cook  v.  Crawford,  4  Texas,  427. 


FOREIGN  AND  INLAND  BILLS.  1  I 

in  Missouri,  as  to  New  Orleans,  the  court  would  not  take  ju- 
dicial notice  that  a  bill  dated  there  was  foreicrn.^ 

§  12.  It  may  be  difficult  sometimes  to  determine  whether 
a  bill  is  inland  or  foreign.  Thus,  suppose  a  Boston  merchant^ 
temporarily  in  the  city  of  New  York,  were  to  draw  his  bill 
on  a  New  York  merchant,  payable  in  New  York,  but  were 
to  date  it  in  Boston,  would  it  be  an  inland  or  a  foreign  bill  i 
In  relation  to  innocent  third  parties,  who  have  taken  the  bill 
in  the  belief  that  it  was  what  its  face  imported,  it  would  un- 
doubtedly be  held  foreign.^  "  As  between  the  original  par- 
ties and  others  having  notice  of  the  circumstances  under 
which  the  bill  was  drawn,  the  question  would  be  more  doubt- 
ful ;  but  we  think  it  would,  even  then,  be  held  to  be  a  foreign 
bill,  especially  if  it  appeared  that  it  was  drawn  in  that  form 
for  no  wrongful  purpose,  but  only  that  the  bill  might  con- 
form to  the  drawer  s  usual  course  of  business,  and  be  what 
it  would  have  been  had  he  not  happened  to  be  at  the  time  in 
New  York.  The  converse  of  this  has  been  decided."  *  Such 
is  the  language  of  Professor  Parsons  on  this  question,  which 
we  adopt  as  a  succinct  and  judicious  view  of  the  law  .* 

§  13.  If  a  bill  be  upon  its  face  an  inland  bill,  the  fact 
that  it  was  actually  drawn  and  delivered  in  a  foreign  State 
will  not  divest  it  of  its  inland  character.  Thus,  where  a  bill 
was  drawn  in  AVisconsin,  but  dated  East  Fork,  in  Illinois,  it 
was  held  in  the  latter  State  that  it  must  be  treated  and  con- 
sidered as  an  inland  bill.  "  Such  was  the  intention  and 
agreement  of  the  parties,  as  shown  on  the  face  of  the  instru- 
ment. That  it  was  competent  for  the  parties,  both  being 
citizens  of  Illinois,  to  provide  for  their  express  agreement 
that  it  should  be  subject  to  and  construed  by  the  laws  of 
this  State,  is  too  well  established  by  authority  to  admit  of 
doubt." ' 

'  Riggin  V.  Collier,  6  Mo.  568. 

'  See  chapter  xxtii  on  the  Conflict  of  Laws  and  Snaitli  y.  Mingay,  1  Muule 
&  S.  87;  Lennig  v.  Ralston,  23  Penn.  St.  137. 

'  Strawbridge  v.  Robinson,  5  Oilman,  470.  *  1  Parsons  N.  &  B.  57. 

'  Strawbridge  v.  Robinson,  5  Gilman,  472,  Caton,  J. 


12         NATURE   AND   USES  OF   NEGOTIABLE  INSTRUMENTS. 

§  14.  The  presumption  is  tliat  a  bill  purporting  to  be 
<b'awn  abroad  was  really  «o  drawn.  But  evidence  would  be 
admissible  to  show  that  a  bill  purjiorting  to  have  been  drawn 
abroad  was,  in  fact,  drawn  within  the  country  where  suit  is 
brought,  and  is  therefore  void  for  want  of  a  stamp  required 
by  the  internal  revenue  laws  of  such  country.^  But  it  has 
been  recently  held,  in  Massachusetts,  that  the  maker  or  in- 
dorser  of  a  note  cannot,  as  against  the  indorser  in  that  State 
for  value,  before  maturity  and  without  notice,  show  that  the 
note  which  was  dated  in  Boston,  with  intent  that  it  should 
be  a  Massachusetts  contract,  was  actually  made  in  New  York, 
and,  on  account  of  illegal  interest,  was  void  under  the  usury 
laws  of  the  latter  State.^ 


SECTION   III. 

THE     EFFECT     OF     A    BILL     OF     EXCHANGE.       WHETHER     OR     NOT    IT    IS    AN 

ASSIGNMENT. 

§  15.  As  we  have  already  seen  heretofore,  it  was  the 
policy  of  the  common  law  to  interdict  tbe  assignment  of  pos- 
sibilities, rights,  titles  and  things  in  action,  on  the  ground,  as 
stated  by  Lord  Coke,  that  "  it  would  be  the  occasion  of  mul- 
tiplying of  contentions  and  suits,  of  great  oppression  of  the 
people,  and  chiefly  of  terre-tenants,  and  the  subversion  of  the 
due  and  equal  execution  of  justice."^  Bills  of  exchange  and 
promissory  notes  have  long  been  recognized  exceptions  to 
this  rule ;  and,  by  courts  of  equity,  it  has  long  been  discred- 
ited, and  assignments  of  a  mere  naked  jiossibility  or  chose  in 
action  for  valuable  consideration  have  been  held  valid  and 
offectuated  by  them.''  And  courts  of  law,  following  in  the 
footsteps  of  equity,  now  recognize  and  enforce  such  assign- 

'  Abraham  v.  Dubois,  4  Camp.  269;  Eire  v.  Moreau,  2  C.  &  P.  376  (12  E.  C. 
L.  R.)  ;  Jordaine  v.  Lfishbrooke,  7  T.  R.  601  ;  Steadman  v.  Duhamel,  1  C.  B. 
«88.     See  post,  §  8G9  et  seq. 

"  Towne  v.  Rice,  122  Mass.  67. 

'  Coke's  R.  Part  X,  48^-. 
3  Lead.  Cases  in  Equity  [  *'652]  307 ;  Chitty  on  Bills  [*7,  8],  9,  10. 


THE  EFFECT  OF   A  BILL    OF    EXCHANGE.  Ir^ 

ments  in  suits  brought  in  the  name  of  the  assignor  for  the 
benefit  of  the  assignee,  it  being  necessary  for  the  assignee  to 
assert  his  rights  at  law  in  that  form,  as  the  want  of  privity 
of  contract  between  himself  and  the  debtor  is  considered  to 
stand  in  the  w^ay  of  a  suit  in  his  own  name,^  except  where 
expressly  allowed  by  statute. 

§  16.  The  drawing  and  transferring  of  bills  of  exchange 
depend  upon  principles  of  the  law  merchant,  which  apply 
peculiarly  to  negotiable  instruments.  But  the  effect  of  the 
drawing  of  a  bill  of  exchange,  upon  the  rights  and  interests 
of  the  parties  in  the  fund  which  is  in  the  hands  of  the  drawee^ 
depends  very  frequently  upon  principles  derived  from  the 
doctrines  of  courts  of  equity  in  respect  to  equitable  assign- 
ments. And  we  shall  now  consider  the  effect  of  a  bill  or 
order  upon  the  fund  on  which  it  is  drawn.  This  inquiry 
naturally  divides  itself  into  several  branches  :  First.  What  is 
the  effect  of  a  bill  of  exchange  (a  negotiable  bill  in  its  com- 
mercial sense)  drawn  for  the  whole  amount  of  a  fund  in  the 
drawee's  hands  ?  Second.  What  is  the  effect  of  a  non-nego- 
tiable order  for  the  whole  of  a  fund  ?  Third.  What  is  the 
effect  of  a  bill  of  exchange  for  part  of  a  fund  ?  And  fourth. 
What  is  the  effect  of  a  non-negotiable  order  for  part  of  a 
fund  ? 

§  1 7.  In  the  first  place,  as  to  the  effect  of  a  negotiable  hill 
for  the  tvhole  of  a  fund  in  the  drawee'' s  hands. — ^The  author- 
ities on  this  question  present  great  contrariety  of  opinion. 
By  some,  it  is  declared  to  operate  as  an  equitable  assignment 
of  the  fund.  By  others,  that  the  drawing  of  the  bill  is  an 
independent  transaction,  totally  disassociated  in  its  legal 
effect  from  the  funds  in  the  drawee's  hands,  and  does  not 
operate  as  an  assignment  of  them,  but  simply  as  an  engage- 
ment of  the  drawer  that  the  drawee  shall  pay  the  payee  a 
certain  amount.  And  great  confusion  lias  arisen  in  the  adju- 
dicated cases  from  a  failure  to  discriminate  between  the  par- 

'  Wheatley  v.  Strobe,  13  Cal.  98;  Mundeville  v.  Welcb,  5  Wheat.  227;  Chitty 
on  Bills  [*9],  10. 


14         NATURE   AND  USES   OF   NEGOTIABLE   INSTRUMENTS. 

ties  who  may  claim  that,  as  to  them,  it  operates  as  an  assign- 
ment, and  those  who  can  make  no  such  claim. 

In  an  early  English  case  it  is  said :  "  The  tlieory  of  a  bill 
of  exchange  is  that  the  bill  is  an  assignment  to  the  payee  of 
a  debt  due  from  the  acceptor  to  tlie  drawer  ;  "  ^  and  it  is  un- 
doubtedly true  that  the  payee  has  a  right  to  suppose  that  the 
drawee  has  funda  of  the  drawer,  upon  the  faith  of  which  un- 
derstanding he  receives  the  bill  directing  them  to  be  paid  to 
him.  As  between  the  drawer  and  payee,  then,  we  think  it  is 
clear  that  the  bill  is  intended  to  operate,  and  does  operate,  as 
an  assii^nment  of  the  fund  in  the  drawee's  hands  sufficient  to 
meet  it ;  ^  and  if  there  be  no  such  funds,  and  no  understand- 
ing that  the  bill  will  be  honored,  the  drawer  commits  a  fraud 
upon  tlie  payee,  and  will  be  absolutely  bound  upon  the  bill, 
without  notice  of  dishonor.  And  if,  after  drawing  the  bill, 
the  drawer  should  withdraw  the  funds  in  the  drawee's  hands, 
it  would  be  likewise  a  fraud  upon  the  payee,  and  the  drawer 
would  be  absolutely  bound  without  notice.^ 

§  18.  As  between  the  payee  and  the  drawee,  however,  there 
is  no  privity  of  contract,  unless  the  drawee  accepts  to  pay 
the  bill.  When  he  does  this,  he  becomes  absolutely  bound 
to  pay  the  debt  to  the  holder  of  the  bill.  And  any  subse- 
quent bill  drawn  upon  him,  or  transfer  or  assignment  of  the 
fund  in  his  hands,  or  legal  process  served  upon  him  by  a 
creditor  of  the  drawer,  could  create  no  liability  upon  him  to 
pay  or  deliver  over  the  funds  of  the  drawer  to  any  one  but 

'  Gibson  v.  Minet,  1  II.  Bl.  569 ;  Story  on  Bills,  §  IS;  Chitty  [*1],  3. 

'  Story  on  Bills,  §§  13,  18;  Cliitty  on  Bills  [M],  2. 

=  In  Gibson  v.  Cooke,  20  Pick.  15,  Dewey,  J.,  said :  "  It  seems  to  be  equally 
■well  settled  that  a  draft  by  the  creditor  on  his  debtor  in  the  form  of  a  bill  of  ex- 
change to  the  amount  of  the  debt,  or  the  whole  funds  in  his  hands,  is  a  good  and 
valid  assignment  of  tlie  debt  or  fund." 

In  Robins  v.  Bacon,  3  Grccnleaf,  349,  Mellen,  C.  J.,  said:  A  case  which 
ficems  directly  in  point  is  tliat  of  Mandeville  v.  Welch,  5  Wheat.  277.  In  that 
case  it  was  decided,  as  stated  by  Story,  J.,  in  delivering  the  opinion  of  the  court, 
that,  "where  an  order  is  drawn  for  a  particular  fund,  it  amounts  to  an  equitable 
assignment  of  the  fund  ;  and,  after  notice  to  the  drawee,  it  binds  the  fund  in  his 
hands."  In  these  cases  the  bills  were  not  negotiable ;  but  no  distinction  in  re- 
spect to  them  was  taken. 


THE   EFFECT   OF   A   BILL    OF    EXCHANGE.  15 

the  holder,  to  whom  he  has  entered  into  an  obligation  to  pay 
them.^ 

§  19.  When,  however,  the  drawee  has  not  accepted,  or 
assented  to  pay  the  amount  to  the  holder,  the  rights  of  the 
parties  are  more  difficult  to  determine.  The  holder  cannot 
sue  the  drawee  at  law  in  his  own  name,  for  there  is  no  con- 
tract on  the  part  of  the  drawee  to  pay  him.^  But  we  should 
say  that  he  might  sue  the  drawee  in  the  name  of  the  creditor 
for  the  amount  of  the  debt,  and  offer  the  bill  in  evidence  to 
sliow  that  it  had  been  assigned  to  him  ;  ^  and   although  the 


■  Lambert  v,  Jones,  2  Patton  &  Heath,  144;  Mandeville  v.  Welch,  5  Wheat. 
277.  In  Buckner  v.  Sayre,  17  B.  Monroe,  754,  it  appeared  that  the  Lexington 
Insurance  Co.  drew  a  bill  on  the  5th  of  August,  1851,  on  its  agent,  J.  H.  Wheeler, 
at  New  Orleans,  payable  at  six  months,  for  $7,183.  In  November  following  the 
company  made  a  general  assignment  to  Buckner,  as  trustee,  to  pay  its  debts; 
and  afterwards,  Wheeler,  who  had  accepted  the  bill,  paid  over  $3,000,  which 
he  had  collected  from  premiums,  to  Buckner,  the  trustee.  Simpson,  J.,  said: 
"  Sayre,  as  the  holder  of  the  bill  of  exchange,  was  entitled  to  the  fund  in  the 
hands  of  the  acceptor,  which  the  latter,  by  his  acceptance,  had  appropriated  for 
his  use  and  benefit."  Harris  v.  Clark,  3  Comstock,  117,  Ruggles,^  J. ;  2  Parsons 
N.  &  B.  330,  331 ;  Story  on  Bills,  §  13. 

'  Tiernan  v.  Jackson,  5  Peters,  580 ;  Harris  v.  Clark,  3  Comst.  117,  Rnggles,  J. : 
■■"  It  is  clearly  settled  that  no  action  at  law  will  lie  in  favor  of  the  holder  of  a  bill 
of  exchange  against  the  drawee,  unless  he  accepts  the  bill."  See  post,  §  50,  and 
note.  New  York  &  Va.  State  Bank  v.  Gilson,  5  Duer,  574,  Duer,  J. :  '•  There  is 
no  such  privity  between  him  (the  drawee)  and  the  holder  as  can  entitle  the  latter 
to  maintain  an  action  against  him."  Yates  v.  Bell,  3  B.  &  Aid.  643;  Williams 
V.  Everett,  14  East,  582.  Holder  has  no  action  against  drawee  to  whom  funds 
are  remitted  for  money  had  and  received. 

'  Corser  v.  Craiff,  1  Wasli.  C.  C.  426.  In  this  case  suit  was  brought  by  the 
payee  and  indorser,  for  the  benefit  of  his  indorsee,  against  the  drawee.  Action 
was  sustained.  This  is  going  farther  than  any  other  adjudicated  case  we  know 
of.  Had  action  been  brought  in  the  name  of  the  drawer  for  the  last  indorsee's 
benefit,  it  would  have  been  unobjectionable,  as  we  think,  and  the  following  lan- 
guage of  Washington,  J.,  would  have  been  applicable.  He  said:  If  the  drawee 
refuse  to  accept,  and  pay  the  bill,  the  right  of  the  holder  to  the  debt  once 
assigned  to  him  is  not  thereby  impaired;  although  he  may  not  be  entitled  to 
recover  the  snme  in  his  own  name,  for  the  want  of  a  promise  to  pay.  But  he 
may  sue  the  drawer,  or  the  drawee  in  the  name  of  the  drawer,  for  the  debt  orig- 
inally due,  in  consequence  of  the  implied  contract  of  the  assignor  of  a  chose  in 
action,  that  the  debtor  shall  pay,  and,  on  failure,  that  the  assignor  will.  The 
bill  being  retained  after  protest,  by  the  assignee,  is  evidence  that  the  amount  has 
not  been  paid  by  the  drawer  or  any  of  the  indorsers.  I  see  no  possible  mischief 
which  can  result  from  this  doctrine.     For,  if  after  payment  refused,  and  protest 


IG  NATURF-   AND   USES   OF   NEGOTIABLE   INSTRUMENT.S. 

drawee  would  be  protected  if  lie  parted  ^vltl)  the  funds  be- 
fore notice  of  the  bill,  yet  if  it  were  payable  on  demand,  and 
after  its  presentment  for  payment,  he  should  pay  the  amount 
to  another,  under  a  subsequent  order,  he  would  be  still  bound 
to  pay  it  over  to  the  holder  of  the  first  bill.  And  after  pre- 
sentment to  the  drawee,  a  subsequent  assignment  in  trust  for 
creditors,  or  attachment  or  garnishment  process  served  upon 
the  drawee,  would  not  defeat  the  equitable  claim  of  the 
holder  to  have  the  funds  appropriated  to  pay  the  bill.' 

§  20.  This  doctrine  is  controverted  by  some  of  the  au- 
thorities.^ And  even  when  the  bill  has  been  accepted,  it  has 
been  declared  not  to  operate  as  an  assignment  of  the  funds 

made,  the  drawee  should  pay  over  the  funds  in  his  hands  to  the  drawer,  or  to 
his  order,  without  notice  from  the  first  assignee,  that  he  should  retain  the  bill, 
and  look  to  him  for  the  amount,  so  far  as  he  was  bound  to  pay ;  this  would  be  a 
good  defense  against  a  suit  brought  in  the  name  of  the  diawer.'" 

'  Wheatley  v.  Strobe,  13  Cal.  97.  Held  that  after  the  presentment  of  the  bill 
funds  could  not  be  reached  by  attachment  at  suit  of  drawer's  creditors.  Field, 
J.:  "  The  want  of  a  written  acceptance  does  not  affect  the  right  of  Howell  (the 
holder)  to  the  money  due,  but  only  the  mode  of  enforcing  it.  With  the  accept- 
ance he  could  have  sustained  the  action  upon  the  order ;  without  it  he  must  re- 
cover upon  the  original  demand  by  force  of  the  assignment.  Under  the  old  com- 
mon law  practice,  the  action  could  only  be  sustained  in  the  name  of  the  assignor 
for  the  benefit  of  the  assignee,  but  under  our  system  it  may  be  brought  in  the 
name  of  the  assignee  as  the  party  beneficially  interested.  Courts  of  law,  equally 
with  courts  of  equity,  gave  effect  to  assignments  like  the  one  under  considera- 
tion, by  controlling  the  jjroceeds  of  the  judgments  recovered  for  the  benefit  of 
the  assignee."  Roberts  v.  Austin,  20  Iowa,  315 ;  see  Vol.  II,  chapter  xlvii,  ou 
Checks,  §  1635  et  i^eq. 

'  See  Bank  of  Commerce  v.  Bogy,  4  4  Mo.  15.  In  this  case  the  bill  was  drawn 
for  the  whole  debt  due  the  drawer  by  the  drawee.  The  payee  sued  the  drawee, 
and  it  was  held  that  the  bill  did  not  operate  per  se  as  an  assignment,  though 
connected  with  circumstances  it  might  be  evidence  of  an  assignment.  The  plead- 
ings did  not  aver  an  assignment,  and  were  defective  in  that  respect.  Harrison 
V.  Williamson,  2  Edw.  Ch.  438.  In  Shand  v.  De  Buisson,  Law.  R.  18  Equity 
Cases,  283  (1874),  where  the  bill  was  for  the  exact  amount  of  the  funds  in  the 
drawee's  hands.  Sir  James  Bacon,  V.  C,  said:  "  It  is  entirely  new  to  me  to  hear 
that  a  bill  of  exchange  in  an  ordinary  mercantile  transaction  in  the  shape  in 
which  this  appears,  can  amount  to  an  equitable  assignment  of  the  debt.  The 
note  might  have  been  indorsed  to  any  individual,  or  to  any  number  of  people, 
who  might  have  indorsed  it  in  succession.  A  mercantile  instrument  it  is  in  its 
original,  and  in  that  shape  it  remains ;  and  has  no  other  validity  or  efibct.  and  to 
call  it  an  assignment  of  a  debt,  would  be  to  call  it  not  by  its  right  name." 


EFFECT   OF    A   BILL   OF   EXCHANGE.  17 

or  property  in  the  drawee's  hands.^  But  in  both  cases,  we 
think  that  the  doctrine  of  the  text  is  enjoined  by  principles 
of  good  faith  and  fair  dealing.  Tlie  payee  of  a  bill  unac- 
cepted, it  is  true,  has  no  written  obligation  but  that  of  the 
drawer  to  look  to.  But  in  its  very  nature  it  imports  that 
the  drawee  holds  the  drawer's  funds,  which  he  will  appro- 
priate to  its  payment.  It  is  in  anticipation  and  upon  the 
faith  of  those  funds  that  the  payee  is,  or  may  be,  induced  to 
take  it.  And  it  seems  just  and  right  that  courts  of  equity? 
and  courts  of  law,  in  so  far  as  their  rules  of  procedure  will 
permit,  should  carry  out  and  enforce  the  expectation  and  in- 
tention of  the  parties.  It  is  not  sufficient  to  answer  that  the 
drawer's  contract  is  absolute  and  independent  of  the  fact 
whether  or  not  he  has  funds  or  property  in  the  drawee's 
hands.  It  is  true,  tkat  he  is  personally  bound,  whether  such 
be  the  case  or  not ;  but  because  he  is  personally  bound  is  no 

'  Marine  and  Fire  Insurance  Bank  v.  Jauncey,  3  Sandf.  258.  John  Wood,  hav- 
ing one  hundred  and  five  bales  of  cotton,  which  he  intended  to  consign  to  Joseph 
Wood,  drew  a  bill  on  him  in  favor  of  Walsh  at  sixty  days' sight,  for  $3,000, 
which  was  discounted  by  plaintifl's,  and  the  proceeds  applied  by  John  Wood  to 
pay  for  the  cotton  above  mentioned,  which  he  had  bought.  The  bill  was  dated 
June  29th,  1846,  and  accepted  by  the  drawee  on  July  6th,  1846.  The  cotton  was 
shipped  to  the  drawee.  On  the  30th  of  June  Joseph  Wood  became  insolvent, 
and  executed  an  assignment  of  all  his  estate,  including  a  debt  due  him  by  John 
Wood,  the  drawer,  of  $2,200.  The  cotton  was  also  placed  in  Jauncey's  hands, 
and  its  net  proceeds  were  $2,700,  which  the  plaintiffs  sought  to  reach  by  their 
bill  in  equity,  The  court  said  in  respect  to  the  bill  of  exchange,  that  though 
accepted,  it  was  not  an  equitable  assignment;  and  that  the  drawee,  on  receiving 
the  funds  derived  from  the  cotton,  "  had  a  right  to  apply  them  to  the  payment 
of  his  general  balance,  or  in  any  other  way  that  John  Wood  and  he  might  agree 
upon."  The  case  was,  as  we  think,  rightly  decided ;  but  we  do  not  see  that  the 
broad  doctrine  declared  was  necessary  to  such  decision.  There  was  a  superior 
equity  in  the  drawee,  which  had  priority  over  the  equitable  assignment.  It  does 
not  follow  that  there  was  not  an  equitable  assignment  (subject  to  superior  equita- 
ble rights'),  or  rather  an  equitable  right  to  follow  the  proceeds  of  the  cotton. 

Cowperthwaite  v.  ShefBeld,  1  Sandf.  41G  ;  Winter  v.  Drury,  3  Sandf.  263,  note ; 
Cowperthwaite  v.  Shefiield,  3  Comst.  243.  Hurlbut,  J.:  "A  proper  bill  of 
exchange  does  not  of  itself  operate  as  an  assignment  to  the  payee  of  funds  of 
the  draw^er  in  the  hands  of  the  drawee,  and  even  after  an  unconditional  accept- 
ance, it  cannot  in  strictness  be  held  to  have  that  effect,  since  the  drawee  becomes 
bound  by  reason  of  the  contract  of  acceptance,  irrespective  of  the  funds  in  his 
hands."  See  pod,  §  50,  and  note. 
Vol.  I.~2 


18         NATURE  AND  USES  OF  NEGOTIABLE  IJJSTRUMENTS. 

reason  why  the  fund  upon  which  the  bill  obtained  additional 
credit,  expressly  or  impliedly,  should  not  be  bound  also,  as 
an  equitable  security  for  the  debt.^ 

§  21.  In  the  second  place  ^  as  to  an  order  for  the  ivliole  of  a 
fund. — It  may  be  regarded  as  a  settled  doctrine,  that  an 
order  founded  upon  a  good  consideration,  given  for  a  specific 
debt  or  fund  owing  by  or  in  the  hands  of  a  third  person, 
operates  as,  or  rather  is  evidence  of,  an  equitable  assignment 
of  the  demand  to  the  holder.'^  It  is  clearly  an  assignment,  as 
between  the  drawer  and  the  payee,  because  so  intended.^  It 
is  equally  so  as  between  them  and  the  drawee,  as  soon  as  it 
is  presented  to  him  and  he  assents ;  *  and  whether  he  assents 
or  not,  the  holder  may  in  equity  recover  the  debt  or  fund 
from  him.^  And  if  the  debtor  be  served  with  garnishment 
or  other  process  of  law  after  the  order  has  been  given,  and 
before  he  has  been  compelled  to  pay  the  amount  to  another, 
the  order  will  take  precedence.^      An   order  for  a  specific 

'  If  the  circumstances  show  an  intention  to  assign  tlie  fund,  the  assignment 
should  be  enforced.  "  The  intention  to  assign  operates  as  an  equitable  assign- 
ment."    Kahnweiler  v.  Anderson,  78  N.  C.  137. 

*  Mandcville  v.  Welch,  5  Wheat.  277;  Robins  v.  Bacon,  3  Grecnleaf,  346 ; 
Cowpcrthwaite  v.  Sheffield,  3  Corust.  243;  McMenomy  v.  Ferrers,  3  Johns. 
72;  Bank  of  Commerce  v.  Bogy,  44  Mo.  18;  Anderson  v.  De  Socr,  6  Gratt. 
364;  Cutts  v.  Perkins,  12  Mass.  209;  Morton  v.  Naylor,  1  Hill,  583;  Gibson 
V.  Cooke,  20  Pick.  15;  Parker  v.  City  of  Syracuse,  31  N.  Y,  379;  Harris  v. 
Clark,  3  Comstock,  117. 

'  Morton  v.  Naylor,  1  Hill  (N.  Y.)  583.  A  landlord  gave  an  order  directing 
his  tenant  to  pay  W.  the  rents  accruing  during  a  specified  period,  which,  on  its 
presentment,  he  said  he  would  do.  The  landlord  sub  equently  directed  the  ten- 
ant not  to  pay,  but  the  latter  disregarded  the  notice,  and  paid  the  order.  It  was 
held  that  the  tenant  did  right,  the  order  operating  as  an  equitable  assignment. 
Cowen,  J.,  said:  "  I  refer  to  cases  in  chancery  to  show  that  an  oi-der  for  value  is 
per  se  an  equitable  assignment  to  the  payee  of  the  debt  due  from  the  drawee  to 
the  drawer.  Our  own  rules  at  law  as  to  enforcing  such  an  assignment  are  well 
known.     We  give  it  the  same  etiect  as  would  a  court  of  chancery." 

^  Legro  V.  Staples,  16  Maine,  252;  Johnson  v.  Thayer,  17  Maine,  403;  De- 
sesse  V.  Napier,  1  McCord,  106  ;  Peyton  v.  Hallet,  1  Caincs,  363.  See  Story's 
Eq.  Juris.  §  1043. 

"  Story's  Eq.  Juris.  §  1044  ;  Kahnweiler  v.  Andereon,  78  N.  C.  136. 

'  Anderson  v.  De  Soer,  6  Gratt.  364.  In  this  case  it  appeared  tliat  a  draft  for 
$10,000,  drawn  by  Griveguee,   a  legatee,  dated  Malaga,  20th  July,  1819,  upon 


THE  EFFECT  OF  A   BILL  OF  EXCHAi?GE.  19 

fund  usually  contains  words  indicating  an  intention  to  pass 

or  appropriate  the  whole  fund,  as,  "  Pay  to  A.  B.,  $ ,  the 

amount  of  your  collection  fi'om  C.  D.,"  or  the  amount  re- 
ceived from  such  a  transaction  ;  ^  which  words,  unless  paren- 
tlietically  inserted  as  a  mere  earmark,  characterize  the  instru- 
ment as  an  unnegotiable  order,  and  dej)rive  it  of  its  qualities 
as  a  commercial  instrument. 

§  22.  In  the  third  place  and  fourth  place^  as  to  a  hill  of 
exchange  or  an  order  for  part  of  a  fund. — The  doctrine  is 
laid  down  with  emphasis  by  many  authorities  that  an  order, 
or  a  bill  drawn  for  part  of  a  fund,  does  not  operate  as  an  as- 
signment of  that  part,  or  give  a  lien  as  against  the  drawee, 
unless  he  consent  to  the  appropriation  by  an  acceptance  of  the 
draft.^  And  Mr.  Justice  Story,  delivering  the  opinion  of  the 
United  States  Supreme  Court,  has  said  :  "  The  reason  of  this 

the  executors  of  Ms  uncle,  at  Richmond,  Va.,  who  had  left  him  a  legacy  of 
$10,000,  directing  that  when  forthcoming,  and  out  of  the  funds  destined  for  that 
object  by  his  deceased  uncle,  they  should  pay  that  amount  to  the  order  of  Messrs. 
Scholtz  &  Brothers,  for  value  I'eceived  of  them,  noting  the  same  as  amount  of 
legacy  left  him  by  his  uncle,  was  held  to  be  an  assignment  of  the  legacy,  and  as 
such  to  have  precedence  over  an  attachment  thereupon  served  four  days  after  the 
drawing  of  the  draft,  and  before  it  was  presented. 

'  Bank  of  Commerce  v.  Bogy,  44  Mo.  18. 

-  Harris  v.  Clark,  3  K.  Y.  (3  Comstock),  115,  116.  Ruggles,  J.,  in  speaking 
of  Justice  Story's  opinion  in  Mandeville  v.  Welch,  5  Wlicat.  286,  to  the  efi'ect  that 
a  bill  of  exchange  is  "  in  theory  an  assignment  to  the  payee  of  a  debt  due  from 
the  drawer  to  the  drawee,"  says  :  "This  is  undoubtedly  true  when  the  Mil hasleen 
accepted,  whether  it  be  dravni  on  general  funds,  or  a  specific  fund,  and  whether 
the  bill  be  in  its  own  nature  negotiable  or  not;  for  in  such  case  the  acceptor,  by 
his  assent,  binds  and  appropriates  the  funds  for  the  use  of  the  payee.  But  where 
an  order  is  drawn  on  a  general,  or  on  a  particular  fund  for  a  part  only,  it  does 
not  amount  to  an  assignment  of  that  part,  or  give  a  lien  on  the  drawee  unless  he 
consent  to  an  appropriation  by  an  acceptance  of  the  draft."  See  Weinstock  v. 
Bellwood,  13  Bush  (Ky.)  139;  Mandeville  v.  Welch,  5  Wheat.  277;  Robins  v. 
Bacon,  3  Greenleaf,  346;  Gibson  v.  Finley,  4  Maryland  Ch.  75  ;  Hopkins  v.  Bee- 
bee,  2  Casey,  85;  Gibson  v.  Cooke,  20  Pick.  15;  Poydras  v.  Delamere,  13  La.  98 
(O.  S.  1838),  action  against  drawee;  Cowperthwaite  v.  Sheffield,  1  Sandf.  416, 
Vanderpoel,  J.:  "  Where  an  order  is  drawn  for  part  of  the  fund  only,  it  does  not 
amount  to  an  assignment  of  that  part,  or  give  a  lien  as  against  the  drawee,  unless 
he  consent  to  an  appropriation  by  an  acceptance  of  the  draft  "  And  if  the 
drawee  pays  a  part  of  the  order,  it  does  not  operate  as  an  assignment  as  to  the 
residue.    Noe  v.  Christie,  51  N.  Y.  273. 


20         NATURE  AND  USES  OF  NEGOTIABLE  INSTRUMENTS. 

principle  is  plain.  A  creditor  sliall  not  be  permitted  to  split 
up  a  single  cause  of  action  into  many  actions,  without  the 
consent  of  his  debtor,  since  it  may  subject  him  to  many  em- 
barrassments and  responsibilities  not  contemplated  in  his 
original  contract.  lie  has  a  right  to  stand  upon  the  single- 
ness of  his  original  contract,  and  to  decline  any  legal  or 
equitable  assignments  by  which  it  may  be  broken  into  frag- 
ments. When  he  undertakes  to  pay  an  integral  sum  to  his 
creditor,  it  is  no  part  of  his  contract  that  he  shall  be  obliged 
to  pay  in  fragments  to  any  other  persons.  So  that,  if  the 
plaintiff  could  show  a  partial  assignment  to  the  extent  of  the 
bills,  it  would  not  avail  him  in  support  of  the  present  suit."  ^ 

§  23.  This  doctrine  is  clearly  correct  in  so  far  as  it  applies 
to  lecjal  assiornments.  The  holder  of  the  bill  or  order  cannot 
sue  the  drawee  at  law  in  his  own  name,  as  he  would  thus 
divide  the  cause  of  action,  and  leave  a  balance  due  the  cred- 
itor.^ He  cannot  sue  in  the  creditor's  name,  except  by  his 
consent,  as,  at  best,  he  is  only  entitled  to  a  part  of  the  debt 
due  him.  But  it  has  been  held  in  numerous  cases  that  a  non- 
negotiable  order  for  part  of  a  fund  operates  as  an  equitable 
assignment  jpvo  taiito?      Clearly  this  is  the  case  when  it  has 

'  Mandeville  v.  Welch,  5  Wheat.  286. 

'  Weinstock  v.  Bellwood,  12  Bush  (Ky.)  139. 

'  Teates  v.  Groves,  1  Vesey,  Jr.  281.  Dawson  being  indebted  to  Yeatcs  and 
Brown,  upon  a  note,  gave  him  an  order  on  Groves  and  Dickinson  for  the  amount 
of  the  note,  wliich  they  surrendered,  payable  out  of  an  amount  due  for  leasehold 
property.  Before  the  money  was  paid,  Dawson  was  thrown  into  bankruptcy,  and 
Yeates  and  Brown  claimed  the  fund  fro  tanto,  and  filed  their  bill  to  reach  it. 
Lord  Thurlow  said :  "  This  is  nothing  but  a  direction  by  a  man  to  pay  part  of 
his  money  to  another  for  a  foregone  valuable  consideration.  If  he  could  transfer, 
he  has  done  it;  and  it  being  his  own  money,  he  could  transfer.  The  transfer 
was  actually  made.  They  were  in  the  right  not  to  accept,  as  it  was  not  a  bill  of 
exchange.  It  is  not  an  inchoate  business.  The  order  fixed  the  money  the  mo- 
ment it  was  shown  to  Groves  and  Dickinson."  See  Bradley  v.  Root,  5  Paige  Ch. 
641,  where  above  case  is  quoted.  Lett  v.  Morris,  4  Simons,  607.  In  this  case, 
A.  having  engaged  to  pay  to  B.  £2,360  by  installments,  B.  signed  and  gave  to  C, 
for  value,  an  order  authorizing  A.  to  pay  parts  of  each  installment  to  C,  and 
£460  was  to  be  reserved  in  A.'s  hands  out  of  the  balance,  and  C.'s  receipt  was 
to  be  a  discharge  to  A.  A.  was  served  with  notice  of  tlie  order  on  the  day  it  was 
signed;  but  there  was  no  act  or  expression  of  consent.      Vice- Chancellor  Shad- 


THE  EFFECT  OF  A  BILL  OF   EXCHANGE.  21 

been  accepted  or  assented  to  by  tlie  drawee.^  And  when  it 
lias  not  been  accepted,  our  own  view  is  this  :  that  a  non-ne- 
gotiable order  for  part  of  a  fund  does  operate  as  an  equitable 
assignment  'pro  tanto  as  between  the  drawer  and  payee,  be- 
cause obviously  so  intended.  But  as  between  drawer  and 
payee  on  the  one  side,  and  the  drawee  on  the  other,  it  creates 
no  obligation  on  the  latter  to  pay  it,  as  he  has  a  right  to  in- 
sist on  an  integral  discharge  of  his  debt.  And  if  the  creditor 
give  a  subsequent  order  for  the  whole  amount,  he  may  pay  it 
with  impunity,  as  he  thus  discharges  his  whole  debt  in  its 
entirety  at  once.^  But  if  the  payee  goes  into  equity,  or  the 
parties  are  brought  therein  by  any  jDroceeding,  so  that  all  of 
them  are  before  the  court,  the  holder  of  the  order  may  en- 
force it  as  an  equitable  assignment  as  against  all  subsequent 
claimants,  whether  by  assignment  from  the  drawer,  or  by 
legal  process  served  upon  the  drawee.^ 

Mr.  Justice  Story  has  stated  the  principle,  as  we  conceive 
it,  more  correctly  in  his  treatise  on  Equity  Jurisprudence 
than  in  the  cases  hitherto  cited ;  and  he  there  declares  that, 
while  a  draft  for  part  of  a  fund  operates  no  assignment  at 
law,  the  same  principle  applies  in  equity  to  a  draft  for  part 
of  a  fund  that  applies  to  a  draft  for  the  whole,  and  that  "  in 
each  case  a  trust  would  be  created  in  favor  of  the  equitable 
assignee  of  the  fund,  and  would  constitute  an  equitable  lien 
upon  it."  *  It  is  necessary,  in  order  to  support  the  assign- 
ment, that  it  should  be  upon  a  valuable  consideration.^ 

well  said  :  "  I  entertain  no  doubt  that  the  order  amounts  to  an  equitable  assign- 
ment." Row  V.  Dawson,  1  Vesey,  331;  Ex  parte  South,  3  Swanston,  391.  Order 
for  £417  6s.  "  as  part  of  the  amount  due  to  me  for  plumber's  work,  &c."  Held, 
subsequent  bankruptcy  of  drawer  did  not  defeat  it,  it  having  been  shown  to  the 
debtor.     Pope  v.  Huth,  14  Cal.  407. 

'  Desesse  v.  Napier,  1  McCord,  107;  Vreeland  v.  Blunt,  6  Barb.  183;  Peyton 
V.  Hallet,  1  Gaines,  363 ;  Pope  v.  Huth,  14  Cal.  407 ;  Cutts  v.  Perkins,  12  Mass. 
206;  Israel  v.  Douglas,  1  H.  Bl.  239;  Clark  v.  Adair,  cited  by  Buller,  J.,  in  Mas- 
ters V.  Miller,  4  T.  R.  343 ;  Tatlock  v.  Harris,  3  T.  R.  180,  may  sue  acceptor  for 
money  had  and  received  ;  Ex  parte  Alderson,  1  Madd.  53. 

^  3  Leading  Cases  in  Equity  (3  Am.  ed.)  356;  Poydras  v.  Delamere,  13  La. 
D8  (O.  S.  1838). 

'  3  Leading  Cases  in  Equity,  356 ;  Field  v.  Mayor  of  New  York,  2  Seld. 
179  (1852). 

*  Story's  Eq.  Juris.  §  1044.  '  Alger  v.  Scott,  54  N.  Y.  14. 


22         NATURE  AND  USES  OF  NEGOTIABLE  INSTRUMENTS. 

SECTION    IV. 

DONATIO   MORTIS    CAUSA. 

§  2-i.  A  gift  made  in  contemplation  of  death  is  termed 
donatio  moi^tis  causa,  an  expression  derived,  with  the  law  on 
the  subject,  from  the  civil  law.  As  to  the  character  of  the 
article  which  may  be  the  subject  of  such  a  quasi-testamentary 
disj^osition,  the  common  law  has  undergone  considerable 
change.  Originally,  it  was  limited  to  chattels  which  might 
be  delivered  by  the  hand ;  and  the  rule  was  relaxed  slowly 
and  somewhat  reluctantly  by  the  courts,  under  the  apprehen- 
sion that  fraud  upon  persons  in  dying  condition  might  be 
encouraged  by  its  extension.  Bank  notes  were  next  em- 
braced, with  lottery  tickets,  and  securities  transferable  by 
delivery,  such  as  notes  payable  to  bearer^  or  to  order,  and 
indorsed  in  blank,  Avhile  notes  not  so  payable  were  excluded.^ 
Subsequently,  it  was  extended  to  bonds ;  ^  and  the  later  cases 
hold  that  a  note  not  negotiable,  or  if  negotiable  not  indorsed 
but  delivered,  passes  by  such  a  donation,  with  a  right  to  use 
the  name  of  the  personal  representative  of  the  promisee,  to 
collect  it  for  the  donee's  own  use,  the  equitable  title  passing 
to  him.*  In  farther  extension  of  the  principle,  it  has  been 
held  that,  even  if  the  donor  indorse  a  bill  or  note  of  a  third 

'  Miller  v.  Miller,  3  P.  Wms.  356,  in  which  case  it  was  held  that  bank  notes 
passed,  but  a  note  payable  to  the  donor's  order  did  not.  Chitty  on  Bills  (13  Am. 
ed.)  3. 

="  See  Chase  v.  Redding,  13  Gray,  420. 

'  Snellgrave  v.  Bailey,  3  Atk.  214;  Ward  v.  Turner,  2  Vesey,  Sr.  431;  Duffield 
V.  Ehves,  1  Bligh,  409,  in  which  case  a  bond  with  mortgage  deeds  delivered  to 
the  donee  was  held  to  create  a  trust  in  his  favor. 

*  Chase  v.  Redding,  13  Gray,  418,  in  which  case  it  was  held  that  a  gift  mortis 
causa  of  promissory  notes,  secured  by  mortgages,  with  assignments  of  the  mort- 
gages, was  valid.  Grover  v.  Grovcr.  24  Pick.  264;  Sessions  v.  Moseley,  4  Cash. 
87;  Turpin  v.  Thompson,  2  Met.  (Ky.)  420;  Jones  v.  Deyer,  16  Ala.  231 ;  Borne- 
man  V.  Sidlinger,  15  Me.  429;  Brown  v.  Brown,  18  Conn.  410;  McConnell  v.  Mc- 
Connell,  11  Vt.  290;  Parker  v.  Marston,  37  Me.  196  ;  Tillinghast  v.  Wheaton,  8 
R.  I.  536 ;  Veal  v.  Veal,  29  L.  J.  Ch.  331 ;  s.  c.  27  Bear.  303 ;  Rankin  v.  Weguelin, 
27  Beav.  309;  Stevens  v.  Stevens,  9  N.  Y.  S.  C.  (3  Ilun),  472;  Byles  on  Bills 
(Sharswood's  ed.)  295-6;  Thomson  on  Bills,  20,  21;  Redfleld  on  Wills,  313,  313; 


DONATIO   MORTIS  CAUSA.  23 

person  as  donatio  mortis  causa,  the  donation  will  be  valid, 
altliougli  the  estate  of  the  indorser  will  not  be  bound  upon 
his  indorsement,  as  it  is  without  consideration.  And  this 
seems  to  us  at  once  a  just  extension  and  limitation  of  the 
principle.^  This  doctrine  obtains  in  Scotland,  where  it  has 
been  decided  in  several  cases  ;  -  and  it  has  been  carried  even 
farther  in  England,  where  it  has  been  held  that  bills  deliv 
ered  on  death  bed,  but  without  consideration,  were  valid 
gifts,  and  authorized  the  donees,  in  the  iirst  place,  to  force 
the  donor's  executors  to  indorse  the  bills,  and,  in  the  next 
place,  to  recover  from  the  acceptors,  the  indorsation  being 
regarded  as  a  mere  technicality.^  The  doctrine  has  been 
held  in  the  United  States  to  extend  to  a  bank  book  contain- 
ing entries  of  deposit ;  and  it  has  been  held  that  the  delivery 
of  such  a  book  by  a  person  in  extremis,  with  intention  to 
give  it  as  donatio  m^ortis  causa,  constituted  a  valid  gift  of  the 
money  deposited  in  the  bank.*  In  Louisiana,  where,  on  the 
day  before  he  died,  plaintiff's  testator  delivered  to  defendant 
the  check  of  another,  payable  to  and  indorsed  by  him  in 

contra,  Bradley  v.  Hunt,  5  Gill  &  Johns.  54,  in  which  case  it  is  limited  to  bank 
notes  and  notes  payable  to  bearer. 

'  Weston  V.  Hight,  17  Me.  287. 

^  Thomson  on  Bills,  30.  In  one  case,  where  a  person  had  indorsed  a  bill  for 
1,000  marks  to  his  grandson,  then  under  age,  and  put  it  thus  indorsed,  but  with- 
out particular  instructions,  into  the  hands  of  his  son  and  general  disponee  (dis- 
tributee), the  court,  in  an  action  for  delivery  brought  by  the  grandson,  decerned 
(decreed)  in  his  favor.  In  a  later  case,  where  the  holder  of  two  promissory  notes 
indorsed  theai  on  his  death  bed,  and  delivered  them  to  a  person,  telling  him  to 
deliver  one  to  a  servant,  as  a  reward  for  services,  and  the  other  to  certain  parties, 
as  a  mark  for  gratitude  for  past  favors,  the  court  sustained  the  right  of  the  donees 
to  sue  the  makers. 

=  Veal  V.  Veal,  29  L.  J.  Ch.  321 ;  27  Beav.  303;  Rankin  v.  Weguelin,  27  Beav. 
309. 

*  Hill  v.  Stevenson,  63  Me.  364 ;  Camp's  Appeal,  36  Conn.  88 ;  4  Am.  Rep.  39 ; 
Tillinghast  v.  Wheaton,  8  R.  I.  536,  Durfee,  J.,  saying :  "  It  is  true  we  find  no 
case  which  is  the  exact  parallel  of  the  case  before  us,  but  the  principle  declared 
in  the  cases  to  which  we  have  referred  is  broad  enough  to  include  the  case  before 
us;  and  therefore  whatever,  as  a  matter  of  wise  policy,  we  may  think  of  the  ex- 
pediency of  holding  a  savings  book  to  be  the  subject  of  a  gift  mortis  causa,  we 
do  not  see  how,  as  a  matter  of  law,  we  can  hold  otherwise."  But  see  contra,  Mc- 
Connell  v.  Murray,  3  Ir.  L.  J.  008. 


24         ^'ATURE  AND  USES   OF   NEGOTIABLE  INSTRUMENTS. 

blank,  and  it  was  not  presented  until  after  the  donor's  death, 
it  was  held  a  valid  gift  causa  moi'tis} 

Delivery  in  all  such  cases  may  be  to  the  donee,  or  to  some 
other  person  for  the  donee.^  Where  a  party  deposits  a  sum 
in  bank  in  his  own  name  as  trustee  for  another,  and  recog- 
nizes it  as  his,  the  deposit  is  considered  as  a  complete  gift, 
irrevocable  by  the  depositor;  and  if  he  withdraws  it,  his  per- 
sonal representative  will  be  liable  for  the  amount;^ 

§  25.  But  the  gift  of  the  donor's  own  note  as  donatio 
mortis  causa  would  not  be  valid,  as  his  representatives  might 
prove  tliat  it  was  without  consideration ;  *  and  so  the  draft 
of  the  donor  on  a  third  person  who  holds  his  funds  is  not  an 
assignment  thereof  until  accepted,  and  is  not  a  valid  mortuary 
^ift.^  The  theory  of  the  law  is  to  throw  the  salutary  checks 
which  are  found  in  the  formal  execution  of  wnlls  around 
those  who  are  associated  with  the  donor  in  his  dying  condi- 
tion ;  and  to  hold  these  dispositions  valid  would,  in  effect, 
dispense  with  the  guards  against  fraud  and  imposition  which 

'  Burke  v.  Bishop,  27  La.  An.  465  (1875)  •,  27  Am.  R.  567. 

=  Hill  V.  Stevenson,  63  Me.  364 ;  Dole  v.  Lincoln,  31  Me.  423  ;  Wells  v.  Tucker, 
3  Bin.  306. 

'  Minor  v.  Rogers,  40  Conn.  512  (1873);  Millspaugh  v.  Putnam,  16  Abbott's 
Pr.  R.  380.  See  also  Champney  v.  Blanchard,  39  N.  Y.  Ill  ;  Grover  v.  Grover, 
24  Pick.  261. 

*  Parish  v.  Stone,  14  Peck,  198;  Ilolley  v.  Adams,  16  Vt.  206.  In  Ilamer  v. 
Moore.  6  Ohio  St.  239,  the  note  ran:  "For  value  received  I  promise  to  pay  to 
Mrs.  Earner,  wife  of  John  Hamer,  the  sum  of  $300,  as  a  small  recompense  for 
the  kindness  siiown  to  me  by  her.  The  executors  of  my  last  \vill  and  testament 
are  hereby  directed  to  pay  the  a])ove  to  Mrs.  H.  or  her  sons,  Moses  and  John, 
after  my  decease."  Signed  and  attested.  It  was  held  invalid  as  a  gift  causa 
mortis.  In  Helfenstein's  Estate,  77  Penn.  St.  828,  H.  made  his  note  for  the  sum 
of  $4,000,  payable  one  year  after  date,  to  Treasurer  of  Theological  Seminary,  and 
delivered  it  to  the  chairman  of  the  seminary  library  committee;  subjoined  to  it 
was  a  statement  that  it  was  a  donation,  the  interest  of  which  was  to  be  applied 
to  the  purchase  of  books  for  the  seminary.  Shortly  afterward  the  maker  died. 
Held  that  the  note,  being  without  consideration,  and  not  having  been  accepted 
by  the  trustees  before  the  maker's  death,  was  revoked  thereby,  and  a  subsequent 
acceptance  of  it  was  ineffective. 

'  Harris  v.  Clark,  3  Comst.  93;  Craig  v.  Craig,  3  Barb.  Ch.  R.  76,  overruling 
Wright  V.  Wright,  1  Cowcn,  598;  Billing  v.  Devaux,  3  Man.  &  Gr.  505;  see  Bay- 
Icy  on  Bills,  348,  intimating  the  contrary. 


DONATIO   MORTIS   CAUSA.  25 

are  found  in  the  rules  which  govern  the  authentication  and 
probate  of  last  testaments.  "The  very  circumstance,"  as  has 
been  said,  "which  sometimes  renders  a  will  suspicious  is  the 
living  principle  in  a  donatio  mortis  causa."  ^  But  it  would 
seem  that  the  payee  even  of  an  undelivered  bill  could  recover, 
in  England,  if  it  were  attested  in  terms  of  the  wills  act.^ 

§  26.  The  same  reasons  which  prevent  a  note  or  bill  of 
the  donor  from  being  the  subject  of  a  donatio  mortis  causa, 
apply  with  equal  force  to  a  check.^  If  a  check  be  given  as 
an  immediate  gift,  and  is  collected  in  the  lifetime  of  the  donoi-, 
the  donee  may  retain  the  proceeds ;  but  death  operates  as  a 
revocation,  if  it  be  not  collected,  or  has  not  passed  into  the 
hands  of  a  bona  fide  holder.^  A  check  to  the  drawer's 
wife,  on  which  he  had  written  that  it  was  to  enable  her  to 
buy  mourning,  and  as  a  temporary  provision,  was  held,  under 
the  peculiar  circumstances,  a  valid  donatio  mortis  causa\^  but 
the  delivery  of  a  note  by  one  brother  going  into  military 
service,  to  another,  with  directions  to  give  it  to  his  mother 
should  he  not  return,  is  not  so  considered.^ 

It  is  plain  that  a  donatio  mortis  causa  cannot  prevail 
against  the  creditors  of  the  donor  when  his  assets  are  other- 
wise insufficient.'^  Nor  can  it  prevail  against  the  donor's 
estate  unless  delivered.^ 

'  Holley  V.  Adams,  16  Vt.  206.  ■  Gough  v.  Findon,  7  Exch.  48. 

'  Tate  V.  Hilbeit,  2  Vesey,  Jr.  HI ;  Burke  v.  Bishop,  27  La.  An.  465  (1875). 

'  Bouts  V.  Ellis,  17  Bear.  121 ;  4  De  G.  M.  &  G.  249 ;  Hewit  v.  Kaye,  L.  R.  6 
Eq.  198;  Burke  v.  Bishop,  27  La.  An.  465  ;  21  American  R.  567. 

'  LaTVSon  v.  Lawson,  1  P.  Wms.  441. 

"  Irish  V.  Nutting,  47  Barb.  370  ;  Sheldon  v.  Button,  13  N.  Y.  S.  C.  (5  Hun), 
110. 

'  Chase  v.  Redding,  13  Gray,  418. 

'  Ward  V.  Turner,  2  Yes.  Sr.  431.  See  en  this  subject  Southern  Law  Review 
for  April,  1875,  p.  145. 


CHAPTEK  11. 

DEFINITION    AND     ESSENTIAL     REQUISITES    OF    BILLS    AND    NOTES. 

§  27.  A  bill  of  exchange  is  an  open  letter  addressed  by 
one  person  to  a  second,  directing  liim,  in  effect,  to  pay  abso- 
lutely and  at  all  events,  a  certain  sum  of  money  therein 
named,  to  a  third  person  or  to  any  other  to  whom  that  third 
person  may  order  it  to  be  paid ;  or  it  may  be  payable  to 
bearer  or  to  the  drawer  himself.^ 

'  The  definitions  of  bills  and  notes  are  given  as  follows  by  various  writers: 

Blackstone  defines  a  bill  of  exchange  to  be  "  an  open  letter  of  request  from 
one  man  to  another,  desiring  him  to  pay  a  sum  of  money  therein  named  to  a 
third  person  on  his  account."     3  Black.  Com.  46G. 

Bayley  says :  A  bill  of  exchange  is  a  written  order  or  request,  and  a  promis- 
sory note  a  written  promise,  for  the  j^ayment  of  money  absolutely  and  at  all 
events."     Bayley  on  Bills,  1. 

Chitty  follows  Blackstone,  and  Chancellor  Kent  follows  Bayley.  Chitty  on 
Bills,  1  ;  3  Kent's  Com.  74. 

Byles  says:  "  A  bill  of  exchange  is  an  unconditional  written  order  from  A, 
toB.,  directing  B.  to  pay  C.  a  sum  of  money  therein  named."  Byles  (Shars- 
wood's  ed.)  1.  And  that  "A  promissory  note,  or  as  it  is  frequently  called,  a 
note  of  hand,  is  an  absolute  promise  in  writing,  signed  but  not  sealed,  to  pay  a 
specified  sum  at  a  time  therein  limited,  or  on  demand,  or  at  sight,  to  a  person 
therein  named  or  designated,  or  to  his  order,  or  to  the  bearer."  Byles  (Shars- 
wood's  ed.)  [*o.] 

In  Story  on  Bills,  the  definition  of  a  bill  given  by  Bayley  is  commended  as 
concise,  clear,  and  accurate.  The  learned  author  adds,  however:  "But  here 
again  its  peculiar  distinguishing  quality  in  modern  times,  its  negotiability,  is 
omitted,  which,  althougli  not  by  our  law  essential  to  the  instrument ;  is  still  that 
which,  practically  speaking,  among  merchants,  constitutes  its  true  character. 
Mr.  Kyd  has  accordingly  given  the  more  extended  definition,  stating  it  to  be  "  an 
open  letter  of  request,  addressed  by  one  person  to  a  second,  desiring  him  to  pay 
a  sum  of  money  to  a  third,  or  to  any  other,  to  whom  that  third  person  shall 
order  it  to  be  paid  ;  or  it  may  be  payable  to  bearer."  See  Kyd  on  Bills,  p.  3,  and 
Story  on  Bills,  §  3. 

In  Story  on  Promissory  Notes,  it  is  said:  "A  promissory  note  may  be  defined 
to  be  a  written  engagement  by  one  person  to  pay  another  person,  therein  named, 
absolutely  and  unconditionally,  a  certain  sum  of  money  at  a  time  specified  there- 
in."    Story  on  Notes,  §  1. 

Without  adopting  the  precise  language  of  any  author,  we  have  given  herein 
definitions  which  seem  to  us  more  accurate  than  some  others,  and  which,  at  least, 
cannot  be  misleadiug. 


DEFINITION   AND   REQUISITES   OF   BILLS  AND   NOTES.         27 

Abram,  who  draws  the  bill,  is  called  the  drawer;  Ben- 
jamin, to  whom  it  is  directed,  is  called  the  drawee,  and, 
upon  accepting  it,  becomes  the  acceptor.  Charles,  to  whom 
the  bill  is  made  payable,  is  called  the  payee. 

If  the  bill  be  payable  to  "  Charles  wz/y,"  it  is  not  nego- 
tiable ;  but  if  payable  to  "  Charles  or  order,"  he  may,  by 
indorsing  it,  direct  that  it  be  paid  to  David,  and  in  that  case 
Charles  becomes  the  indorser,  and  David  the  indorsee. 

§  28.  A  promissory  note  or  note  of  hand,  as  it  is  often 
called,  is  an  open  j^romise  in  writing  by  one  person  to  pay 
another  person  therein  named,  or  to  his  order,  or  to  bearer,  a 
specified  sum  of  money  absolutely  and  at  all  events.  Abram, 
w^ho  makes  the  note,  is  called  the  maker ;  Benjamin,  to 
whom  the  promise  is  made  to  pay,  the  payee ;  and  if  the 
note  is  transferred  from  Benjamin  to  Charles  by  indorsement, 
they  are  termed  respectively  indorser  and  indorsee.  If  the 
transfer  from  Benjamin  to  Charles  be  by  delivery  merely, 
they  are  termed  respectively  assignor  and  assignee. 

The  maker  of  a  note  is  sometimes  termed  the  drawer, 
and  in  accommodation  indorsements  the  indorser  frequently 
writes  over  his  name  :  "  Credit  drawer."  When  the  term 
"  drawer  "  is  so  used,  the  maker  is  of  course  meant,  though 
not  accurately  described. 

"  Holder  "  is  a  general  word  applied  to  any  one  in  actual 
or  constructive  possession  of  the  bill  or  note,  and  entitled  at 
law  to  recover  or  receive  its  contents  from  the  parties  to  it. 

§  29.  In  their  original  structure,  a  bill  of  exchange  and 
promissory  note  do  not  strongly  resemble  each  other.  In  a 
bill  there  are  three  original  parties :  drawer,  drawee,  and 
payee ;  in  a  note  only  two  :  maker  and  payee.  In  a  bill  the 
acceptor  is  the  primary  debtor.  In  a  note  the  maker  is  the 
only  debtor.  But  if  the  note  be  transferred  to  a  third  party 
by  the  payee,  it  becomes  strikingly  similar  to  a  bill.  The 
indorser  becomes  then,  as  it  were,  the  drawer,  the  maker  the 
acceptor,  and  the  indorsee  the  payee.     The  reader,  bearing 


28         DEFINITION   AND  REQUISITES  OF  BILLS  AND  NOTES. 

this  similitude  in  mind,  will  easily  be  able  to  apply  to  notes 
the  decisions  hereinafter  cited  concerning  bills,  and  vice 
versa. 

§  30.  In  order  to  fulfill  the  definition  given,  the  paper 
must  carry  its  full  history  upon  its  face,  and  embrace  the 
following  requisites :  First.  It  must  be  open,  that  is,  un- 
sealed. Second.  The  engagement  to  pay  must  be  certain. 
Third.  The  fact  of  payment  must  be  certain.  Fourth.  The 
amount  to  be  paid  must  be  certain.  Fifth.  The  medium  of 
payment  must  be  money.  Sixth.  The  contract  must  be  only 
for  the  payment  of  money  ;  and  Seventh.  It  is  also  essential 
to  the  operation  of  the  instrument  that  it  should  be  delivered. 


SECTION  I. 

THE  PAPER  MUST  BE  OPEN,  THAT  IS,  UNSEALED. 

§  31.  The  first  requisite  of  a  bill  is,  that  it  shall  be  an 
"  open  letter  "  of  direction — and  of  a  note  that  it  shall  be  an 
open  promise — for  the  payment  of  money.  By  the  term 
"  open  "  is  meant  "  unsealed  "  ;  and  though  the  instrument 
possess  all  the  other  requisites  of  a  bill  or  note,  its  character 
as  a  commercial  instrument  is  destroyed,  and  it  becomes  a 
covenant,  governed  by  the  rules  affecting  common  law  secu- 
rities, if  it  be  sealed.^  Thus  in  Delaware,  where  a  draft  in 
the  form  of  a  bill  was  drawn  by  a  corporation  which  attached 
its  corporate  seal,  it  was  held  not  to  be  a  bill  of  exchange, 
and  to  be  incapable  of  indorsement  as  such  by  the  law 
merchant.^     It  has  been  held,  however,  that  the  aflSxing  of  a 

'  Edwards  on  Bills,  208,  210  ;  Chitty  on  Bills  (13  Am.  ed.)  [*166],  190;  Story 
on  Bills,  §  62 ;  Story  on  Notes,  §  55. 

2  Conine  v.  Junction  &  B.  R.  Co.  3  Houston,  289,  Gilpin,  C.  J.,  saying: 
"  Deeds  or  sealed  instruments  are  not  only  of  a  much  higher  antiquity  than  bills 
of  exchange,  but  they  are  of  a  totally  different  origin.  They  cannot  be  said  to  be 
made  secundum  usum  mercatorum,  since  they  find  their  recognition  and  validity 
in  the  more  ancient  rules  of  the  common  law.  On  the  other  hand,  bills  of  ex- 
change find  their  oriijin  and  sanction  in  the  usage  and  custom  of  merchants,  the 


THE  PAPER  MUST  BE  UNSEALED.  29 

seal  to  a  bill  is  a  mere  superfluity,  and  does  not  interfere 
with  its  validity  or  transferability ;  ^  but  the  doctrine  of  the 
text  is  sup23orted  by  the  highest  authority. 

§  32.  Seals  to  notes.  In  respect  to  promissory  notes,  the 
same  rules  prevail.  If  a  seal  be  affixed  to  a  paper  in  the  or- 
dinary form  of  a  note,  its  character  as  such  is  destroyed ; 
and  it  is  thereby  converted  into  the  deed  or  bond  of  the 
maker,  who  is  then  termed  the  obligor,  and  the  instrument  is 
not  subject  to  the  peculiar  doctrines  that  are  ajDplicable  to 
mercantile  securities.^  And  this  rule  applies  to  corporations 
as  well  as  to  individuals.^  It  appears,  indeed,  that,  anterior 
to  the  statute  of  3  <fe  4  Anne,  already  quoted,'*  bonds  were 
occasionally  transferred  by  indorsement  in  like  manner  as 
bills  and  notes,  but  the  practice  did  not  ripen  into  a  settled 
custom,  and  by  the  above  mentioned  statute  they  were  not 
included  Avith  notes  in  being  declared  negotiable.^     It  is  to 

lex  mercatoria,  a  particular  or  peculiar  system,  which,  being  in  the  interest  of 
commerce,  became  at  length  gradually  engrafted  into,  and  established  as  a  part 
of  the  common  law  itself.''  *  *  *  *  h=  *        * 

"  All  contracts  under  seal  are  specialties,  sealing  and  delivery  being  the 
particular  form  and  ceremony  which  alter  the  nature  and  operation  of  the  agree- 
ment. Forms,  consecrated  by  time  and  usage,  become  substance.  The  seal  is 
substance  and  changes  the  nature  and  operation  of  the  contract.  It  seems  to  me,, 
therefore,  that  the  question  which  I  have  been  considering  is  settled  upon  princi- 
ple against  the  plaintiffs.  But  however  this  may  be,  it  has  been  held  as  settled 
upon  authority  for  more  than  thirty  years  past." 

'  Irwin  V.  Brown,  3  Cranch  C.  0.  314. 

2  Clegg  V.  Lemesurier,  15  Grat.  108;  Mann  v.  Sutton,  4  Rand,  253;  Hopkins 
V.  Railroad  Co.  3  Watts  &  S.  410;  Clark  v.  Farmers'  Manuf  Co.  15  Wend.  256; 
Parks  V.  Duke,  2  McCord,  380 ;  Lewis  v.  Wilson,  5  Blackf.  369 ;  Helper  v. 
Alden,  3  Minn.  332;  Warren  v.  Lynch,  5  Johns.  239. 

=  Clark  V.  Farmers'  Manuf.  Co.  15  Wend.  256.  See  Central  Kat.  Bank  v. 
Charlotteville,  &c.  R.  R.  Co.  5  S.  C.  156,  where  respecting  a  note  with  the  seal  of 
the  corporation,  which  made  it  impressed  upon  it,  and  which  was  held  negotia- 
ble, it  was  said  :  "  The  seal  of  a  corporation  is  not  in  itself  conclusive  of  an 
intent  to  make  a  specialty.  It  is  equally  appropriate  as  the  means  of  evidencing 
the  assent  of  a  corporation  to  be  bound  by  a  simple  contract  as  by  a  specialty." 
Indorsement  by  corporation  through  its  seal,  held  not  to  affect  its  negotiability 
in  Rand  v.  Dovey,  83  Penn.  St.  280.     See  2J0st,  §  664. 

*  See  ante,  §  5,  note. 

'  Bullcr  V.  Crips,  6  Mod.  29  (1704).  Holt,  C.  J.,  declared  that  he  had  de- 
sired to  epeak  with  two  of  the  most  famous  merchants  in  London,  and  that  they 


so        DEFINITION  AND  REQUISITES  OF   BILLS  AND  NOTES. 

be  observed,  however,  that  merely  by  attaching  a  seal  to  the 
signature  does  not  make  it  a  sealed  instrument,  unless  there 
be  a  recognition  of  the  seal  in  the  body  of  the  instrument  by 
some  such  phrase  as  "  witness  my  signature  and  seal,"  or 
"  siirned  and  sealed,"  for  otherwise  the  door  would  be  thrown 
open  to  frauds  and  forgeries,  by  the  facility  with  wliich  seals 
could  be  superadded.^  Such  is  the  view  taken  in  Virginia; 
but  it  is  conceded  that  the  rule  was  otherwise  at  common 
law,"  and  there  are  decisions  adhering  to  the  common-law 
rule.^ 

§  33.  In  some  of  the  States  of  the  United  States,  sealed 
instruments  for  the  payment  of  money  are  placed  by  statute 
upon  the  same  footing  as  l)ills  and  notes  in  respect  to  their 
negotiability ;  and  the  addition  of  a  seal  to  a  bill  or  note  pay- 
able to  order  or  bearer  in  no  way  impairs  its  negotial)ility.'^ 

In  others,  bonds  are  made  transferable,  and  may  be  sued 
upon  in  the  name  of  the  assignee,  but  the  latter  takes  them 
subject  to  all  defenses  that  were  available  to  the  original 
oblic'ee."'' 

§  34.  A  scroll  affixed  as  a  seal  is  generally  of  the  same 
force  as  a  seal,*^  and  parol  evidence,  where  such  is  the  case,  is 


bad  told  him  that  not  only  notes,  but  bonds  for  money,  were  transferred  fre- 
quently, and  indorsed  as  bills  of  exchange. 

'  Peasley  v.  Boatwright,  2  Leigh,  196.     In  Anderson  v.  Bullock,  4  Munf.  442, 
the  following  was  held  to  be  a  promissory  note,  and  the  scroll  annexed  as  a  seal 
to  be  mere  surplusage: 
$3  361  81.  Richmond,  October  10,  1801. 

'  On  or  before  the  first  day  of  February  next,  we  hind  ou,rselvos,  our  heirs, 
executors,  or  administrators,  to  pay  Thomas  and  Amos  Ladd,  or  order,  two 
thousand  three  hundred  and  sixty-one  dollars  and  eighty-one  cents. 

AUSTIN  &  ANDERSON,  [l.  s.] 

Cromwell  v.  Tate's  Exs.  7  Leigh,  805;  Baird  v.  Blagrove,  1  Wash.  170; 
Argcnbright  v.  Campbell,  3  H.  &  M.  174;  Austin  v.  Whitlock,  1  Munf  487; 
Jenkins  v.  Hart,  2  Rand.  446 ;  Clegg  v.  Lemesurier,  15  Gratt.  108. 

^  Cromwell  v.  Tate's  Exs.  7  Leigh,  305. 

=■  Trasher  v.  Everhart,  3  Gill  &  J.  246. 

■•  Colorado,  Dakota,  Florida,  Georgia,  Illinois,  Kansas,  Massachusetts,  Ne- 
braska, North  Carolina,  Ohio,  Tennessee. 

'  As  in  Virginia. 

•  Giles  V.  Mauldea,  7  Richardson,  11;  Peasley  v.  Boatwright,  supra;  contra, 
Blackwell  v.  Hamilton,  47  Ala.  470. 


CERTAINTY  AS  TO  ENGAGEMENT  TO   PAY.  31 

admissible  to  show  that  a  scroll  affixed  was  intended  as  a 
seal.^  An  instrument  binding  the  signers  to  pay  a  certain 
sum  of  money,  and  signed  by  some  wdth,  and  by  others 
without,  seals,  is  the  bond  of  the  former,  and  the  promissory 
note  of  the  latter,  and  one  action  of  debt  may  be  brought 
against  all  the  parties.^ 

SECTIOiS'  II. 

CERTAINTY    AS   TO    ENGAGEMENT   TO    PAY. 

§  35.  Ill  the  second  'place^  the  engagement  to  'pay  must  he 
certain. — Therefore  the  bill  must  contain  a  certain  direction, 
and  the  note  a  certain  promise  to  pay.  A  bill  is  in  its  na- 
ture the  demand  of  a  right,  not  the  mere  asking  of  a  favor, 
and  therefore  a  supplication  made,  or  authority  given  to  pay 
an  amount,  is  not  a  bill.  The  language,  "  Mr.  Little,  please 
to  let  the  bearer  have  £7,  and  place  it  to  my  account,  and 
you  will  much  oblige  your  humble  servant,"  was  held  not  a 
bill ;  ^  but  on  the  other  hand,  where  the  language  was :  "  Mr. 
Nelson  will  much  oblige  Mr.  Webb  by  paying  I.  Ruff,  or 
order,  on  his  account,  twenty  guineas,"  was  held  to  import  an 
order,  and  therefore  a  good  bill.^  The  usual  expression  used 
in  bills  is,  "  please  pay,"  and  it  has  been  well  said  by  Justice 
Story  that  the  language  should  not  be  too  nicely  scanned, 
nor  be  regarded  because  of  its  politeness  as  asking  a  favor 
rather  than  demandins:  a  rio-ht.^  "  Please  let  the  bearer  have 
$50 ;  I  will  arrange  it  with  you  this  forenoon,"  and  signed, 
"your's,  most  obedient,"  was  held  sufficient  in  Kentucky.*^ 
An  instrument  directing  a  certain  person  to  deliver  a  particu- 
lar sum  to  A.  B.,  or  to  be  accountable  or  responsible  to  him 
for  a  particular  sum  would  be  a  good  biiy  and  so  would  a 


'  Pollock  V.  Glassell,  2  Grat.  439.  "  Rankiu  v.  Roler,  8  Grat.  53. 

=  Little  V.  Stackford,  1  Mood.  &  Malk.  371.         '  Ruff  v.  Webb,  1  Esp.  R.  129. 
'"  Story  on  Bills,  §  33;  Chitty,  p.  150;  Thomson,  6. 
°  Bresenthal  v.  Williams,  1  Duval,  329. 
'  Morris  v.  Lee,  2  Lord  Raymond,  1396. 


32        DEFI5JTTI0N  A:ND  REQUISITES  OF  BILLS  AND  NOTES. 

direction  to  credit  liim  in  cash  for  a  particular  sum/  or  any 
expression  from  which  such  direction  could  be  inferred. 

§  36.  A  promissory  note  must  contain  a  certain  promise 
to  pay.  It  is  said  by  Story,  that,  "it  seems  that  to  constitute 
a  good  promissory  note,  there  must  be  an  express  promise 
upon  the  face  of  the  instrument  to  pay  the  money ;  for  a 
mere  promise  implied  by  law,  founded  upon  an  acknowledged 
indebtedness,  will  not  be  sufficient."  ^  But  we  think  the  bet- 
ter language  is  used  by  Byles,  who  says :  "  No  precise  words 
of  contract  are  necessary,  provided  they  amount,  in  legal 
effect,  to  a  promise  to  pay."  ^  In  other  words,  if  over  and 
above  the  mere  acknowledgment  of  debt,  there  may  be  col- 
lected from  the  words  used  a  promise  to  pay  it,  the  instru- 
ment may  be  regarded  as  a  promissory  note. 

In  England,  it  seems  to  be  well  settled  that  an  ordinary 
due-bill,  which  is  there    frequently  given  in  the  following 

form: 

'*  London,  1st  January,  1875. 

"  Mr.  A.  B.  : 

"I.  O.  U.  £100. 

"C.  D." 

does  not  amount  to  a  promissory  note,  but  is  mere  evidence 
of  an  account  stated,  requiring  no  stamp  under  the  English 
stamp  acts.  This  w^as  the  view  taken  by  Lord  Chief  Justice 
Eyre  in  1795,  where  the  paper  ran  "  I.  O.  U.  eight  guineas,"  * 
and  thouo-h  in  1800  Lord  Eldon  held  a  similar  paper  to  be  a 
promissory  note,  and  ruled  it  out  when  offered  in  evidence, 
because  it  had  no  stamp,^  subsequent  decisions  have  recurred 
to  the  doctrine  of  Chief  Justice  Eyre,  and  it  is  the  established 
law  of  Enfcland.^ 


'  Ellison  V.  CoUingride,  9  C.  »&  B.  570 ;  Allen  v.  Sea  Fire,  &c.  Ins.  Co.  9  C.  B. 
.574.     But  see  WooUey  v.  Sergeant,  3  Ilalstecl,  263. 

•'  Story  on  Promissory  Notes,  §  14.  ^  Byles  on  Bills,  8. 

*  Fisher  v.  Leslie,  1  Esp.  425.  '  Guy  v.  Harris,  Cbitty  on  Bills,  526. 

*  Israel  v.  Israel,  1  Camp.  499,  Lord  Ellenborough.  The  paper  ran,  "I  owe 
my  father  470^."  Childers  v.  Boulnois,  Dow.  «fc  By.  8;  Payne  v.  Jenkins,  4  Car. 
&  P.  335;  Fesenmayer  v.  Adcock,  16  M.  &  W.  449;  Tompkins  v.  Ashby,  6  B.  «& 
C,  541 ;  9  Dow.  &  Ky.  543. 


CERTAINTY  AS  TO  THE  ENGAGEMENT  TO   PAY.  33 

In  the  United  States  the  decisions  are  conflicting.  In 
some  of  tliem  a  naked  dne-bill  is  held  to  be  a  promissory- 
note  ;  ^  as  in  Illinois,  for  instance,  where  the  paper  ran  "  Due 
G.  S.  W.,five  hundred  and  twenty-five  dollars,"''^  and  in  Mis- 
souri, wliere  the  words  were,  "  Due  B.,  one  hundred  and  fifty- 
dollars."  ^  In  others  such  a  paper  is  held  to  be  a  mere  ac- 
knowledo;ment  of  indebtedness.^ 

§  37.  The  question  seems  to  us  simply  one  of  intention. 
If  a  debtor  give  a  mere  due-bill  to  his  creditor  containing 
nothing  but  an  acknowledgment  of  the  debt,  it  is  fair  to  pre- 
sume that  he  merely  designed  to  furnish  him  with  evidence 
of  its  existence.  The  law  implies  a  promise  to  pay  from  the 
existence  of  the  debt ;  but  that  promise  not  being  written  on 
the  note,  it  cannot  be  regarded  as  a  promissory  note.  To  be 
a  "promissory  note,"  the  promise  must  not  only  be  implied 
from  the  fact  of  indebtedness  evinced  by  the  note,  but 
should  be  expressed  in  the  note  in  so  many  words,  or  by 
necessary  implication. 

§  38.  There  may  be  words  superadded  to  the  acknowl- 
edgment, however,  from  which  an  intention  to  accompany  it 
with  an  engagement  to  pay  may  be  gathered.  Thus  in  New 
York  the  words  "  Due  S.,  or  bearer,  $340,  for  value  received, 
wdth  interest,"  were  held  to  constitute  a  note ;  ^  so  in  the  same 
State,  the  words,  "  Due  A.  B.,  or  bearer,  two  hundred  and 
26-100,  for  value  received  ;"®  in  Maine,  the  w^ords,  "  Good  to 
bearer,"  '^  and  in  Tennessee,  "Due  J.  C,  R,  or  order,"  ^  were 
held  sufficiently  obligatory  to  constitute  a  promissory  note. 
So  in  New  Hampshire  the  language,  "  Good  E.  C,  or  order 


'  Fleming  v.  Burge,  6  Ala.  373 ;  Brewer  v.  Brewer,  6  Qa.  588 ;  Marrigan  v. 
Page,  4  Humph.  247 ;  Cummings  v.  Freeman,  3  Humph.  145  (overruling  Read  v. 
Wheeler,  2  Yerger,  50). 

'  Jacquin  v.  Warren,  40  III.  459 ;  39  Id.  461. 

=  Brady  v.  Chandler,  31  Mo.  28. 

"  Currier  v.  Lockwood,  40  Conn.  348 ;  Road  v.  Wheeler,  2  Yerger,  50. 

^  Sackett  v.  Spencer,  29  Barb.  180;  Lowe  v.  Murphy,  9  Ga.  338. 

°  Russell  V.  Whipple,  2  Cow.  536. 

'  Hussey  v.  Winslow,  59  Me.  170.  "  Marrigan  v.  Page,  4  Humph.  247. 

Vol.  I.— 3 


34        DEFINITION  AND  REQUISITES  OF  BILLS  AND   NOTES. 

for  thirty  dollars,  borrowed  money,"  ^  and  in  Maine,  "  Dae 
A.  B.,  or  order,  $20,  on  demand,"  ^  has  been  given  the  like 
effect ;  and  so  in  Arkansas,  "  Due  I.  H.,  or  order,  value  re- 
ceived."^ In  these,  as  in  other  cases,  the  insertion  of  negotia- 
ble words  have  been  justly  construed  as  manifesting  an  in- 
tention to  make  the  instrument  promissory  and  negotiable, 
and  they  have  been  effectuated  accordingly. 

§  39.  The  insertion  of  "  on  demand,"  has  been  thought,  in 
itself,  sufficient  to  show  that  the  debtor  intended  to  do  more 
than  merely  state  the  balance  due  on  account.  It  recognizes 
an  obligation,  and  necessarily  implies  a  promise  to  pay  when 
demanded.  This  view  was  taken  in  Connecticut,  where  the 
words  used  were,  "Due  John  Allen,  $94  91,  on  demand," 
Smith,  J.,  saying :  "  Where  a  writing  contains  nothing  more 
than  a  bare  acknowledgment  of  a  debt,  it  does  not,  in  legal 
construction,  import  an  express  promise  to  pay  ;  but  where  a 
writing  imports  not  only  the  acknowledgment  of  a  debt,  but 
an  agreement  to  pay  it,  this  amounts  to  an  express  contract."^ 
And  the  like  view  has  obtained  in  other  cases.  The  mere 
addition  of  the  words  "  value  received,"  would  not  alone,  it 
seems,  import  a  promise  in  addition  to  the  acknowledgment,^ 
though  it  has  been  held  otherwise.^  But,  "Due  A.  B.,  $325, 
payable  on  demand,"  '  or  "  I  acknowledge  myself  indebted  to 


'  Franklin  v.  March,  G  N.  H.  364;  Huyck  v.  Meador,  34  Ark.  195 ;  Cummings 
V.  Freeman,  2  Humph.  144. 

*  Carver  v.  Hayes,  47  Me.  357.  '  Huyck  v.  Meador,  24  Ark.  193. 

*  Smith  V.  Allen,  2  Day,  837. 

'  Read  v.  Wheeler,  2  Yerger,  50;  Currier  v.  Lockwood,  40  Conn.  348;  Am. 
Law  Reg.  Jan'y,  1875.  Judge  Kedfiekl,  in  a  note  to  this  case,  dissents  from  its 
conclusions,  as  did  also  two  of  tiie  judges  (Foster  and  Phelps),  who  were  mem- 
bers of  the  court  which  decided  it.  Judge  Redfield  says:  "  A  promissory  note 
is  not  required  to  be  in  any  particular  form,  much  less  to  embrace  the  word 
'  promise.'  All  that  is  required  is  that  the  written  terms  used,  in  their  proper 
legal  construction,  shall  import  an  admission  by  the  maker  that  he  holds  himself 
bound  to  pay  the  p;iyee  a  dctinite  sum  of  money  at  a  definite  time;  or,  no  time 
being  named,  then  presently  on  demand." 

"  Finney  v.  Shirley,  7  Mo.  43;  see  Uuyck  v.  Meador,  34  Ark.  193. 

'  Kimball  v.  Huntington,  10  Wend.  675;  Mitchell  v.  Rome  R.  R.  Co  17  Ga. 
574;  Pepoon  v.  Stagg,  1  Nott  &  McCord.  103. 


CERTAINTY    AS   TO   THE  FACT   OF   PAYMENT.  35 

A.  ill  100/.,  to  be  paid  on  demand,  for  value  received,"^  or 
"I.  O.  U.  85/.,  to  be  paid  May  5tli,"^  would  constitute  prom- 
issory notes,  significance  being  given  to  the  words  of  pay- 
ment as  indicating  a  promise. 

§  40.  There  are  other  memoranda  of  indebtedness  which 
have  been  held,  like  bare  due-l)ills,  not  to  amount  to  notes. 
Thus,  a  memorandum,  "  Mr.  T.  has  left  in  my  hands  $200," 
is  not  a  note.^     And  the  following  papers : 

"I   have  received  the   sum  of ,  which  I  borrowed 

from  you,  and  I  have  to  be  accountable  for  the  said  sum 

with  interest,"*  and  "  T.  O.  U. ,  wdiich  I  borrowed  of 

Mrs.  MeLanotte,  and  to  pay  her  five  per  cent,  till  paid,"^  have 
been  held  not  notes,  because  not  importing  promises  to  pay. 

So,  in  a  written  bargain  for  buying  goods,  a  promise  to 
pay  the  seller  the  price  in  a  limited  time  is  not  a  note,  but 
a  mere  memorandum  of  the  terms  of  the  bargain.^ 

SECTION  III. 

CERTAINTY    AS    TO    THE    FACT    OF   PAYMENT. 

§  41.  Ill  the  third  iilace  the  fact  of  paijment  7nust  he  cer- 
tain. The  instrument  must  be  payalde  unconditionally,  and 
at  all  events,  in  order  to  be  negotiable.  If  the  order  or 
promise  be  payable  provided  terms  mentioned  are  complied 
with  ;  as,  for  instance,  that  a  railroad  be  built  to  a  certain 
point  by  a  certain  time,  it  is  not  a  bill  or  note ; '  and  likewise 
if  payable  provided  a  certain  act  be  not  done;^  or  another 
person  shall  not  previously  pay  ;^  or  provided  a  certain  ship 
shall  arrive  ;^^  or  provided  the  maker  shall  be  able.^^     Some- 

'  Casborne  v.  Dutton,  1  Selwyn's  N.  P.  320, 

"  WaithQiau  v.  Elzee,  1  C.  &  K.  35. 

'  Tompkins  v.  Ashby,  6  B.  &  C.  541 ;  s.  c.  1  M.  &  M.  33. 

*  Home  V.  Redfearne,  4  Bing.  N.  C.  433. 

'  Melauotte  v.  Teasdale,  13  M.  &  W.  21G.  '  Ellis  v.  Ellis,  Gow,  216. 

'  Eldred  v.  Malloy,  2  Col.  T.  320;  Chitty  on  Bills,  134. 

'  8  Mod.  363.  »  Roberts  v.  Pcake,  1  Burr.  323. 

'°  Coolidge  V.  Ruggles,  15  Mass.  R.  387;  Palmer  v.  Pratt.  2  Bing.  185. 

"  Ex  parte  Tootle,  4  Vesey,  372;  Saliuas  v.  Wright,  11  Tex.  572. 


oG        DEFIXITTON  AND  BEQUISITES   OF   BILLS  AND  NOTES. 

times  a  condition  of  time  is  expressed  by  the  word  "when," 
as  "when  A.  shall  marry  ;"^  "  when  a  certain  suit  is  deter- 
mined;"^ "wdien  a  certain  sale  is  made ;" '^  or  "  certain  divi- 
dends declared  ;"^  "  when  a  certain  amount  is  collected;"^  or 
"  when  the  estate  of  M.  is  settled  up  ;"  '^  "  after  arrival  and 
discharge  of  coal  by  brig  A."  "^  So,  if  it  be  expressed  to  be 
payable  subject  to  this  policy."®  In  all  these  cases  the  con- 
tingency imjilied  deprives  tbe  instrument  of  its  character  as  a 
bill  or  note,  as  the  events  named  may  never  happen.  If  paya- 
ble in  installments,  no  time  for  the  payment  of  the  installments 
being  mentioned,  it  is  not  a  2)romissory  note.^  In  Illinois, 
where  the  promise  was  to  pay  a  railroad  company  or  order, 
a  certain  sum,  in  such  instalments,  and  at  such  times  as  the 
directors  of  the  payee  company  might  assess  or  require,  it 
was  held  negotiable,  and  in  effect  payable  on  demand,  or  in 
installments  on  demand.^*^ 

§  42.  In  England,  it  has  been  held  that  an  order  for  a 
certain  sum  "  payable  ninety  days  after  sight  or  when  real- 
ized," was  not  a  bill,  as  the  latter  alternative  made  it  pay- 
able upon  a  contingency,"  but  this  is  not  the  view  which 
prevails  in  such  cases  in  the  United  States. 

§  43.  Authorities  in  the  United  States.  In  the  United 
States,  if  the  time  must  certainly  come,  although  the  particu- 
lar day  is  not  mentioned  in  the  note,  it  is  regarded  as  nego- 
tiable, as  the  fact  of  payment  is  then  certain.  Thus,  where 
the  note  ran,  "I  promise  to  pay  A.  B.,  or  bearer,  $75  one 
year  from  date,  with  interest  annually,  and  if  there  is  not 

'  Pearson  v.  Garrett,  4  Mod.  243;  Bcardsley  v.  Baldwin,  Stra.  1157. 

^  Shelton  v.  Bruce,  9  Yerger,  24. 

'  De  Forest  v.  Frary,  G  Cow.  151  ;  Hill  v.  Ilalford,  2  B.  &  P.  413. 

*  Brooks  V.  Hargreaves,  91  Mich.  255, 

"  Corbett  v.  State  of  Georgia.  24  Ga.  287. 

"  Husband  v.  Bpling,  81  111.  172  (1876).  '  Grant  v.  Wood,  12  Gray,  220. 

*  American  Exchange  Bank  v.  Blanchard,  7  Allen,  332.  But  a  mere  note  of 
the  number  of  tlie  policy  for  which  the  note  was  given,  would  not  vitiate  its 
negotiability.     Union  Ins.  Co.  v.  Grcenleaf,  64  Me.  123;  see  §  797. 

»  Moffivtt  V.  Edwards,  Car.  &  M.  16. 

'»  White  V.  Smith,  77  lU.  351.  "  Alexander  v.  Tliomas,  16  Q.  B.  333. 


CERTAINTY  AS  TO  THE  FACT  OF  FAYMENT.  37 

enongli  realized  by  good  management  in  one  year,  to  have 
more  time  to  pay,  in  the  manufacture  of  the  plaster  bed  on 
Steams'  land,"  it  was  held  negotiable,  Pierpont,  C.  J.,  saying 
that  the  only  uncertainty  was  as  to  the  length  of  time  to  be 
given,  and  "  this  uncertainty  the  law  makes  certain  by  givino- 
him  a  reasonable  time  thereafter  (the  time  prescribed)  to 
make  the  payment."^  So,  where  the  note  ran  "to  be  paid 
as  soon  as  collected,  from  my  accounts  at  P.,"  it  was  lield  that 
the  phrase  w\as  not  intended  to  make  the  debt  conditional, 
but  only  to  prescribe  that  a  reasonable  time  be  allowed  for 
collection  of  the  accounts.^  So,  where  tlie  note  was  to  pay 
"  by  20th  of  May,  or  when  he  completes  the  building  accord- 
ing to  contract,"  it  was  held  that  the  20th  of  May  fixed  the 
ultimate  day  when  it  should  fall  due.^  So,  where  the  prom- 
ise was  to  pay  "against  the  19th  of  December,  or  when  the 
house  John  Mayfield  has  undertaken  to  build  for  me  is  com- 
pleted," the  like  decision  was  made/  So  a  note  payable  on 
or  before  a  certain  day  ;^  for,  as  said  in  such  a  case  by  Cooley, 
J. :  "  The  legal  rights  of  the  holder  are  clear  and  certain ; 
the  note  is  due  at  a  time  fixed,  and  it  is  not  due  before. 
True,  the  maker  may  pay  sooner  if  he  shall  cboose,  but  this 
option  if  exercised  would  be  a  payment  in  advance  of  the 
legal  liability  to  pay,  and  nothing  more.  Notes  like  this  are 
common  in  commei'cial  transactions,  and  we  are  not  aware 
that  their  negotiability  is  ever  questioned  in  business  deal- 
ings. It  ought  not  to  be  questioned  for  the  sake  of  any  dis- 
tinction that  does  not  rest  upon  sound  reason."  ® 

§  44.  Other  cases  have  arisen  illustrative  of  these  views. 
A  note  payable  on  demand  after  date,  "  when  convenient," 
has  been  held  payable  absolutely  in  a  reasonable  time.'^  So 
a  note  payable  in  six  months  "  or  as  soon  as  I  can  with  due 

'  Capron  v.  Capron,  44  Vt.  412  (1872). 
^  Ubsdell  V.  Cunningham,  22  Mo.  124  (1855). 

'  Stevens  v.  Blount.  7  Mass.  240  (1810).       "  Goodloe  v.  Taylor,  3  Hawks,  458. 
'  Mattison  v.  Marks,  31  Micb    421;  Jordan  v.  Tate,  19  Ohio,  N.  S.  586. 
•  Mattison  v.  Marks,  31  Mich.  421  (1875);  Helmer  v.  Krolick,  36  Mich.  373 
(1877).  ■•  Works  v.  Ilersbey,  35  Iowa,  340. 


38        DKFIJTITION   AND  REQUISITES  OF  BILLS  AND  NOTES. 

diligence  make  the  money  ont  of  said  patent  right  ;"^  a  note 
payable  in  nine  months,  "or  as  A.'s  horse  earns  the  money  in 
the  cavalry  service;"^  a  note  payable  twelve  months  after 
date,  "or  sooner  if  made  out  of  a  certain  sale,"^  have  been 
each  held  valid,  negotiable  notes,  payable  absolutely  at  the 
termination  of  the  time  expressed,  and  earlier,  provided  the 
alternative  event  transpired.  A  note  payable  "  from  the 
avails  of  logs  bought  of  M.  M.,  when  there  is  a  sale  made;"* 
or  "when  I  sell  my  place  where  1  novv"^  live,"  have  been  held 
in  Maine  payable  absolutely  after  a  reasonable  time.^ 

§  45.  So,  where  the  note  was  to  pay  "  as  soon  as  real- 
ized," to  which  was  added  "  to  be  paid  in  the  course  of  the 
season  now  coming,"  Shaw,  C.  J.,  said  the  undertaking  to 
pay  was  absolute,  and  that  "  whatever  time  may  be  under- 
stood l)y  the  '  coming  season,'  whether  harvest  time  or  the 
coming  year,  it  must  come  by  mere  lapse  of  time,  and  that 
must  be  the  ultimate  limit  of  tlie  time  of  payment."  ^  So, 
where  the  certificate  is  payable  "  on  the  return  of  this  certifi- 
cate," it  is  negotiable,  because  that  merely  requires,  as  in  the 
case  of  any  note,  the  return  of  the  evidence  of  the  debt ;  but 
if  there  be  added  "  and  the  return  of  my  guaranty  of  a  cer- 
tain note,"  it  would  engraft  a  collateral  condition  which 
woulvl  defeat  the  negotiability  of  the  instrument.'^ 

The  American  decisions  quoted  seem  to  us  salutaiy  and 
cori"ect.  It  has  been  held  by  the  United  States  Supreme 
Court  that  a  note  payable  "  as  soon  as  the  crop  can  be  sold,  or 
the  money  raised  from  any  other  source,"  is  not  a  promissory 
note."« 

§  40.  If  payable  when,  or  so  many  days  after,  "  A.  shall 
come  of  age,"  ^  the  instrument  would  not  be  a  bill  or  note, 

'  PalincT  V.  Ilummor,  10  Kansas,  464;  contra,  Hubbard  v.  Mosely,  11  Gray, 
170.  '  Gardner  v.  Bargcr,  4  Ileiskell,  069. 

'  Ernst  V.  Steckman,  74  Pcnn.  St.  13.  To  same  effect,  Walker  v.  "Woolen,  54 
Ind.  164.  *  Sears  v.  Wright,  24  Me.  278. 

'  Crooker  v.  Holmes,  65  Me.  195.  "  Cota'v.  Buck,  7  Mete.  588  (1844). 

'  Smilie  v.  Stevens,  39  Vt.  310;  Blood  v.  Northrup,  1  Kansas,  29. 

•  Nunez  v.  Dauttl,  19  Wall.  592.  »  Kelley  v.  Hemmingway,  13  111.  604. 


CERTAINTY   AS   TO   THE   FACT   OF    PAYMENT.  .39 

as  A.  might  die  a  minor,  and  the  fact  that  he  actually  attains 
majority  does  not  alter  it;  but  if  the  time  ^vhen  A.  will 
come  of  age  is  specified,  it  will  be  good,  as  it  will  be  taken 
to  be  payable  absolutely  wdien  the  time  arrives.^  If  payable 
at  or  within  a  certain  time  after  a  man's  death,  it  is  sufficient, 
because  the  event  must  occur ;  -  and  a  promise  to  pay  "on 
demand,  after  my  decease,  $850,"  signed  by  the  promiser,  is 
a  good  note,  negotiable  as  any  other,  and  binding  on  the 
promiser's  estate  at  his  death,^  So  a  note  payablx3  "  one  day 
after  date  or  at  my  death,"  ^  and  if  the  day  of  payment  must 
come  at  the  same  time,  it  has  been  said  that  the  distance  is 
immaterial.^  The  English  courts  have  gone  so  far  as  to  hold 
that  if  payable  at  a  certain  time  after  a  government  ship  is 
paid  off,  it  would  l)e  good,  because  government  is  sure  to 
pay;^  but  this  decision  has  been  justly  criticised  and  dis- 
trusted.^ 

An  agreement  to  pay  ninety  days  after  the  happening  of 
two  events,  one  of  which  may  never  happen,  is  not  negotia- 
ble.^ A  note  payable  "  on  or  by  "  a  certain  day  is  payable 
on  that  day  ;  ^  and  a  note  payalde  "  by  "  a  certain  day  may 
be  declared  on  as  payable  on  that  day.^** 

§  47.  A  promise  to  pay  a  certain  sum  for  stock  "  in  whole 
or  from  time  to  time  in  part,  as  the  same  shall  be  required 
within  thirty  days  after  demanded,  or  upon  notification  of 
thirty  days  in  any  newspaper,"  w^ould  answer  the  conditions 
necessary  to  a  negotiable  promissory  note.^^ 

And  so  would  a  promise  to  pay  a  certain  sum  "  in  such 
manner  and  proportions,  and  at  such  time  and  place  as  A. 

'  Goss  V.  Nelson,  1  Burr.  226. 

'  Goode  T,  Colehan,  2  Stra.  1217 ;  Mabier  v.  Successors  of  Ilenne,  246. 

'  Bristol  V.  Warner,  19  Conn.  7.  *  Conn  v.  Thornton,  46  Ala.  588. 

"  Worth  V.  Case,  42  N.  Y.  362. 

•  Andrews  v.  Franklin,  1  Stra.  24;  Evans  v.  Underwood,  1  Wils  262. 

'  1  Parsons,  40;  Edwards,  142.  '  Sacliett  v.  Palmer,  25  Barb.  178. 

»  Massie  v.  Belford,  68  111.  290.  ""  Preston  v.  Dunham,  42  Ala.  217. 

"  Protection  Insurance  Co.  v.  Hill,  31  Conn.  534.  See  Stillwell  v.  Craig,  58 
Mo.  17,  where  note  payable  iu  installments  not  to  exceed  10  per  cent,  on  each 
share,  at  thirty  days'  notice  of  call  from  board  of  directors,  was  held  negotiable. 


40        DEF12?1TI0N  AND  REQUISITES  OF   BILLS  AND   NOTES. 

shall  require,"  being  payable  on  demand ;  ^  but  a  like  promise 
to  })ay  at  sucli  times  and  in  sucli  articles  as  C.  may  need  for 
sni)port,  would  not,  the  medium  of  payment  not  beiug  money .^ 
A  written  iiisfrument  acknowledging  receipt  of  a  certain 
sum,  and  promising  to  pay  it  to  a  certain  party  "  on  return 
of  this  receipt,"  has  been  held  a  perfect  negotiable  note  in 
New  York,  and  its  return  was  regarded  as  not  of  the  essence 
of  the  contract.^ 

If  the  note  be  in  part  for  a  sum  certain,  and  part  upon  a 
contingency,  it  will  not  be  negotiable.* 

§  48.  If  a  promissory  note  be  made  payable  by  install- 
ments, with  a  condition  that  if  default  be  made  in  the  pay- 
ment of  the  first  installment  by  the  maker,  the  whole  shall  be 
immediately  payable,  it  is  negotiable  within  the  statute  of 
Anne.  It  is  not  payable  upon  a  contingency,  or  at  a  time 
uncertain,  but  is  likened  to  a  bill  payable  at  a  certain  time 
after  sight;  and  the  period  or  periods  when  it  shall  be  done 
is  dependent  on  the  act  of  the  maker  himself^  In  Michigan, 
where  the  promise  was  to  pay  "$l,r)00,  to  be  paid  20  per  cent, 
a  month  from  the  1st  July,  1871,"  towards  ])uilding  a  certain 
road,  the  note  was  held  negotiable.^  And  in  Illinois,  where 
a  note  is  not  payable  to  a  corporation  or  order  "  in  such  in- 
stallments, and  at  such  times  as  the  directors  of  said  company 
may  from  time  to  time  require,"  the  like  decision  was  ren- 
dered, Sheldon,  J.,  saying :  "  It  was  in  effect  payable  on  de- 
mand, or  in  installments  on  demand."  '^ 

'  Goshen  v.  Turpin,  9  Johns.  217;  Washington  Co.  Mutual  Ins.  Co.  v.  Miller, 
26  Vt.  77.  '  Corbctt  v.  Steinmetz,  15  Wise.  170. 

°  Frank  v.  Wesscls,  G4  N.  Y.  158,  Church,  Ch.  J.,  saj'ing  of  the  paper :  "It 
contains  an  express  promise  to  pay  Feist  or  order  a  specified  sum  of  money  upon 
demand,  \\\th  interest.  These  are  the  statutory  elements  of  such  a  (negotiable 
promissory)  note."  1  R.  S.  721,  §  7.  "The  words,  'on  the  return  of  this  receipt,' 
do  not  make  it  payable  upon  a  contingency,  or  constitute  a  condition  precedent 
to  any  payment.  *  *  *  This  restriction  would  be  implied,  if  not  exjjressed ; 
it  is  implied  in  every  promissory  note;  and  there  is  also  an  implied  exception  on 
account  of  mistake  or  accident.  *  *  *  This  clause  is  not  of  the  essence  of 
the  contract."     See  ante,  §  45. 

*  Palmer  v.  Ward,  6  Gray,  340.  *  Carlin  v.  Kenealy,  13  M.  &  W.  139. 

'  Wright  V,  Irwin,  33  Mich.  S2.  '  White  v.  Smith,  77  111.  351  (1875). 


CERTAINTY  AS  TO  THE"  ti-ACT  OF  PAYMENT.  41 

§  49.  Cases  arising  out  of  Confederate  war, — During  the 
war  bet^Yeell  tlie  United  States  and  the  Confederate  States, 
obligations  were  frequently  given,  payable  when,  or  a  certain 
time  after,  peace  sliould  be  declared.  Where  a  note  was  ex- 
pressed to  be  payable  "  six  months  after  peace  is  declared 
between  the  United  States  and  the  Confederate  States  of 
America,"  it  was  held  actionable  six  months  after  peace 
ensued.^  And  the  like  ruling  prevailed  as  to  a  note  payable 
"  thirty  days  after  peace  between  the  C.  S.  and  the  U.  S.,"  ^ 
and  as  to  a  note  payable  "  one  day  after  the  treaty  of 
peace."  ^  But  in  West  Virginia,  where  a  bond  was  payable 
"  six  months  after  the  ratification  of  peace  between  the  U.  S. 
and  C.  S.,"  it  seems  to  have  been  regarded  as  a  wager  upon 
the  success  of  the  Confederacy ;  but  the  case  went  off  on  a 
formal  point.*  In  North  Carolina,  this  view  has  been  adopted 
•and  applied,"^  and  certainly  is  not  without  force.  Only  the 
United  States  Senate  can  ratify  a  peace,  and  a  peace  ratified 
between  two  countries  implies  the  independence  of  each. 
And  further,  it  may  be  said  that  until  the  condition  prece- 
dent is  fulfilled,  no  liability  accrues.  But  upon  the  principle 
'■^res  tnagis  valeat,  qitam  pereat^^''  we  think  the  better  view  is 
that  "  six  months  after  peace "  would  fulfill  the  meaning  of 
the  terms  as  they  were  used  in  the  country,  though  they  are 
the  very  woi-ds  of  Confederate  treasury  notes;  and  it  has 
been  so  decided  in  Texas.^  *  -^y 

§  50,  Instruments  payahle  out  of  a  particular  fund  not  ne- 
gotlahle. — In  accordance  with  these  principles,  the  character 
of  the  instrument  as  a  bill  or  note  is  destroyed  if  it  be  made 
payable  expressly  or  by  implication  out  of  a  particular  fund ; 
for  its  payment  becomes  then  conditioned  on  the  sufficiency 

'  Brewster  v.  Williams,  2  So.  Car.  455  (1871). 
-  Mortee  v.  Edwards,  20  La.  An.  236  (1868). 
2  Gaines  v.  Dorsett,  18  La.  An.  563  (1866). 

*  Harris  v.  Lewis,  5  W.  Va.  (Hagans),  576  (1872). 
5  McNincli  V.  Ramsey,  66  N.  C.  229  (1872). 

*  Knight  V.  McRcynolds,  37  Tex.  204.  A  case  arose  in  the  Supreme  Court  of 
Appeals  of  Virginia,  involving  this  question  (Phelps  v.  Moomaw),  but  it  was 
compromised,  and  never  came  to  trial.     The  inferior  court  ruled  as  in  Texa:?. 


42        DEFINITION    AND   REQUISITES   OF   BILLS   AND   NOTES. 

of  tliat  riiud,  wliicli  may  prove  inadequate.^  Thus  the  inser- 
tion, in  an  order  of  A.  upon  B.  to  pay  a  certain  sum,  of  the 
words  "  on  account  of  ]>rick  work  done  on  a  certain  build- 
inp;,"'-  or  "out  of  any  money  in  his  liands  belonging  to  me,"^ 
have  been  held  to  imply  contingencies,  and  non-negotiable. 
So,  also,  where  the  paper  was  expressed  as  payable  "for 
vahie  received  in  stock,  ale,  brewing  vessels,  tfec,  this  being 
intended  to  stand  airainst  the  undersiofned  as  a  set-oif  for  the 
sum  k^ft  me  in  my  father's  will,  above  my  sister's  share,"  ^ 
and  where  the  words  were  added  "out  of  rents,"  ^  "out  of 
my  growing  substance,"  ®  "  out  of  the  uet  proceeds  of  certain 
ore,"  "^  or  "  out  of  a  certain  claim,"  ®  "  out  of  a  certain  pay- 
ment when  made,"^  or  "the  demand  I  have  against  the 
estate  of  A.,"  ^^  or  "  out  of  my  part  of  the  estate  of  A.,"  "  or 
"being  the  amount  that  came  to  you  from  B.  tome,"  ^^  or 
"  out  of  tke  proceeds  of  A.'s  bond,"  ^^  or  "  and  deduct  the 
same  from  my  share  of  the  profits  of  the  partnership."  ^'* 


'  Wadlington  v.  Covert,  iil  Miss.  G31. 

"  Pitrasm  V.  Crawford,  3  Grat.  127;  Edwards  on  Bills,  143. 

'  Averett's  Adm.  v.  Booker,  15  Grat.  1G5,  Lee,  J. :  "  Here,  the  sum  to  ))c  paid 
is  not  payable  absolutely  and  at  all  events.  It  is  payable  out  of  a  particular 
fund,  to  wit,  the  moneys,  if  any,  in  the  hands  of  the  drawee,  belonging-  to  the 
drawer.  The  draft,  therefore,  cannot  be  treated  as  a  bill  of  exchange,  nor  can  a 
recovery  be  had  upon  it  as  such."     Jcnney  v.  Ilearle,  2  Ld.  Raym.  13G1. 

*  Clarke  v.  Perceval,  2  B.  &  Ad.  600.  •  1  Parsons  N.  &  B.  43. 

«  Josselyn  v.  Lacier,  10  Mod.  294.  '  Wordcn  v.  Dodge,  4  Denio,  159. 

*  Richardson  v.  Carpenter,  47  N.  Y.  661  ;  Corbett  v.  State,  24  Ga.  287. 
'  Haydock  v.  Lynch,  2  Ld.  Raym.  1563. 

'"  West  V.  Fornian,  24  Ala.  400.  "  Mills  v.  Kuykendale,  2  Blackf.  47. 

"  Harriman  v.  Sanborn,  43  N.  H.  128. 

"  Kenny  v.  Hinds,  44  How.  Pr.  R.  7. 

"  Miinger  v.  Shannon,  61  N.  Y.  258,  Dwight,  C. :  '•  The  present  order,  it 
should  be  observed,  is  payable  out  of  an  uncertain  fund,  from  profits,  and,  of 
Gourde,  none  may  be  realized.  This  fact  deprives  it  of  an  clement  essential  in  a 
bill  of  exchange,  which  is  that  it  be  payable  absolutely,  and  not  upon  a  con- 
tingency. *  *  *  I  think  that  the  true  construction  of  the  present  order  is, 
that  it  was  an  equitable  assignment  of  a  certain  amount  of  the  profits  of  the 
business  of  L.  A.  Gulick.  Cowperthwaite  v.  Slicffield.  3  N.  Y.  243,  is  not  op- 
posed to  this  view,  since,  in  that  case,  there  was  nothing  on  the  face  of  the  bills 
to  indicate  that  they  were  drawn  on  a  specific  fund,  but  they  were  in  the  ordinary 
forms  of  bills  of  exchange.  The  same  remark  is  to  be  applied  to  Harris  v.  Clark, 
3  N.  Y.  93." 


CERTAINTY  AS  TO  THE  FACT   OF   PAYMENT.  43 

§  51.  Indications  as  to  Diode  of  reimhursement. — The 
statement  as  to  a  particular  fund  in  a  bill,  however,  will  not 
vitiate  it,  if  inserted  merely  as  an  in<lication  to  the  drawee 
how  to  reimburse  himself,  or  to  show  to  what  account  it 
should  be  charged.  Thus,  where  the  bill  said,  "  and  charge 
the  same  against  whatever  amount  may  be  due  me  for  my 
share  of  fish,"  it  was  held  a  mere  indication  of  the  means  of 
reimbursement,  and  the  payment  not  limited  to  the  proceeds 
of  the  fish.^  So,  where  A.  B.  directed  the  defendant  in  writ- 
ing to  pay  the  plaintiff  or  order  i£9  10s,  "  as  my  quarterly 
half  pay,  to  be  due  from  24th  of  June  to  27th  of  September 
next,  by  advance,"  the  court  held  it  a  good  bill,  saying, 
"  The  mention  of  the  half  pay  is  only  by  way  of  direction 
how  he  shall  reimburse  himself,  but  the  money  is  still  to  be 
advanced  on  the  credit  of  the  person."'^  So  it  was  ^leld 
where  the  expression  used  was,  "  pay  A.  L.,  or  order,"  it  will 
be  in  full  of  certain  judgment;^  or  that  it  is  "secured  ac- 
cording: to  the  condition  of  a  certain  morto-agje  : "  *  or  that  it 
was  "given  in  consideration  of  a  certain  patent  right;"  ^  or 
"  as  part  pay  for  a  piano  forte,"  or  for  any  other  considera- 
tion.*^ The  statement  that  collateral  security  has  been  de- 
posited for  the  performance  of  the  promise  contained  in  the 
bill  or  note  is  a  recital  only  which  does  not  affect  its  negoti- 
ability;^ and  though  the  recital  contain  the  terms  of  the 
deposit,  that  does  not  alter  the  case,  for  it  renders  neither  the 
amount,  the  time  of  payment,  the  payee,  nor  the  engagement 
to  pay  uncertain.^ 

'  Redman  v.  Adams,  51  Me.  433;  Edwards  on  Bills,  144;  see  §§  41,  797. 

'  MacLeod  v.  Snee,  2  Stra.  762;  2  Ld.  Raym.  1481. 

'  Ellett  V.  Britton,  6  Tex.  229. 

*  Littlefield  v.  Hodge,  6  Mich.  32G;  Howry  v.  Eppinger,  34  Mich.  29.  In  this 
case  the  note  contained  the  memorandum  "secured  by  mortgage."  Held,  not  to 
affect  it.  See  Roberts  v.  Jacks,  31  Ark.  597;  Duncan  v.  Louisville,  13  Bush 
(Ky.)  385. 

'  Hereth  v.  Meyer,  33  Ind.  511. 

'  Pieston  V.  Whitney,  23  Mich.  260;  "Wright  v.  Irwin,  33  Mich.  32;  Collins 
V.  Bradbury,  64  Me.  37 ;  see  §§  41,  797. 

'  Wise  V.  Charlton,  4  A.  &  E.  786;  Fancourt  v.  Thornc,  9  Q.  B.  312. 

'  Towne  v.  Rice,  122  Mass.  74 ;   Arnold  v.  Rock  River,  &c.  R.  R.  5  Duer,  207. 


44        DEFINITION  AND  REQUISITES  OF  BILLS  AND  NOTES. 

§  52.  The  rule  seems  to  l)e  that  if  the  memorandum  or 
collateral  agreement  impairs  the  essential  characteristics  of 
certainty  necessary  to  negotiable  paper,  it  destroys  its  nego- 
tiability, V)iit  otherwise  not.  A  promise  to  pay  S.  or  order 
$1,000,  or  upon  surrender  of  "  this  note,"  to  issue  stock  for 
the  same,  does  not  violate  this  rule,  and  is  a  good  note,  the 
option  to  receive  the  stock  being  entirely  with  the  payee.^ 
So  it  was  held  in  Wisconsin  that  a  note,  otherwise  negotiable, 
was  not  therein  affected  by  the  fact  that  it  contained  a 
memorandum  that,  if  the  maker  failed  to  pay  it  at  maturity, 
the  whole  amount  of  the  i)remium  on  a  policy  of  insurance, 
for  which  it  was  given,  should  be  considered  earned,  and  the 
policy  void.^ 

The  negotiability  of  a  promissory  note  payable  to  order 
is  not  restrained  by  the  circumstance  of  its  being  given  for 
the  purchase  of  real  property  in  Louisiana,  and  the  notary 
before  whom  the  contract  of  sale  was  executed  writing  upon 
it  tlie  words  "  ne  varietur^^^  according  to  the  laws  and  usages 
of  that  State,  and  others  governed  by  the  civil  law.^ 


SECTION   IV. 

CERTAINTY   AS   TO   THE   AMOUNT   TO   BE   PAID. 

§  53.  In  the  fourth  place^  the  amount  to  he  paid  must  he 
certain^  Therefore,  the  instrument  is  not  negotiable  if  it  en- 
gages to  pay  a  certain  sum  "  and  all  other  sums  which  may 
be  due,"  as  the  aggregate  amount  is  not  capaljle  of  definite 
ascertainment.^     So,  if  it  be  for  a  certain  sum  "  and  whatever 


'  Hodges  V.  Shuler,  22  N.  Y.  114. 

'  Kirk  V.  Dodge  County  Mutual  Ins.  Co.  39  Wise.  138. 

^  Fleckner  v.  Bank  of  U.  S.  8  Wheat.  338. 

"  Gaar  v.  Louisville  B.  Co.  11  Bush  (Ky.)  180. 

'  Smith  V.  Nightingale,  2  Stark.  375. 


CERTAINTY  AS   TO   THE   AMOUNT   TO   BE   PAID.  45 

sum  you  may  collect  of  me  for  C. ; "  ^  or  if  it  be  for  "  the 
proceeds  of  a  shipment  of  good>!,  value  about  £2,000,  con- 
signed by  me  to  you ; "  "^  or  "  the  demands  of  the  sick  club  in 
part  of  interest;"'^  or  "a  certain  sum,  the  same  to  go  as  a 
set  oif ;  "^  or  if  it  be  expressed  "deducting  all  advances  and 
expenses  ;  "  ^  or  if  it  be  for  "  $800  and  such  additional  pre- 
mium as  may  be  due  on  policy  No.  218,171."^  But,  id  cer- 
ium est  quod  certmn  reddi  potest,  and  if  the  amount  can  be 
ascertained  from  the  face  of  the  paper,  the  form  of  expression 
is  immaterial.  Therefore,  a  promise  to  pay  bearer  a  certain 
sum  per  acre  for  so  many  acres  as  a  certain  tract  contained, 
was  held  to  be  a  note  as  soon  as  the  number  of  acres  was  in- 
dorsed upon  it.^ 

§  54.  If  there  be  added  to  the  amount  "  with  current  ex- 
change on  another  place,"  the  comuiercial  character  of  the 
paper  is  not  impaired,  as  that  it  is  capable  of  definite  ascer- 
tainment.® Exchange  is  an  incident  to  bills  for  the  transmis- 
sion of  money  from  place  to  place.  Its  nature  and  effect  are 
well  understood  in  the  commercial  world,  and  merchants 
having  occasion  to  use  their  funds  at  their  place  of  business, 
sometimes  make  the  currency  at  that  point  the  standard  of 
payments  made  to  them  by  their  customers  at  a  different 
point.  Exchange  preserves  the  equivalence  of  amounts  in 
value,  and  does  not  introduce  such  an  element  of  uncertainty 
as  destroys  the  negotiability  of  the  bill  or  note  which  em- 
bodies it  in  its  terms.^  But  there  are  cases  which  hold  that  an 
agreement  to  pay  exchange  destroys  the  negotiable  character 

'  Legro  V.  Staples,  16  Me.  252;  Lime  RockF.&M.  Ins.  Co.  v.  Hewitt,  60  Me.  407. 

=  Jones  V.  Simpson,  2  B.  &  0.  318.  =  Bolton  v.  Dugdale,  4  B.  &  Ad.  619. 

'  Clark  V.  Percival,  2  B.  &  Ad.  660.  '  Cashman  v.  Ilaynes,  20  Pick.  132. 

»  Marrett  v.  Equitable  Ins.  Co.  54  Me.  537.        '  Smith  v.  Clopton,  4  Tex,  109. 

*  Smith  V.  Kendall,  9  Mich,  241 ;  Leggett  v.  Jones,  10  Wise.  34;  see,  also, 
Grutacup  v.  Woulloise,  2  McLean,  581 ;  Price  v.  Teal,  4  McLean,  201  ;  Johnson  v. 
Frisbie,  15  Mich.  286  ;  Bradley  v.  Lill,  4  Bissell,  473.  See  Pollard  v.  Hemes,  3 
B.  &  P.  335,  where  a  paper  "payable  in  Paris,  or,  at  the  choice  of  the  bearer,  at 
the  Union  Bank  in  Dover,  or  at  H.'s  usual  residence  in  London,  according  to  the 
course  of  exchange  upon  Paris,"  was  declared  on  and  treated  as  a  promissory  note. 

°  Smith  V.  Kendall,  9  Mich,  242, 


46        DEFINITION  AND   REQUISITES  OF   BILLS  AND  NOTES. 

of  the  paper,  and  renders  it  a  special  promise  requiring  proof 
of  consideration.^  AVhere  there  is  such  an  addition  to  a  bill  or 
note,  payable  where  it  is  drawn,  it  is  clear  that  it  might  be 
rejected  as  surplusage,  there  being  iu  such  case  no  exchange.^ 


SECTION  Y. 

CERTAINTY    AS   TO   THE    MEDIUM    OF   PAYMENT,  AVHICH    MUST   BE   MONEY. 

§  55.  Ill  the  fifth  pJace^  the  medium  of  imyment  must  he 
money.  It  is  indispensably  requisite,  in  order  to  constitute  a 
bill  of  exchange  or  negotiable  promissory  note,  that  the  direc- 
tion or  promise  be  to  pay  in  money.^  And  if  the  instrument 
be  expressed  to  be  payable  "  in  cash  or  specific  articles,"  in 
the  alternative,'*  or  in  merchandise,  as  for  instance,  "  in  good 
merchantable  whisky  at  trade  piice,"  ^  or  "  in  ginned  cotton 
at  eight  cents  per  pound,"  ^  or  "  in  w^ork,"  "^  it  becomes  a 
special  contract,  and  by  the  law  merchant  loses  its  character 
as  commercial  paper.  Nor  can  it  be  for  payment  in  "good 
East  India  bonds," ^  or  in  "foreign  bills," ^  or  by  bill  or 
note.^  A  bond  payable  "  in  notes  of  the  United  States  Bank, 
or  either  of  the  Virginia  banks,"  has  been  held  not  payable 
in  money ;^°  but  where  the  bond  was  for  a  certain  sum,  and 
it  was  added,  "  which  sum  may  be  discharged  in  notes  or 
bonds  due  on  good  solvent  men  in  R.,"  it  was  held  payable 

'  Lowe  V.  Bliss,  24  111.  168 ;  Read  v.  McNulty,  12  Rich.  (Law),  445.  In  Russell 
V.  Russscll  (1  McArthur,  203  [1874]),  it  was  held  that  a  note  made  and  payable  in 
Michigan,  "with  current  exchange  on  New  York,"  was  not  negotiable,  the  court 
regarding  the  sum  as  uncertain,  so  that  an  indorsee  could  not  sue  in  his  own 
name. 

^  Clauser  v.  Stone,  29  111.  IIG  :  Hill  v.  Todd,  29  111.  103;  Byles  on  Bills  (Shars- 
wood's  ed.)  73. 

'  Chitty  on  Bills  [*132],  153.  "  Matthews  v.  Houghton,  2  Fairfax,  377. 

»  Rhodes  v.  Lindley,  Ohio  Cond.  465;  Chitty  on  Bill  [*132J. 

'  Lawrence  v.  Dougherty,  5  Yerg.  435. 

'  Quimby  v.  Merritt,  11  Humph.  439. 

'  Smith  V.  Bochm,  Chitty,  Jr.  234. 

'  Jones  V.  Faies,  4  Mass.  245;  Young  v.  Adams,  6  Mass  182. 

'"  Chitty  on  Bills  [*^132  :'.],  153.  "  Ik-irne  v.  Dunlap,  8  Leigh,  514. 


THE  MEDIUM   OF   PAYMEIfT  MUST  BE  MONEY,  47 

in  money.^  But  the  coiii'ts  would  not  go  so  far,  we  think,  as 
to  hold  an  instrument  couched  in  such  terms  negotiable,^  for, 
in  order  to  possess  that  quality,  it  should  afford  on  its  face 
every  element  necessary  to  fix  its  value,  and  sucli  a  paper 
would  be  a  special  contract  rather  than  a  negotiable  bill  or 
note. 

§  56.  Instruments  payahle  in  hanh  bills,  or  in  currency. 
Strictly  pursuing  this  principle,  it  has  been  held  in  England 
that  a  note  payable  in  cash,  or  bank  of  England  notes,  was 
not  neo-otiable  under  the  statute  of  Anne,  thouo;h  the  bills 
of  that  bank  were  at  any  time  redeemable  in  money .^  In 
Pennsylvania,  this  ruling  was  followed  upon  an  instrument 
payable  in  "current  bank  bills  or  notes," the  court  remarking 
that  "  it  was  payable  in  more  than  forty  kinds  of  paper  of 
different  value."  ^  The  Supreme  Court  of  the  United  States 
has  applied  it  where  the  note  was  payable  in  the  "  office 
notes  of  a  bank."  ^  When  the  medium  of  payment  is  ex- 
pressed to  be  "  good  current  money,"  or  "  current  money,"  it 
is  not  objectionable,  as  legal  tender  money  is  intended ;  ^  but 
if  it  be  "in  currency"  simply,  the  paper  is  not  negotiable,  as 
the  term  includes  all   varieties  of  the  circulatiui2:  medium.' 

'  Butcher  v.  Carlisle,  13  Gratt.  520.  "  Williams  v.  Sims,  23  Ala.  513. 

'  Ex  imrte  Iveson,  2  Rose,  235.  *  McCormick  v.  Trotter,  10  Serg.  &  R.  94. 

*  Irvine  v.  Lowry.  14  Peters,  293. 

^  Wharton  v.  Morris.  1  Dallas,  134;  Graham  v.  Adams,  5  Ark.  3G1  ;  Wilburn 
V.  Greer,  6  Ark.  (1  Eng.)  255  ;  Black  v.  Ward,  27  Mich.  193.  But  contra,  McCherd 
V.  Ford,  3  T.  B.  Monroe,  168. 

'  Lampton  v.  Haggard,  3  Monroe,  149;  Farwell  v.  KenKctt,  7  Mo.  595.  And 
like  decisions  were  rendered  where  the  bill  or  note  was  payable  ■"  in  common  cur- 
rency of  ArJcansas,''^  Dillard  v.  Evans,  4  Ark.  185  ;  "i/i  Canada  bills,'"  Gray  v.  Wor- 
den,  29  Q.  B.  (Upper  Canada  R.)  535  ;  "  in  bank  bills,'"  Simpson  v.  ]\Ieuedeu.  3 
Cold.  429;  "^  in  A^eio  Tori' funds  or  their  equivalent,''^  Hasbrook  v.  Palmer,  2  Mc- 
Lean, 10;  '■'in  current  bank  bills,'^  Fry  v.  Rousseau,  3  McLean,  106;  '■^  in  foreign 
bills,''''  Jones  v.  Fales,  4  Mass.  245;  " //?  paper  medium,''''  Lange  v.  Kohue,  1  Mc- 
Cord,  115  ;  "  in  current  bank  notes,'"  Little  v.  Phoenix  Bank,  2  Hill,  425;  Pardee 
V.  Fish,  60  N.  Y.  265;  "  in  Pennsylvania  or  New  York  paper  currency,''''  Lieber  v. 
Goodrich,  5  Cow.  186  ;  '■'■in  current  notes  of  the  State  of  North  Carolina,"  Warren 
V.  Brown,  64  N.  C.  381 ;  "  in  current  funds  at  Pittsburg,"  Wright  v.  Hurt,  44  Penn. 
St.  454;  "m  cun ent  funds,"  Cornwell  v.  Puinphroy,  9  Ind.  135;  Haddock  v. 
Woods,  46  Iowa,  433. 


48        DEFINITION   AND   REQUISITES   OF   BILLS  AND  NOTES. 

But  tlie  decisions,  as  will  be  seen  fi'om  the  subjoined  notes, 
are  contradictory.^  In  some  cases  it  is  held  that  the  meaning 
of  such  phrases  as  -'current  funds"  may  be  explained  l)y 
parol  evidence  as  to  the  understanding  of  the  parties,  and 
that  they  may  be  shown  to  have  meant  money? 

In  busines  paper  it  is  best  to  adhere  to  strict  rules ;  and 
as  certainty  is  of  the  first  moment  in  commercial  dealings, 
and  paper  payable  in  fluctuating  values  is  uncertain  and  de- 
lusive, we  think  sound  judgment  approves  the  doctrine  of 
tlie  text.  Money  alone  is  legal  tender,  and  only  the  note 
which  represents  ironey  should  be  held  negotiable.  It 
should  be  expressed  simply  as  payable  in  dollars,  which  have 
a  definite  signification  fixed  by  law.^ 

§  57.  It  has  been  suggested  that  since  Congress  has  de- 
clared and  the  Supreme  Court  held,  that  the  treasury  notes 
of  the  United  States  shall  be  "  legal  tender  "  in  discharge  of 
debts,  the  terms  "  in  currency  "  should  be  construed  to  mean 
legal  tender  currency,  and  instruments  so  payable  should  be 
deemed  negotiable.  But  "  the  very  reverse  of  this  proposi- 
tion is  true,"  as  said  in  Iowa,  in  respect  to  a  certificate  of 

*  In  the  following  cases,  instruments  expressed  to  be  payable  as  indicated 
were  held  negotiable:  "  in  current  funds,''  Shoemaker's  Bank  v.  Street,  IG  Ohio, 
N.  S.  5;  "m  current  Ohio  lanlc  notes,'"  Swetland  v.  Creigh,  15  Ohio,  118;  "w 
cv.rrent  funds  of  the  State  of  Ohio;'  White  v.  Richmond,  IG  Ohio,  5;  "■  in  funds 
current  in  the  city  of  New  Yorh;''  Lacy  v,  Holbrook,  4  Ala.  88 ;  "  in  good  current 
ihoneij  of  this  State  (or  in  Arkansas  money),"  Graham  v.  Adams,  5  Ark.  361 ; 
Wilburn  v.  Greer,  1  Eng.  255  ;  but  otherwise,  if  "  in  Arkansas  money  of  the  Fay- 
etfcville  Iranch;'  Hawkins  v.  Watkins,  5  Ark.  481  ;  in  New  York,  ''in  Yorh  State 
Mils  or  specie,'^  Keith  v.  Jones,  9  Johns.  120;  "  m  lanJc  notes  current  in  the  city  of 
New  Torh;'  Judah  v.  Harris,  19  Johns.  144;  "m  North  Carolina  lanTc  notes,''  De- 
berry  V.  Darnell,  5  Yerg.  451  ;  "  in  lawful  current  money  of  Pennsylvania,'"  Whar- 
ton V.  Morris,  1  Dallas,  124;  "  in  foreign  money,"  Sanger  v.  Stimpson,  8  Mass.  260; 
"in  currency;'  Butler  v.  Paine.  8  Minn.  324  ;  Hunt  v.  Divine,  37  111.  137;  Swift 
V.  Whitney,  20  111.  144  ;  Laughlin  v.  Marshall,  19  111.  390;  Peru  v.  Farnsworth,18 
HI.  563:  Drake  v.  Markle,  21  Ind.  433;  Fry  v.  Dudley,  20  La.  An.  368  ;  "  in  cur- 
rency of  the  State  of  Mississippi;'  Mitchell  v.  Hewitt,  5  Smedes  &  M.  361;  "m 
currency  of  3Iissouri,"  Coc\iVQW  v.  Kirkpatrick,  9  Mo.  688;  "m  New  YorJc  State 
currency;'  Ehle  v.  Chittenango  Bank,  24  N.  Y.  548. 

'  Haddock  v.  Woods,  46  Iowa,  435  ;  Huse  v.  Hamblin,  29  Iowa,  501  ;  Pilmcr 
V.  Branch  Bank,  16  Iowa,  321. 

'  Omohundro  v.  Crump,  18  Grat.  703, 


THE  MEDIUM   OF  PAYMENT  MUST  BE  MONEY.  49 

deposit  payable  in  currency.  And,  continued  Beck,  J. :  "  It 
is  evident  that  it  was  not  intended  that  payment  should  be 
made  in  coin,  or  '  legal  tender '  government  notes.  The 
holder  of  the  paper  could  have  demanded  payment  thereon 
in  '  legal  tender '  money,  without  any  words  in  the  instru- 
ment indicating  the  currency  in  which  payment  should  be 
made.  *  *  Some  other  medium  of  circulation  is  described 
by  the  word  currency."  ^  In  Arkansas,  it  has  been  held  that 
a  note  payable  "  in  greenback  currency  "  was  negotiable,  be- 
cause legal  tender  currency,  and  not  national  or  other  bank 
notes  was  intended  ;  ^  and  in  New  York  it  has  been  said  by 
Church,  Ch.  J. :  "  The  objection  that  the  instrument  is  not  a 
promissory  note  because  payable  in  paper  currency,  is  an- 
swered by  the  suggestion  that  this  must  be  taken  to  refer  to 
the  legal  tender  paper  currency  which  under  the  United 
States  laws  and  decisions  is  money."  * 

§  58.  It  is  not  necessary,  however,  that  the  money  should 
be  that  current  in  the  place  of  payment,  or  where  the  bill  is 
drawn  ;  it  may  be  in  the  money  of  any  country  whatever.'* 
But  it  has  been  held  that  it  is  necessary  that  the  instrument 
should  express  the  specific  denomination  of  money  when  it 
is  payable  in  the  money  of  a  foreign  country,  in  order  that 
the  courts  may  be  able  to  ascertain  its  equivalent  value ; 
otherwise  it  is  not  negotiable.  Thus  in  New  York,  where  a 
note  was  given  for  a  certain  sum  "  payable  in  Canada 
money,"  it  was  held  not  negotiable  ;  and  the  court  said  : 

"  This  view  of  the  case  is  not  incompatible  with  a  bill  or 
note  payable  in  money  of  a  foreign  denomination,  or  any 
other  denomination,  being  negotiable,  for  it  can  be  paid  in 
our  own  coin  of  equivalent  value,  to  which  it  is  always  re- 
duced by  a  recovery.  A  note  payable  in  pounds,  shillings 
and  pence,  made  in  any  country,  is  but  another  mode  of  ex- 

'  Huse  V.  Hamblin,  29  Iowa,  344;  but  see  Fry  v.  Dudley,  20  La.  Au.  368. 

*  Burton  v.  Brooks,  25  Ark.  215. 

'  Frank  v.  Wessels,  64  N.  Y.  158  (1876). 

*  Chitty  on  Bills  [*133],  154;    Story  on  Bills,  §  43 ;    Black  v.  Ward,  27  Mich. 
193  ;  Thompson  v.  Sloan,  23  Wend.  71. 

Vol.  L— 4 


50        DEFIKITION  AND  REQUISITES  OF  BILLS  AND  NOTES. 

pressing  the  amount  in  dollars  and  cents,  and  is  so  under- 
stood judicially.  The  course,  therefore,  in  an  action  on  such 
an  instrument,  is  to  aver  and  prove  the  value  of  the  sum  ex- 
pressed, in  our  own  tenderable  coin."  ^ 

Intention,  to  be  gathered  from  the  face  of  the  paper,  ac- 
cording to  fixed  rules,  is  the  test  of  negotiability,  and  we  do 
not  see  how  the  idea  of  its  possessing  a  negotiable  quality  is 
excluded  by  the  mere  fact  that  the  denomination  of  foreign 
money  is  not  set  out.  A  case,  remarkable  for  its  learning 
and  ability,  decided  by  the  Su]:>reme  Court  of  Michigan, 
adopts  this  view ;  and  there  it  has  been  held  th.at  a  note 
payable  "  in  Canada  currency  "  is  negotiable,  the  terms  being 
equivalent  to  Canada  money.^ 


SECTION  Yl. 


THE  CONTRACT  MUST  BE  ONLY  FOE  THE  PAYMENT  OF  MONEY. 

§  59.  In  the  sixth  place  it  is  essential  to  the  negotiabil- 
ity of  the  bill  or  note,  that  it  purport  to  be  only  for  the  pay- 
ment of  money .^  Such  at  least  may  be  stated  to  be  the  gen- 
eral rule,  for  if  any  other  agreement  of  a  different  character 

'  Thompson  v.  Sloan,  23  Wend.  71. 

"  Black  V.  Ward,  37  Micb.  193  (1873),  Campbell,  J.,  saying: 

"  A  note  payable  in  Canada  currency  means  no  more  and  no  less  tban  that  it 
is  payable  in  Canada  money  at  the  Canada  standard,  and  that  it  is  governed  as 
to  the  amount  it  calls  for  by  the  same  rules  as  if  it  had  been  made  in  Canada,  and 
payable  in  so  many  dollars,  without  containing  any  further  direction." 

"  It  is  evident  the  language  was  used  to  exclude  the  idea  that  it  should  be 
paid  in  dollars  according  to  our  paper  standard,  and  to  put  it  on  the  footing  of 
a  gold  contract." 

"It  is  urged  that  this  is  superfluous,  and  that  as  every  one  is  presumed  to 
know  the  law,  it  would  not  have  been  put  in  except  for  some  purpose  which 
would  change  its  legal  import.  The  objection  appears  to  us  to  be  far  fetched 
and  unreasonable.  This  case  cited  above  sufficiently  answers  it.  A  very  large 
proportion  of  the  bonds  and  deeds  drawn  up  in  this  country  describe  the  money 
secured  or  paid  as  '  lawful  money  of  the  United  States,'  when  there  can  be  no 
other  lawful  money  in  the  republic,  and  when  it  is  clearly  superfluous." 

'  Fletcher  v.  Thompson,  55  N.  H.  308. 


CONTRACT  MUST  BE   ONLY  FOR  TAYMBNT  OF  MONEY.       51 

be  engrafted  upon  it,  it  l)ecomes  a  special  contract  clogged 
and  involved  with  other  matters,  and  has  been  deemed  to 
lose  thereby  its  character  as  a  commercial  instrument.  But 
at  the  present  time  we  think  that  this  general  rule  is  subject 
to  the  qualification,  that  if  the  superadded  agreement  do  not 
impair  tlie  certainty  of  the  promise  to  pay  the  certain 
amount  named,  but  only  facilitates  the  means  of  its  collec- 
tion, it  does  not  in  any  degree  destroy  the  negotiability  of 
the  instrument,  but  is  embodied  in  the  contract  of  all  the 
parties,  and  passes  as  an  incident  of  the  paper  itself  to  every 
holder. 

§  60.  In  accordance  with  the  general  rule  above  stated, 
it  has  been  held  that  if  a  note  for  a  certain  amount  be  given 
for  the  hire  of  a  negro,  to  which  is  added,  "  said  negro  to  be 
furnished  with  the  usual  quantity  of  clothing,  was  not  a 
negotiable  promissory  note,  but  a  special  contract  for  the 
hirino*  and  clothino;  of  the  neo-ro.^  And  this  seems  to 
us  clearly  the  correct  doctrine,  though  the  view  has  been 
taken  that  such  a  paper  is  negotiable,  the  obligation  to  pay 
the  money  only  passing  to  an  indorsee.^  So  it  has  been  held 
that  if  the  instrument  be  to  pay  money,  and  also  "  to  deliver 
up  horses  and  a  wharf;  "^  or  to  pay  money  "  and  take  up  a 
certain  outstanding  note,"  *  it  is  not  a  negotiable  note.  So  if 
it  be  to  pay  money  "  and  all  fines  according  to  rule,"  it  is 
not  a  negotiable  note,  and  the  additional  words  cannot  be 
construed  as  insensible  surplusage.  "  It  is  quite  possible," 
said  Parke,  B.,  "  that  they  have  a  meaning,  and  may  import 
that  certain  pecuniary  fines  or  forfeitures  are  to  be  paid  by 
the  defendants ;  and,  if  so,  this  is  certainly  no  promissory 
note  within  the  statute,  but  is  a  specific  agreement  to  do  cer- 
tain things.^ 

So,  likewise,  where  the  following  words  were  added^  the 

'  Barnes  v.  Gorman,  6  Rich.  297. 

»  Baxter  v.  Stewart,  4  Sneed,  213  ;  Gaines  v.  Shelton,  47  Ala.  413. 

'  Martin  v.  Chauntry.  2  Strange,  1271.         *  Cook  v.  Satterlee,  6  Cow.  118. 

'  Ayrey  v.  Fearnsides,  4  Mees.  &  W.  168. 


52        DEFINITION  AND  REQUISITES  OF  BILLS  AND  NOTES. 

instruments  were  held  special  agreements  and  not  negotia- 
ble :  "  If  any  dispute  should  arise  about  the  sale  of  goods 
for  which  the  note  is  given,  it  is  to  be  void/  or  it  is  "  only  a 
security  for  all  balances  up  to  its  amount."  ^  So  if  it  provide 
that  the  payee  is  to  receive  less  than  tlie  principal  sum  if  it 
be  paid  before  maturity .'^  So,  where  the  promise  was  to  pay 
H.  a  certain  amount,  adding, "  and  said  II.  is  to  build  a  barn 
and  fence,  and  said  P.  (the  promissor),  is  to  have  all  the  land 
back  of  the  house."  ^ 

§  61.  Additions  of  power  to  confess  judg7nents,  of  'waivers 
of  exceptions^  and  of  stipulations  to  pay  collection  fees. — Some- 
times it  is  stated  in  the  note  that  (1)  the  promissor  appoints 
the  payee,  or  order,  or  holder  to  confess  judgment  for  him 
when  the  note  is  payable ;  or  (2)  w^aives  benefit  of  appraise- 
ment laws,  or  homestead  exemptions,  where  such  laws  or 
exemptions  exist ;  or  (3)  stipulates  for  payment  of  collection, 
and  attorney's  fees.  The  authorities  differ  as  to  the  negotia- 
bility of  such  instruments ;  but  the  later  cases  maintain  that 
they  are,  and  the  principle  is  becoming  established  that,  if 
the  note  is  in  itself  certain  and  perfect  without  conditions, 
and  there  is  merely  superadded  the  provision  or  declaration 
that  the  payee  or  holder  may  confess  judgment  for  the 
maker  ;  or  that  certain  remedies  are  granted,  or  rights  waived 
in  respect  to  its  collection,  then  the  negotiability  of  tiie 
paper  is  not  destroyed.'^  The  leading  case  of  Overton  v. 
Tyler,  3  Barr,  346,  in  wliich  a  j)i)wer  to  confess  judgment 
engrafted  on  the  note  was  held  to  i-ender  it  non-negotiable,® 

'  Hartley  v.  Wilkinson,  4  Catnp.  127.     **  Leeds  v.  Lancashire,  3  Camp.  205. 

'  Fralick  v.  N«n-ton,  2  Mich.  130.  '*  Fletcher  v.  Tiiompson,  5o  N.  H.  308. 

^  2  Parsons,  N.  &  B.  147. 

°  Zimmerman  v.  Anderson,  67  Penn.  St.  421.  In  this  case  the  following  note 
was  sued  on  by  the  indorsees  against  the  maker :  '*  Township  of  Buffalo,  March 
25,  1868.  $125.00.  Six  montlis  after  date  I  promise  to  pay  to  E.  W.  Lowe,  or 
order,  one  hundred  and  twenty-five  dollars,  for  value  received,  with  interest, 
waiving  the  right  of  appeal,  and  of  all  valuation,  appraisement,  stay,  and  ex- 
emption laws."  Signed,  Moses  Anderson,  and  indorsed  by  E.  W.  Lowe.  The 
defense  was  failure  of  consideration,  grounded  on  the  alleged  non-negotiability 
of  the  note.     But  it  was  held  negotiable.     Read,  J.,  saying  :  "  The  paper  in  this 


CONTRACT  MUST  BE   ONLY  FOR  PAYMENT  OF  MONEY.       53 

does  not  now  seem  to  be  followed  by  the  State  courts  as  a 
general  rule  ;  and  the  declaration  of  Chief  Justice  Gibson  in 
that  case,  that  "  a  negotiable  bill  or  note  is  a  courier  without 


case  comes  within  all  the  definitions  of  the  best  text  writers  of  a  promissory 
note,  for  it  is  a  written  promise  by  the  defendant  to  pay  to  E.  W.  Lowe,  or 
order,  $125,  six  mouths  after  date,  for  value  received,  with  interest,  absolutely 
and  at  all  events.  But  it  is  urged  that  the  words  '  waiving  the  right  of  appeal, 
and  of  all  valuation,  appraisement,  stay  and  exemption  laws,'  destroys  its  nego- 
tiability. In  what  way  ?  They  do  not  contain  any  condition  or  contingency, 
but  after  th^^  note  falls  due  and  is  unpaid,  and  the  maker  is  sued,  facilitate  the 
collection  by  waiving  certain  rights  which  he  might  exercise  to  delay  or  impede 
it.  Instead  of  clogging  its  negotiability  it  adds  to  it,  and  gives  additional  value 
to  the  note.  *  *  *  These  principles  and  cases  clearly  prove  this  to  be  a 
regular  negotiable  promissory  note;  but  we  are  met  by  the  case  of  Overton  v. 
Tyler,  in  3  Barr,  346,  decided  by  this  court  a  quarter  of  a  century  ago,  which, 
however,  is  iJlainly  distinguished  from  the  one  before  us.  In  Overton  v.  Tyler, 
the  payment  was  fixed  for  a  day  named  specifically  in  the  instrument,  with  a 
regular  power  of  attorney  to  confess  judgment,  upon  which  a  judgment  was 
entered  on  the  10th  March,  and  execution  issued  thereon  on  the  2d  of  June,  one 
day  after  the  money  was  payable,  and  the  waivers  which  followed  all  related  to 
the  judgment  thus  entered  two  months  and  twenty-one  days  before  the  paper 
fell  due.  It  is  unnecessary  to  say  how  far  this  ruling  is  sustained  by  the  author- 
ities, for,  if  25erfectly  good  and  sound  law,  it  does  not  touch  the  present  case." 

While  the  court  distinguishes  this  case  from  Overton  v.  Tyler,  3  Barr,  3-4G,  it 
draws  a  very  tine  distinction — one  without  a  material  difference,  and  it  evidently 
does  not  regard  that  case  with  much  favur.  In  Overton  v.  Tyler  the  note  ran  : 
"  For  value  received  I  promise  to  pay  Francis  Tyler  and  Levi  Westbrook,  or 
bearer,  one  thousand  dollars  with  interest,  by  the  first  day  of  June  next.  And 
I  do  hereby  authorize  any  attorney  of  any  court  of  record  in  Pennsylvania  to 
appear  for  me  and  confess  judgment  for  the  above  sum  to  the  holder  of  this 
single  bill,  with  costs  of  suit,  hereby  releasing  all  errors  and  waiving  stay  of 
execution,  and  the  right  of  inquisition  on  real  estate;  also  waiving  the  right  to 
have  any  of  ray  property  appraised  which  may  be  levied  upon  by  virtue  of  any 
execution  issued  for  the  above  sum."  Gibson,  C.  J.,  said:  "  A  negotiable  bill 
or  note  is  a  courier  without  luggage.  It  is  requisite  that  it  be  framed  in  the 
fewest  possible  words,  and  those  importing  the  most  certain  and  precise  contract; 
and  though  this  requisite  be  a  minor  one,  it  is  entitled  to  weight  in  determining 
a  question  of  intention.  To  be  writhin  the  statute,  it  must  be  free  from  con- 
tingencies or  conditions  that  would  embarrass  it  in  its  course ;  for  a  memorandum 
to  control  it,  though  indorsed  on  it,  would  be  incorporated  with  it  and  destroy 
it.  But  a  memorandum,  which  is  merely  directory  or  collateral,  will  not  aflect 
it.  The  warrant  and  stipulations  incorporated  with  this  note  evince  that  the 
object  of  the  parties  was  not  a  general,  but  a  special  one.  Payment  was  to  be 
made,  not  as  is  usual  at  so  many  days  after  date,  but  at  a  distant  day  certain ; 
yet  the  negotiability  of  the  note,  if  it  had  any,  as  well  as  its  separate  existence, 
was  instantly  liable  to  be  merged  in  a  judgment,  and  its  circulation  arrested  by 


54        DEFINITION  AND  REQUISITES  OF  BILLS  AND  NOTES. 

luggage,"  is  answered  by  the  assertion  that  such  provisions 
facilitate  rather  than  incumber  the  circulation  of  such  instru- 
ments.    They  are  not  luggage,  but  ballast. 

§  62.  Upon  the  same  principle  that  power  to  confess 
judgment  is  not,  by  the  later  cases,  considered  to  impair  the 
negotiable  quality  of  the  instrument,  it  has  been  held  that 
an  agreement  added,  "  if  not  paid  when  due  and  suit  brought 
thereon,  I  hereby  agree  to  pay  collection  and  attorney's  fees 
thereon,"  does  not  impair  it.^  Nor  do  the  addition  of  such 
fees  render  a  bill  or  note,  otherwise  unimpeachable,  usu- 
rious.2     g^^,}^  feeg  j^qq^  not  be  sued  for  by  the  attorney,  but 


the  debt  being  attached,  as  an  encumbrance  to  the  maker's  land ;  and  it  was 
actually  merged  when  it  had  nearly  three  months  to  run.  Now  it  is  hard  to 
conceive  how  the  commercial  properties  of  a  bill  or  note  can  be  extinguished 
before  it  has  come  to  maturity.  That  is  not  all.  A  warrant  to  confess  judgment, 
not  being  a  mercantile  instrument,  or  a  legitimate  part  of  one,  but  a  thing  col- 
lateral, would  not  pass  by  indorsement  or  delivery  to  a  subsequent  holder  ;  and  a 
curious  question  would  be,  whether  it  would  survive  as  an  accessory  separated 
from  its  principal,  in  the  hands  of  the  payee,  for  the  benefit  of  his  transferee,  I 
am  unable  to  see  how  it  could  authorize  him  to  enter  up  judgment,  for  the  use  of 
another,  on  a  note  with  which  he  had  parted.  But  it  may  be  said  that  his 
transfer  would  be  a  waiver  of  the  warrant  as  a  security  for  himpelf  or  any  one 
else;  and  that  subsequent  holders  would  take  the  note  without  it.  The  principle 
is  certainly  applicable  to  a  memorandum  indorsed  after  signing,  or  one  written 
on  a  separate  paper.  But  the  appearance  of  paper  with  such  unusual  stipula- 
tions incorporated  with  it  would  be  apt  to  startle  commercial  men  as  to  their 
effect  on  the  contract  of  indorsement,  and  make  them  reluctant  to  touch  it.  All 
this  shows  that  these  parties  could  not  have  intended  to  impress  a  commercial 
character  on  the  note,  dragging  after  it,  as  it  would,  a  train  of  special  provisions 
which  would  materially  impede  its  circulation."  Sec  Sweeney  v.  Thickstun,  77 
Penn.  St.  R  131. 

In  Osborn  v.  Hawley,  19  Ohio,  130,  it  was  held  that  a  power  of  attorney 
added  to,  and  as  part  of  a  note,  did  not  affect  its  negotiability. 

'  Spcrry  v.  Horr,  32  Iowa,  184.  See  also,  to  the  same  effect.  Smith  v.  Muncie 
National  IBank,  29  Ind.  158;  Wyant  v.  Pattorf,  37  Ind.  512;  Hubbard  v.  Har- 
rison, 38  Ind.  323;  Stoneman  v.  Pyle,  35  Ind.  104;  Johnson  v.  Crossland,  34 
Ind.  384;  Dietrich  v.  Baylie,  23  La.  An.  767;  Gaar  v,  Louisville  B.  Co.  11  Bush. 
(Ky.)  1 80 ;  Nickersen  v.  Sheldon,  33  111.  373.  In  Seaton  v.  Scoville  (18  Kansa.s.  433 ; 
16  Alb.  L.  J.  148  (1877),  21  American  R.  212),  the  Supreme  Court  of  Kansas  held  a 
paper  promising  to  pay  a  certain  sum,  "  also  costs  of  collecting,  including  reasona- 
ble attorney's  fees,  if  suit  be  instituted  on  this  note,"  to  l)e  a  good  ncgotial)le  note. 

="  Stoneman  v.  Pyle,  35  Ind.  104;  First  National  Bank  v.  Silvers,  34  Ind.  149; 
Smith  V.  Silvers,  32  Ind.  321. 


CONTRACT  MUST   BE   ONLY  FOR  PAYMENT  OF   MONEY.       55 

are  recoverable  by  the  bolder.^  And  the  liability  for  them, 
as  for  every  engagement,  imported  by  the  bill  or  note,  enters 
into  the  acceptor's  ^  and  iudorser's  contract.^  But  the  decis- 
ions illustrating  these  doctrines  are  not  uniform,  and  in 
Pennsylvania,  where  the  note  contained  a  warrant  of  attor- 
ney to  enter  judgment  for  the  amount,  and  five  per  cent,  col- 
lection fees,  it  was  held  not  negotiable.^  So,  in  that  State 
where  to  the  note  was  added,  "  and  five  per  cent,  collection 
fees  if  not  paid  when  due,"  it  was  held  not  negotiable,  Shars- 
wood,  J.,  saying :  "  It  is  a  necessary  quality  of  negotiable 
paper,  that  it  should  be  simple,  certain,  unconditional,  and 
not  subject  to  any  contingency.  *  *  Interest  and  costs  of 
protest  after  non-payment  at  maturity  are  necessary  legal 
incidents  of  the  contract,  and  the  insertion  of  them  in  the 
body  of  the  note  would  not  alter  its  negotiability.  Neither 
does  a  clause  waiving  exemption,  for  that  in  no  way  touches 
the  implicity  and  certainty  of  the  paper.  But  a  collateral 
agreement  as  here,  depending  too,  as  it  does,  upon  its  reason- 
ableness, to  be  determined  by  the  verdict  of  a  jury,  is  en- 
tirely different."  ^ 

The  holder  must  prove  the  amount  of  the  attorney's  fees 
in  order  to  recover  them.® 


*  Johnson  v.  Crossland,  34  Tnd.  334.  But  it  has  been  held  in  Ohio  that  a 
stipulation  for  a  certain  per  centage,  besides  interest,  for  collection  fees  is  usuri- 
ous.    State  V.  Taylor,  10  Ohio,  378  ;  Shelton  v.  Gill,  11  Ohio,  417. 

'  Smith  V.  Muncie  National  Bank,  39  Ind.  158. 
"  Hubbard  v.  Harrison,  38  Ind.  323. 

*  Sweeney  v.  Thickstun,  77  Penn.  St.  131. 

'  Woods  V.  North,  84  Penn.  St.  410  (1877).  In  First  Nat.  Bank  v.  Gay,  63 
Mo.  33  (1876),  there  was  added  to  the  promise  :  "  And  if  not  paid  at  maturity, 
and  the  same  is  placed  in  tlie  hands  of  an  attorney  for  collection,  we  agree  and 
promise  to  pay  an  additional  suoi  of  ten  per  cent,  as  attorney's  fee.  Held  not 
a  promissory  note,  nor  negotiable. 

"  Wyant  v.  Pattorf,  37  Ind.  513.  In  Stoneman  v.  Pyle,  35  Ind.  103  (1871),  the 
note  contained  a  stipulation  for  the  payment  of  attorney's  fees.  Worden,  J.,  said: 
"  As  the  nO'C  was  payable  at  a  bank  in  this  State,  it  is  governed  by  the  law  mer- 
chant, and  the  holder  thereof  is  entitled  to  all  the  rights  of  a  holder  of  commercial 
paper,  unless  the  clause  in  the  note  stipulating  for  the  payment  of  attorney's  fees, 
in  case  suit  should  be  commenced  thereon,  takes  it  out  of  that  class  of  paper.  It 
is  earnestly  urged  by  counsel  for  the  appellee,  that  the  provision  above  indicated 


50        DEFINITION  AND   REQUISITES   OF   BILLS   AND   NOTES. 

SECTION  VII. 

DELIVERY. 

^  GS.  In  the  seventh  place  the  insi/rument  mvst  he  deliv- 
ered.— Delivery  is  the  final  step  necessary  to  perfect  the 
existence  of  any  Avritten  contract ;  and  therefore  as  long  as 
a  bill  or  note  remains  in  the  hands  of  the  drawer  or  maker 
it  is  a  nullity.^  And  even  though  it  be  placed  by  the 
drawer  or  maker  in  the  hands  of  his  agent  for  delivery,  it  is 
still  undelivered  as  long  as  it  remains  in  his  hands,  and  may 

makes  the  amount  of  the  note  uncertain,  and  therefore  that  it  does  not  come 
within  the  legal  requirements  of  commercial  piipcr.  It  may  be  conceded  that  a 
note,  in  order  to  be  placed  upon  the  footing  of  bills  of  exchange,  must  be  for  a 
sum  certain ;  for  in  no  other  way  can  the  maker  know  precisely  what  he  is  bound 
to  pay,  or  the  holder  what  he  is  entitled  to  demand.  But  the  note  in  question, 
if  paid  at  maturity,  or  after  maturity,  but  before  suit  brought  thereon,  is  for  a 
sum  certain.  On  the  maturity  of  the  note  the  maker  knew  precisely  what  he 
was  bound  to  pay,  and  the  holder  what  he  was  entitled  to  demand.  In  the 
commercial  world,  commercial  paper  is  expected  to  be  paid  promptly  at  maturity. 
The  stipulation  for  the  payment  of  attorney's  fees  could  have  no  force  except 
upon  a  violation  of  his  contract  by  the  defendant.  Had  the  defendant  kept  his 
contract,  and  paid  the  note  at  maturity,  or  afterwards,  but  before  suic,  he  would 
have  been  required  to  pay  no  attorney's  fees,  nor  would  there  have  been  any  dif- 
ficulty as  to  the  extent  of  his  obligation. 

"Wc  see  no  reason,  on  principle  or  authority,  or  on  grounds  of  public 
policy,  for  holding  that  such  a  stipulation  destroys  the  commercial  character  of 
paper  otherwise  having  that  character.  See  Smith  v.  Silvers,  32  Ind.  331.  The 
case  is  quite  analogous  to  a  class  of  cases  on  the  subject  of  usury.  Says  Mr. 
Parsons:  '  So,  if  the  borrower  agrees  to  pay  the  sum  borrowed  at  a  time  certain, 
or  on  demand,  with  lawful  interest,  and  if  he  fail  to  do  so,  so  much  more  by  way 
of  penalty ;  even  if  it  be  called  extra  interest,  this  is  not  such  usury  as  would 
affect  the  contract,  because  the  borrower  has  the  right  to  pay  the  principal  and 
avoid  the  penalty.'  2  Parsons  Notes  and  Bills,  413,  414.  So  here  the  defendant 
had  the  right  to  pay  the  face  of  the  note  when  due,  and  avoid  the  attorney's  fees. 
As  long  as  the  note  retained  the  peculiar  characteristics  of  commercial  paper, 
viz.,  up  to  the  time  of  its  maturity  and  dishonor,  the  amount  to  be  paid  on  the 
one  hand,  and  recovered  on  the  other,  was  fixed  and  definite." 

'  Bailey  v.  Taber,  5  Mass.  286  ;  Marvin  v.  McCuUum,  20  Johns.  288 ;  Freeman 
v.  Ellison,  37  Mich.  459;  Lansing  v.  Caine,  2  Johns.  300;  Woodford  v.  Dorwin, 
3  Vt.  82  ;  Ward  v.  Chum,  18  Grat.  801 ;  Hopper  v.  Eiland,  21  Ala.  714  ;  Rich- 
ards V.  Darst,  51  111.  141 ;  Roberts  v.  Bethell,  12  C.  B.  778;  Cox  v.  Troy,  5  B.  & 
Aid.  474  ;  Uowe  v.  Ould,  28  Grat.  7  ;  Bartlett  v.  Same,  Id. 


DELIVERY.  57 

be  recalled ;  and,  while  tliere,  the  payee  has  no  right  to  it, 
unless  it  be  wrongfully  withheld  by  the  agent.^  It  is  not 
necessary,  however,  to  aver  the  delivery  of  a  bill  or  note,  for 
the  averment  that  a  bill  was  draw^n  or  a  note  made  includes 
the  idea  of  a  delivery,  without  which  the  drawing  or  mak- 
ing is  not  complete.'^  So  essential  is  delivery,  that  it  has 
been  held  that  where  a  promissory  note,  the  writing  of 
which  was  unknown  to  the  grantee,  lay  in  the  grantor's 
possession,  and  was  found  amongst  his  papers  after  death, 
the  payee  could  not  claim  or  sue  upon  it ;  ^  and  though  such 
a  note  should  be  found,  accompanied  with  written  directions 
to  deliver  it  to  the  payee,  the  payee  will  still  have  no  right 
of  action,  unless  the  directions  be  valid  as  a  testament.^ 

It  is  to  be  observed,  however,  that  delivery  may  be  con- 
structive as  well  as  actual,  by  manual  passing  of  the  instru- 
ment. A  direction  to  a  third  person  who  is  in  actual 
custody  thereof,  to  hold  it  subject  to  the  payee's  or  trans- 
feree's order ;  or  an  order  to  the  depositary  to  deliver  it,  is 
sufficient  in  legal  contemplation.^ 


*  Thomson  on  Bills,  90-91 ;  The  King  v.  Lambton,  5  Price,  438  ;  Byles 
[*146],  265 ;  Edwards  on  Bills,  186 ;  1  Parsons  N.  &  B.  48-50. 

^  Churchill  v.  Gardner,  7  T.  R.  596  ;  Smith  v.  McClure,  5  East,  477;  Binney 
V.  Plumley,  5  Vt.  500 ;  Peets  v.  Bratt,  6  Barb.  662 ;  Chester,  &c.,  R.  R.  Co.  v. 
Lickiss,  72  111.  521. 

»  Disher  v.  Disher,  1  P.  Wms.  204 ;  Chitty,  Jr.  230. 

*  Gough  V.  Findon,  7  Exch.  48. 

'  Howe  V.  Ould,  28  Grat.  7 ;  Bartlett  v.  Same,  Id. ;  Fisher  v.  Bradford,  7 
Greenl.  28;  Richardson  v.  Lincoln,  5  Mete.  201;   Mitchell  v.  Byrne,  6  Rich.  171. 

In  Howe,  Knox  &  Co.  v.  Ould  &  Carrington,  28  Grat.,  it  appeared  that 
Samuel  Strong,  the  owner  of  a  note  executed  to  him  by  Samuel  Myers,  indorsed 
it,  and  deposited  it  witli  the  First  National  Bank  of  Richmond,  Va.,  as  collateral 
for  a  loan  obtained  from  the  bank  by  Betz,  Youngaling  &  Byer.  Strong  sold  the 
note  to  Ould,  and  gave  him  an  order  on  the  bank  for  it,  who  at  once  presented 
the  order  at  the  bank,  but  was  informed  that  the  president  was  out  of  town.  A 
few  days  afterwards  the  president  informed  him,  that  the  debt  for  which  the 
note  was  pledged  was  nearly  paid,  and  tliat  he  would  deliver  him  the  note  but 
for  the  fact  that  an  attachment  had  been  issued  against  it, — of  the  attachment 
which  antedated  the  sale  of  the  note,  Ould  &  Carrington  had  no  notice.  It 
was  held  that  they  were  entitled  to  it, — were  not  affected  by  the  attachment  of 
which  they  had  no  notice  at  time  of  purchase;  and  that  the  constructive  delivery 
of  the  note  was  sufficient. 


58        DEFINITION  AND  REQUISITES  OF   BILLS  AND  NOTES. 

§  64.  If  the  party  who  has  signed  or  indorsed  the  instru- 
ment die  before  delivery,  it  is  a  nullity,  and  cannot  be  de- 
livered by  his  personal  representative;^  but  if  advances 
had  been  made  on  the  faith  of  a  delivery,  then  the  promisee 
or  indorsee  would  be  entitled  to  a  delivery.^ 

It  is  said  by  Mr.  Chitty,  in  respect  to  a  bill,  that  delivery 
(by  the  acceptor)  is  not  essential  to  vest  the  legal  interest  in 
the  j^ayee.^  But  the  doctrine  sustained  by  the  authorities 
goes  only  to  the  extent  that  if  the  drawee  actually  accepts 
the  bill,  and  improperly  detains  it  in  his  hands,  an  averment 
that  the  bill  was  accepted  is  sufficient,  without  averment  of 
a  delivery  by  the  acce2:)tor.* 

§  65.  Whenever  a  bill  or  note  is  found  in  the  hands  of 
the  payee,  it  will  be  presumed  that  it  was  delivered  to  him,*^ 
and  that  the  delivery  took  place  on  the  day  of  its  date,  if  it 
be  dated,^  and,  at  any  rate,  before  the  day  of  its  maturity.'^ 
But  the  presumption  both  as  to  the  fact  and  the  time  of  de- 
livery may  be  rebutted.^ 

As  a  bill  or  note  takes  effect  only  by  delivery,  so  it  takes 
effect  only  on  delivery ;  and  if  this  be  subsequent  to  its  date, 
it  will  be  binding  only  from  that  day.^  But  still,  when  deliv- 
ered, if  it  bear  an  anterior  date,  and  be  payable  at  some 
future  day  from  date,  the  time  will  be  computed  according 
to  its  terms,  and  therefore  by  relation  from  its  date ;  for  it  is 
competent  for  the  parties  to  frame  their  contracts  to  suit 


'  Clark  V.  Boyd,  2  Ohio,  56  ;  Clark  v.  Sigourney,  17  Conn.  511 ;  Bromage  v. 
Lloyd,  1  Exch.  32 ;  Byles  [*56],  142. 

"  Perry  v.  Crammond,  1  Wash.  C.  C.  100;  1  Pars.  N.  &  B.  49. 

'  Chitty  on  Bills  [=^172],  198. 

'  Smith  V.  McClure,  5  East,  47G ;  Story  on  Bills,  §  203,  note  2 ;  Thomson  on 
Bills,  90. 

'  Griswold  V.  Davis,  31  Vt.  390  ;  Woodford  v.  Dorwin,  3  Vt.  82. 

•  Cranston  v.  Goss,  107  Mass.  439;  Sinclair  v.  Baggaley,  4  M.  &  W.  312;  An- 
derson V.  Weston,  C  Bing.  N.  C.  290. 

'  Churchill  v.  Gardiner,  7  T.  R.  596;    Smith  v.  McClure,  5  East.  477;  Binney 
V.  Plumlcy,  5  Vt.  500 ;  see  Chapter  XXI  on  Transfer  by  Indorsement,  sec,  vi. 
«  Woodford  v.  Dorwin,  3  Vt.  82. 

•  Lovejoy  v.  Whipple,  18  Vt.  379. 


DELIVERY.  59 

themselves/  and  it  will  be  proper  to  describe  it  as  drawn  on 
tLe  day  it  bears  date.^ 

§  66.  If  the  bill  or  note  bear  no  date,  the  time  must  be 
computed  from  its  delivery ;  and  if  the  day  of  actual  de- 
livery cannot  be  proved,  it  will  be  computed  from  the 
earliest  day  on  which  it  appears  to  have  been  in  the  hands 
of  the  payee  or  any  holder/^  It  is  not  necessary  to  aver  a 
date  to  the  bill  or  note,  but  it  is  sufficient  to  aver  that  it 
was  drawn  or  made  on  a  certain  day.* 

§  67.  Delivery  to  a  father  of  an  order  for  an  amount 
due  his  minor  son  is  sufficient  delivery  in  law ;  ^  and  so 
delivery  to  a  trustee  is  sufficient  as  delivery  to  the  cestui  que 
trust.^ 

It  is  essential  to  delivery  that  the  minds  of  both  par- 
ties should  assent,  in  order  to  bind  them ;  and  if,  through 
inattention,  infirmity,  or  otherwise,  one  does  not  assent,  the 
act  of  the  other  is  nugatory.  Therefore,  leaving  a  check  on 
the  desk  of  a  clerk '^  or  the  counter  of  a  bauk,^  without  the 
knowledge  of  such  clerk  or  the  bank  officer,  is  not  de- 
livery. 

Where  notes  were  executed  and  left  with  the  payee's 
agent,  who  objected  only  to  their  form,  but  retained  them, 
agi'eeing  to  accept  them,  if  the  form  could  not  be  changed, 
and  it  was  not,  it'  was  held  to  be  sufficient  delivery,^  Placing 
bills  or  notes  signed  or  indorsed,  in  the  custody  of  the  post- 
man, addressed  to  the  payee  or  indorsee — that  being  the 
course  of  business  between  the   parties — has  been   held,  in 

'  Po-\vell  V.  Waters,  8  Cow.  669 ;  Bunipass  v.  Tirnais,  3  Sneed,  459  ;  Snaith  v. 
Mingay,  1  Maule  &  S.  87;  Barker  v.  Sterne,  9  Exch.  684. 

"^  Snaith  v.  Mingay,  1  Maule  &  S.  89. 

'  Clark  V.  Sigourney,  17  Conn.  51 1 ;  Richardson  v.  Lincoln,  5  JMet.  201 ;  Wood- 
ford V.  Dorwin,  3  Vt.  82. 

*  De  La  Coutier  v.  Bellamy,  2  Show.  423  (1083) ;  Hague  v.  French,  3  Bos.  & 
P.  173  ;  Giles  v.  Bourne,  6  Maule  &  S.  73. 

"  Mason  v.  Hyde,  41  Vt.  432.  '  Tucker  v.  Bradley,  33  Vt.  325. 

'  Kinney  v.  Ford,  52  Barb.  194. 

'  Chicopee  Bank  v.  Philadelphia  Bank,  8  Wall.  041. 

•  Bodley  v.  Higgins,  73  111.  375. 


60        DEFINITION  AND  REQUISITES  OF  BILLS  AND  NOTES. 

England,  a  sufficient  delivery  ;  ^  and  so  depositing  them  in 
the  post  office,  with  the  assent  of  the  payee  or  indorsee,  is 
considered  sufficient  in  the  United  States.*^  And  if  a  bill  or 
note  so  deposited  be  lost  on  the  way,  and  the  creditor  obtain 
a  duplicate,  and  cause  it  to  be  demanded  and  protested,  he 
may  recover.^  The  vendor  of  negotiable  paper  has  the  right 
of  stoppage  in  transitu  to  the  same  extent  as  the  vendor  of 
other  species  of  personal  property;  and  the  right  to  the 
remedy  applies  not  only  as  against  the  vendee,  but  as  well 
against  a  creditor  of  the  vendee  who  has'  made  a  loan  upon 
the  promise  of  the  vendee  to  transfer  the  paper  to  him  on  its 
arrival.* 

§  68.  Escroios.  A  bill  or  note,  as  w^ell  as  a  deed,  may 
be  delivered  as  an  escrow — that  is,  delivered  to  a  third  party 
to  hold  until  a  certain  event  happens,  or  certain  conditions 
are  complied  with — and  then  the  liability  of  the  party  com- 
mences as  soon  as  the  event  happens  or  the  conditions  are 
fulfilled,  without  actual  delivery  by  the  depositary  to  the 
promisee.^ 

But  there  is  this  distinction  between  negotiable  and 
sealed  instruments.  If  the  custodian  of  the  former  betrays 
his  trust,  and  passes  off  the  negotiable  instrument  to  a  bona 
fide  holder,  before  maturity  and  without  notice,  all  j;>arties 
are  bound;  but  if  the  instrument  be  sealed,  the  rule  is 
otherwise.  A  bill  or  note  cannot  be  shown  to  have  been  de- 
livered to  the  promisee  as  an  escrow,  for  the  evidence  would 
be  repugnant  to  the  act.*'  These  questions  are  elsewhere 
more  fully  considered.^  It  has  been  said,  however,  by  the 
Court  of  Appeals  of  New  York, that  "instruments  not  under 

'  Rex  V.  Lambton,  5  Price,  428. 

"  Kirkmau  v.  Bank  of  America,  3  Cold.  397. 

'  Kirkman  v.  Bank  of  America,  s?(;wa.  "  Muller  v.  Poudir,  55  N.  Y.  325. 

'  Couch  V.  Meeker,  2  Conn.  302;  1  Parsons  N.  &  B.  51;  see  Chapter  on  Bona 
Fide  Holder,  §  856;  Taylor  v.  Thomas,  13  Kansas,  217. 

«  1  Parsons  N.  «fc  R.  51  ;  Scott  v.  State  Bank,  9  Ark.  30 ;  Massman  v.  Holscher, 
49  Mo.  87;  B;idcock  v.  Steudman,  1  Koot  (Conn.).  87  ;  see  post,  §§  79,  81. 

'  See  Cliapter  XXVI  on  Rights  of  Bona  Fide  Holder  or  Purchaser,.  §  856; 
Hensliaw  v.  Dutton,  59  Mo.  139. 


DELIVERY.  61 

seal  may  be  delivered  to  the  one  to  whom  on  their  face  they 
are  made  payable,  or  who  by  their  terms  is  entitled  to  some 
interest  or  benefit  under  them,  upon  conditions,  the  observ- 
ance of  which  is  essential  to  their  validity.  And  the  annex- 
ing of  such  conditions  to  the  delivery  is  not  an  oral  contra- 
diction of  the  written  obligation,  though  negotiable,  as 
between  the  parties  to  it,  or  othei's  having  notice.  It  needs 
a  delivery  to  make  the  obligation  operative  at  all,  and  the 
effect  of  the  delivery  and  the  extent  of  the  operation  of  the 
instrument  may  be  limited  by  the  conditions  with  which  the 
delivery  is  made."  ^ 

§  69.  Bills  and  notes  made  on  Sunday.  By  the  common 
law,  there  is  no  interdiction  of  secular  business  being  con- 
ducted on  Sunday,  and,  unless  restrained  by  statute,  a  party 
may  draw,  make,  indorse,  or  accept  bills  and  notes  on  Sun- 
day, and  their  acts  will  be  as  valid  as  if  done  on  any  other 
day.^  By  statute,  however,  in  many  of  the  States  of  the 
United  States,  no  contract  can  be  entered  into  on  Sunday,  or 
secular  business  legally  conducted. 

Bills  and  notes  executed  and  delivered  on  Sunday  fall 
within  the  interdiction  of  such  laws ;  and  the  rule  applicable 
to  such  instruments  is,  that  the  plaintiff  cannot  recover 
when,  in  order  to  sustain  his  supposed  claim,  he  must  set 
up  an  illegal  agreement,  to  which  he  himself  is  a  party.^ 
But  it  is  delivery  that  completes  a  contract,  and  if  the  bill 
or  note  be  delivered  on  another  day,  it  will  be  valid,  though 
dated  and  signed  on  Sunday;  and  parol  evidence  is  com- 
petent to  show  that  it  was  so  delivered  on  a  different  day, 
notwithstanding  its  date  as  of  Sunday.^     And  when  so  de- 


'  Benton  v.  Martin,  53  N.  Y.  574,  Folger,  J. 

'  Begbie  V.  Levy,  1  CroDip.  &  J.  180;  1  Tyrw.  130;  Cbitty,  Junior,  1516; 
Chitty  on  Bills  1*148],  171;  Thomson  on  Bills,  171. 

'  Pope  V.  Linn,  50  Me.  86 ;  Pinney  v.  Calendar,  8  Minn.  43 ;  Bramhall  v.  Van 
Campen,  8  Minn.  13;  State  Capitol  Bank  v.  Thompson,  43  N.  H.  370;  Smith  v. 
Bean,  15  N.  H.  577;  Bank  of  Cumberland  v.  Mayberry,  4  Hub.  198;  Smith  v. 
Case,  3  Oregon,  190;  Furz  v.  Nicholls,  3  M.  G.  &  S.  500. 

*  Flanagan  v.  Meyer,  41   Ala.  133;    Aldridge  v.   Branch   Bank,  17  Ala.  45; 


62        DEFINITION  AND  REQUISITES  OF   BILLS  AND  NOTES. 

livered  on  a  different  day,  it  is  no  objection  to  it  tliat  interest 
commences  to  rnn  on  Sunday.^  Though  the  note  made  and 
delivered  on  Sunday  be  void,  the  payee  may  recover  upon 
the  original  consideration.'*  And  the  weight  of  authority 
seems  to  be,  that,  although  a  contract  be  entirely  closed  up 
on  Sunday,  yet,  if  ratified  by  the  parties  upon  a  subse- 
quent day,  it  is  valid.^ 

§  70.  Indorsements  on  Sunday. — The  indorsement  of  a 
bill  or  note  on  Sunday  stands  on  the  same  footing  as  draw- 
ing a  bill  or  making  a  note,  and  tlie  indorsee  cannot  sue 
upon  such  an  indorsement,  either  in  his  own  name,  or  in  an- 
other's for  his  benefit.^  The  indorsee  of  a  bill  or  note  made 
or  drawn  on  Sunday  can  stand  upon  no  better  footing  than 
his  transferrer,  provided  he  have  notice  of  the  fact.  And 
if  the  bill  or  note  bear  a  certain  date,  or  it  appears  that  it 
was  executed  upon  a  certain  day  of  the  month,  the  court 
will  take  judicial  notice  of  the  fact,  if  such  day  were  Sunday. 
The  almanac  has  long  been  regarded  and  held  as  a  part  of 
the  law  of  the  land.^  And  an  indorsee  would,  doubtless, 
be  chargeable  with  notice  from  the  face  of  the  paper,  if  the 
day  of  the  date  it  bears  was  Sunday. 

Clearly,  however,  an  indorsee  who  takes  a  bill  or  note 
dated  as  of  a  secular  day,  and  without  notice  from  its  face 
or  otherwise,  that  it  w^as  executed  on  Sunday  could  recover 
upon  it.^     And  if  the  instrument  were  without  date,  there 

Vinton  v.  Peck,  15  Mich.  287;  Drake  v.  Rogers,  33  Me.  524;  Fritscli  v.  Heesless, 
40  Mo.  55G;  Lovejoy  v.  Whipple,  18  Vt.  379;  State  Capitol  Bank  v.  Thompson, 
42  N.  H.  37G;  Dohmcy  v.  Dohmey,  7  Bush  (Ky.)  217;  King  v.  Fleming,  72  111. 
21 ;  Love  v.  Wells,  25  Ind.  503  (a  deed). 

'  Marshall  v.  Russell,  44  N.  H.  509. 

"  Sayre  v.  Wheeler,  31  la.  112. 

'  King  V.  Fleming,  72  III.  21 ;  Commonwealth  v.  Kendig,  3  Penn.  St.  448 ; 
Clough  V.  Davis,  9  N.  II.  500;  Lovejoy  v.  Whipple,  18  Vt.  379;  Hilton  v. 
Houghton,  35  Me.  143;  Winchell  v.  Carey,  115  Mass.  560. 

*  Benson  v.  Drake,  55  Me.  555 ;  but  see  State  Capitol  Bank  v.  Thompson,  42 
N.  H.  370. 

^  Finney  v.  Callondar,  8  ^linn.  41. 

•  Brieber  v.  Commercial  Bank,  31  Ark.  128;  Cranson  v.  Goss,  107  Mass.  439; 
Grcathead  v.  Walton,  40  Conn.  81;  Pope  v.  Linn,  50  Me.  84;  State  Capitol  Bank 
V.  Thompson,  42  N.  II.  370. 


DELIVERY.  C3 

would  be  nothing  about  it  to  intimate  notice,  or  charge  the 
indorsee  with  its  illegality  because  made  on  Sunday.^ 

§  Vl.  The  execution  of  a  note  does  not  im2:)ort  a  debt 
existing  previous  to  the  period  of  its  execution ;  but  its 
effect  is  to  give  the  debt  and  the  note  a  cotemporaneous 
origin.^  Proof  of  the  giving  of  a  promissory  note  by  one 
person  to  another,  nothing  else  appearing,  is  ])riina  facie 
evidence  of  an  accounting  and  settlement  of  all  demands 
between  the  parties,  aud  that  the  maker  at  the  date  of  the 
note  was  indebted  to  the  payee  upon  such  settlement  to  the 
amount  of  such  note.^  But  this  is  a  mere  presumption, 
which  may  be  repelled  by  proofs  of  the  consideration  of 
such  note,  and  of  the  occasion  for,  and  circumstances  attend- 
ing the  giving  of  the  same.* 

'  state  Capitol  Bank  v.  Thompson,  43  N.  H.  370. 

^  Johnston  v.  Lane's  Trustees,  11  Grat.  553. 

'Lake  v.  Tysen,  6  N.  Y.  461;  De  Freest  v.  Bloomingdale,  5  Denio,  304; 
Dutcher  v.  Porter,  63  Barb.  20 ;  Sherman  v.  Mclutyre,  14  N.  Y.  S.  C.  (7  Hun), 
592. 

'  Sherman  v.  Mclntyre,  14  N.  Y.  S.  C.  (7  Hun),  592. 


CHAPTER  III. 

FORMAL    REQUISITES    OF    BILLS    AND    NOTES. 


SECTION   I. 
FORMALITY   IN   EESPECT   TO    STYLE   AND   MATERIAL. 

§  72.  Ha\ing  sufficiently  treated  of  the  elements  essential 
to  the  contract  in  order  to  impart  to  it  the  character  of  nego- 
tiability, we  now  come  to  speak  of  the  formal  preparation 
and  delivery  of  the  instrument. 

§  73.  As  to  the  peculiar  forms  of  hills  and  notes. — It  does 
not  appear  necessary  that  they  should  be  framed  in  any  par- 
ticular form,  provided  they  possess  the  essential  qualities 
which  have  been  mentioned.  We  give  the  forms  which  are 
usually  in  vogue  amongst  merchants,  and  it  would  be  unwise 
to  depart  from  them.^  But  the  law  respects  substance  more 
than  form ;  and  where  the  intention  appears  to  have  assumed 
the  obligations  which  devolve  upon  drawers  and  makers  of 
negotiable  instruments,  it  will  be  enforced,  although  not  evi- 
denced in  the  usual  commercial  form.  Thus,  an  oi'der  written 
under  a  note, "  Please  pay  the  above  note,  and  hold  it  against 
me  in  our  settlement,"  signed  by  the  drawer  and  accepted  by 
the  drawee,  has  been  held  a  good  bill ;  ^  and  so,  also,  has  been 
held  a  like  order  written  under  an  account.^  And  where  an 
indorsement  was  made  on  a  bond,  ordering  the  contents  to 

'  Chitty  on  Bills  [*128],  148 ;  see  Appendix  A. 

»  Leonard  v.  Mason,  1  Wend.  252.  =  Hoyt  v.  Lynch,  2  Sandf.  328. 


FORMALITY  IN   RESPECT  TO   STYLE   AND   MATERIAL.        65 

be  paid  to  order  for  value  received,  it  was  held  a  good  bill.^ 
And  au  instrument  of  the  following  tenor  :  "  Nobleboro, 
October  4th,  1869.  Nathaniel  O.  Winslow,  Cr.  By  labor, 
IGf  days,  a  $4  per  day,  $67.  Good  to  bearer.  (Signed,) 
Wm.  Vannah,"  has  been  decided  to  be  a  negotiable  promis- 
sory note,  payable  to  Winslow  on  demand.^  But  the  words 
under  an  itemized  account:  "  A.  B.,  please  pay  the  above 
bill,"  if  naming  no  payee,  would  not  be  a  bill.^ 

§  74.  It  does  not  matter  upon  what  portion  of  the  instru- 
ment the  maker  or  drawer  affixes  his  name,  so  that  he  signed 
as  drawer  or  maker.*  In  a  late  case,  where  the  maker  of  a 
note,  which  was  in  printed  form,  by  mistake  signed  his  name 
above  the  printed  line  which  stated  the  bank  at  which  it 
was  payable,  it  was  held  that  the  printed  line  below  the 
signature  was  nevertheless  part  of  the  note,  especially  where 
it  had  interest  coupons  attached,  and  was  indorsed  in  that 
form ;  these  circumstances  precluding  all  doubt  of  the  fact 
that  the  designation  of  the  place  of  payment  was  on  the  note 
at  the  time  it  was  executed;^  "  I,  A.  B.,  promise  to  pay,"  is  as 
good  a  note,  if  written  by  A.  B.  or  his  authorized  agent,  as 
"  I  promise  to  pay,"  subscribed  "  A.  B."  ®  And  so  "  I,  A.  B., 
request  you  to  pay  "  would  be  a  good  bill,  though  not  under- 
signed.'^ Nor  is  it  at  all  material  whether  the  writing  is  in 
pencil  or  ink,^  though,  as  a  matter  of  permanence  and  security, 
ink  is,  of  course,  preferable.  And  the  name  may  be  printed 
as  well  as  written,  though,  in  such  cases,  it  cannot  prove  it- 
self, and  must  be  shown  to  have  been  adopted  and  used  by 

*  Bay  V.  Froazer,  1  Bay,  66.     But  see  Norris  v.  Solomon,  3  M.  &  Rob.  117, 
^  Hussey  v.  Winslow,  59  Me.  '  Platzer  v.  Norris,  38  Tex.  387. 

*  Hunt  V.  Adams,  5  Mass.  359  ;  Clason  v.  Bailey,  14  Johns.  484  ;  Schmidt  v. 
Schmaelter,  45  Mo.  503. 

'  TurnbuU  v.  Thomas,  1  Hughes,  173. 

°  Taylor  v.  Dobbins,  1  Strange,  399. 

■'  Saunderson  v.  Jackson,  2  Bos.  »&  P.  338  ;  Chitty,  Jr.  on  Bills,  10. 

•*  Brown  v.  Butchers'  Bank,  6  Hill,  443 ;  Reed  v.  Roark,  14  Tex.  329  ;  Closson 
V.  Stearns,  4  Vt.  11;  Geary  v.  Physic,  5  Barn.  &  C.  234:  Chitty  on  Bills  [*126], 
147.  A  deed  in  pencil  has  been  deemed  sufficient.  McDowell  v.  Chambers,  1 
Strob.  Eq.  347. 

Vol.  I.— 5 


no  FOEMAL  REQUISITES  OF  BILLS  AND  NOTES. 

the  party  as  Lis  signature.^  The  full  name  may  be  written  ; 
and  at  least  the  surname  should  appear,  and  generally  does. 
But  this  is  not  indispensable — the  initials  are  sufficient.^ 
and  any  mark  which  the  party  uses  to  indicate  his  intention 
to  bind  himself  will  be  as  effectual  as  his  signature,  whether 
there  be  a  certificate  of  witnesses  on  the  instrument  or  not.* 
But,  of  course,  a  mark  does  not  prove  itself  like  a  signature, 
although  it  is  an  adminicle  of  proof.*  Any  peculiarity  in  it 
may  be  shown  as  evidence  of  its  genuineness ;  ^  but,  unless 
there  be  an  attesting  witness,  or  one  who  saw  it  written, 
or  is  familiar  with  its  characteristics,  the  plaintiff  cannot 
recover.^ 

§  75.  The  name  is  not  necessary  if  it  be  sufficiently  indi- 
cated who  the  party  is.  A  note  signed  "Steamboat  Ben  Lee 
and  owners, " '  has  been  held  sufficient ;  and  likewise  a  bill 
drawn  on  "  Steamer  C.  W.  D.  and  owners,"  and  accepted 
"  Steamer  C.  W.  D.,  by  A.  B.,  agent."  ^ 

§  76.  Manifest  inforonalities. — A  manifest  informality  of 
expression  or  grammatical  error,  whether  in  respect  to  date, 
amount,  time,  place,  or  other  matter,  w'ill  in  nowise  affect 
the  validity  of  a  bill  or  note.  Thus,  it  lias  been  held  that  a 
note  in  form  negotiable,  but  running  "  sixty  days  after  date, 
I  promised  to  pay,"  instead  of  "  I  promise,"  was  as  good  as  if 

'  Schneider  v.  Norris,  2  Maule  &  S.  286 ;  Brown  v.  Butchers'  Bank,  6  Hill, 
44:^;  Pennington  v.  Baehr  (Sup.  Ct.  Cal.),  Cent.  L.  J.  vol.  2,  No.  6,  Feb.  5.  1875; 
Story  on  Bills,  §  58. 

^  Mercbauts'  Bank  v.  Spicer,  6  Wend.  443;  Palmer  v.  Stephens,  1  Denio,  471; 
1  Parsons  N.  &  B,  36. 

'  Willougliby  V.  Moulton,  47  N.  11.  20.")  (unwitnessed);  Shank  v.  Butsch,  28 
Ind.  19  (unwitnessed);  Flint  v.  Flint,  6  Allen,  34;  Hilborn  v.  Alford,  22  Cal. 
482;  George  v.  Surrey,  1  Moody  &  M.  516,  where  the  indorsement  was  "Ann 
Moore  X  her  mark."  Brown  v.  Butchers'  Bank,  G  Hill,  443,  where  the  figures 
"  1,  2,  8  ■'  were  held  sufficient. 

*  Hill)orn  v.  Alford,  22  Cal.  482;  Flowers  v.  Billing.  45  Ala.  488;  see  cases 
supra,  and  Story  on  Bills,  §  53,  note  6. 

^  George  v.  Surrey,  1  Moody  &  M.  516;  Thomson  on  Bills,  35;  2  Parsons  N. 
&  B.  480. 

•  See  Thomson  on  Bills,  30,  Til,  33.         '  Sanders  v.  Anderson,  21  Mo.  402. 
'  Alabama  C.  v.  Braiuard,  35  Ala.  478. 


FORMALITY   IN   RESPECT   TO   STYLE    AND   MATERIAL.  G7 

the  promise  in  the  past  tense  had  been  expressed  in 
the  present/  So  the  singular  "  pound "  clearly  means, 
"  pounds."  '^ 

A  note  payable  "  twenty-four  after  date," '  and  one  paya- 
ble "six  after  date,"*  have  been  held  not  void  for  uncer- 
tainty, but  parol  evidence  has  been  admitted  to  ascertain  the 
intention  of  the  parties ;  and  a  note  payable  "  four  months 
after,"  has  been  held  j)ayable  "  four  months  after  date."  ^ 

"  With  ten/>67'  cent,  after  due,"  ^  or  "at  ten^^r  cent.^  value 
received,"^  clearly  means  with  ten  'per  cent,  "interest," 
although  the  word  "interest"  be  omitted. 

Where  a  note  is  dated  in  December,  and  made  payable 
on  "  the  25th  of  December  next,"  it  is  admissible  to  show  that 
December  instant  was  intended.^  And  where  a  bill  was 
drawn  "  payable  on  the  6-9  Jan.,"  the  evidence  of  bankers 
and  brokers  was  held  admissible  to  show  that  the  fiirures 
•  were  designed  to  designate  the  days  of  grace.^  The  words 
"  are  to  be  paid,"  if  obviously  necessary  to  make  sense,  may 
be  understood  as  implied,  and  considei-ed  as  inserted.^*' 

§  77.  As  to  the  material  upon  which  negotiable  instru- 
ments should  be  written,  it  does  not  appear  to  be  necessary 
that  the  substance  should  be  paper.  It  is  conceived  that 
they  might  be  written  on  parchment,  cloth,  leather,  or  any 
other  convenient  substitute  for  paper."  Whether  a  valid  bill 
or  note  may  be  written  upon  metal,  stone,  or  wood,  does  not 
seem  to  have  been  decided  ;  but,  if  it  were  distinctly  proven 
that  the  instrument  was  intended  as  a  hill  or  note,  the  sub- 


'  Perkins'  Case,  7  Grat.  651 ;  Commonwealth  v.  Parmenter,  5  Pick.  279. 

=  Rex  V.  Post,  Russ.  &  Ry.  101,         '  Conner  y.  Routh,  7  How.  (Miss.)  176. 

*  Nichols  V.  Frothingham,  45  Me.  220. 

"  Pearson  v.  Stoddard,  9  Gray,  199.  «  Higley  v.  Newell,  28  Iowa,  51G. 

'  Williams  v.  Baker,  67  III.  238:  Thompson  v.  Hoagland,  65  111.  310;  Cramer 
V.  Joder,  65  111.  314. 

8  McCrary'v.  Caskey,  27  Ga.  54. 

«  Kelsey  t.  Hibbs,  13  Ohio,  N.  S.  340. 

'"  Peyton  v.  Harman,  22  Grat.  643. 

"  Byles  on  Bills  (Sharswood's  ed.)  165.  A  deed  must  be  written  upon  parch- 
ment or  paper.     Coke,  Littleton,  229. 


C8  FORMAL   REQUISITES  OF   BILLS  AND  XOTES. 

stance  could  be  no  objection  to  its  validity.  But  it  is,  of 
course,  entirely  out  of  the  usual  course  of  business ;  and  it 
must  rarely,  if  ever,  occur  tliat  such  a  question  is  presented. 
Certainly  the  courts  would  look  with  suspicion  upon  so  pe- 
culiar an  instrument;  and  its  unusual  form  would  in  itself 
be  a  w^arning  to  all  purchasers  that  they  took  it  at  their 
peril. ^  A  metallic  token,  like  an  I.  O.  U.,  would  seem  at 
common  law  to  be  only  evidence  of  a  debt.^ 

§  T8.  Individuals,  bankers  and  others  have  frequently,  in 
the  United  States,  issued  their  promissory  notes  in  printed 
forms  closely  i-esembling,  in  size,  color,  and  texture  of  the 
paper,  and  in  mode  of  execution,  bank  notes.  They  are  in- 
tended to  circulate  as  money,  and  very  often  constitute  a 
currency  in  themselves,  when  no  national  or  State  law  pro- 
hibits them.  They  are  valid  obligations  when  not  so  pro- 
hibited, and  are  enforced  by  the  courts  as  the  promissory 
notes  of  the  parties  executing  them.^ 

§  79.  The  whole  of  the  bill  or  note  must  be  ex23ressed  in 
writing.  But  the  whole  of  it  need  not  be  in  the  body  of  the 
instrument ;  and  a  coteinporaneous  memorandum  or  indorse- 
ment on  any  part  of  it  may  qualify  its  terms  by  making  it 
payable  upon  a  contingency,*  or  at  a  particular  place,"'^  or  pro- 
viding that  it  may  be  renewed.^  And  there  may  be  a  w^'itten 
stipulation  on  a  detached  paper  affecting  the  instrument, 
which  would  be  admissible  as  between  the  original  parties 
and  their  representatives ;  "^  but  such  stipulation  would  not 
affect  a  hona  fide  holder  for  value,  who  acquired  it  without 
notice.^     But  any  party  having  notice  would  stand  on  no 


»  1  Parsons  N.  &  B.'23.  "  Byles  on  Bills  (Sharswood's  ed.)  281. 

=■  James  v.  Rogers,  23  Ind.  453  (18G5). 

*  Beele  v,  Bidgood,  1  Man.  &  Ry.  143;  7  B.  &  C.  453;  Hartley  v.  Wilkinson, 
4  M.  &  S.  25  ;  Ileywood  v.  Perrin,  10  Pick.  228  ;  Shaw  v.  M.  E.  Society,  8  Mete. 
226;  Chitty  on  Bills  [+126],  146;  Wheelock  v.  Freeman,  13  Pick.  168;  Byles 
(Sharswood's  ed.)  [*94]  193;  Leeds  v.  Lancashire,  2  Camp.  205. 

'  Ibid.  "  Hartley  v.  Wilkinson,  4  M.  &  S.  25. 

^  Bowerbark  v.  Monteiro,  4  Taunt.  844. 

"  Hoare  v.  Graham,  3  Camp.  57. 


FORMALITY  IN  RESPECT  TO   STYLE  AND   MATERIAL.         09 

better  footing  than  the  original  parties.^  Whether  the  in- 
strument be  a  bill  of  exchange  or  promissory  note,  or  other- 
wise, and  whether  or  not  it  be  negotiable,  must  be  determined 
by  its  face,  without  reference  to  any  other  source.'^ 

§  80.  Parol  evidence. — It  is  a  general  principle  of  law 
that  parol  evidence  is  inadmissible  to  vary  or  contradict  a 
written  contract.  Therefore,  if  a  bill  or  note  be  absolute 
upon  its  face,  no  evidence  of  a  verbal  agreement  made  at  the 
same  time  qualifying  its  terms,  can  be  admitted.  Thus 
where  a  note  is  payable  on  demand,  it  cannot  be  shown  by 
verbal  testimony  that  it  was  agreed  that  it  should  not  be 
paid  till  after  the  decease  of  the  testator ;  ^  nor  until  after 
sale  of  the  maker's  estates ;  *  nor  until  a  certain  account 
should  be  adjusted  and  credited  on  its  face  ;^  nor  until  cer- 
tain premises  were  delivered  up  ;  ^  nor  until  a  dividend  of  a 
bankrupt's  assets  should  have  been  made ;  '^  nor  until  the 
amount  was  collected  from  certain  sources ;  ®  nor  until  a  cer- 
tain draft  was  received.^  Nor  can  it  be  shown  verbally  that 
demand  of  a  post-dated  check  was  not  to  be  made  at  ma- 
turity ;  ^°  nor  that  a  note  in  which  no  time  for  payment  is 
expressed,  and  is  therefore  constructively  payable  on  de- 
mand, was  to  be  paid  at  a  specified  time.-^  Nor  can  it  be 
shown  that  there  was  any  agreement  to  prolong  or  vary 
the  time  of  payment  specified  in  the  instrument,  by  taking 
part  payment  and  waiting  for  the  residue,  by  receiving 
payment  in  instalments,  or  otherwise  than  the  instrument 
itself  declares ;  ^^  nor  that  it  was  not  to  be  neo-otiated  but  re- 

'  Gibbon  v.  Scott,  2  Stark.  286.  *  Strachan  v.  Miixton,  24  Wis.  21. 

'  Woodbridge  v.  Spooner,  3  B.  &  Aid.  233 ;  Graves  v.  Clark,  6  Blackf.  183. 

*  Free  v.  Hawkins,  8  Taunt.  92 ;  IJ.  B.  Moore,  535. 

'  Mahan  «.  Sherman,  7  Blackf.  S78.         '  Moseley  v.  Hanford,  10  B.  &  C.  729. 
'  Rawson  v.  Walker,  1  Stark.  361. 

*  Campbell  v.  Upshaw,  7  Humph.  185;   McClanaghan  v.  Hines,  2  Strob.  122; 
Litchfield  v.  Falconer,  2  Ala.  280. 

''  Kincaid  v.  Higgins,  1  Bibb,  396.  '"  Hill  v.  Gaw,  4  Barr,  493. 

"  Thompson  v.  Ketchura,  8  Johns.  189. 

'=  Eaton  V.  Emerson,  14   Me.   335  ;    Barton  v.  Wilkins,  1   Mo.  74 ;    D.iwson  v. 
Bank  of  Illinois,  4  Scam.  56 ;  Walker  v.  Clay,  21  Ala.  797  ;  Blakemore  v.  Wood, 


70  FORMAL  REQUISITES  OF  BILLS  AND  NOTES. 

newecl.^  Nor  that  it  was  not  to  be  paid  in  case  a  certain 
verdict  was  obtained;^  nor  that  it  was  merely  given  as  an 
indemnity  against  certain  claims;'  nor  merely  as  a  receipt."* 
On  this  subject  the  United  States  Supreme  Court  has  re- 
cently said:  "Negotia})le  notes  are  written  instruments,  and 
as  such  they  cannot  be  contradicted,  nor  can  their  terms  be 
varied  by  parol  evidence  ;  and  that  proposition  is  universally 
true  where  the  promissory  note  is  in  the  hands  of  an  inno- 
cent liolder.  AVhere  a  bill  of  exchange  was  drawn  in  the 
usual  form,  and  was  protested  for  non-payment,  the  court 
held  twenty  years  ago  that  ])arol  evidence  of  an  understand- 
ing between  the  drawer  and  the  party  in  whose  favor  the 
bill  was  drawn  was  inadmissible  to  vary  the  terms  of  the 
instrument."  ^ 

§  81.  The  principle  applies  to  every  element  of  the  in- 
strument. It  cannot  be  shown  by  parol  that  the  sura  agreed 
to  be  paid  was  different ;  '^  nor  that  an  additional  sum  was  to 
be  paid  in  a  certain  contingency ;  "^  nor  that  a  certain  account 
w'as  to  be  deducted  from  the  note,^  or  the  value  of  certain 
articles  credited  uj)on  it;^  nor  that  a  note  payable  in  '"  law- 
ful money  "  was  to  be  paid  in  silver ;  ^"^  nor  when  expressed 
to  be  payable  in  dollars,  that  it  was  payable  in  bank  notes, 
corporation,  or  individual  notes,  or  in  any  paper  currency," 
or  in  goods  or  other  articles."  ^^ 

3  Sneed,  470;  Rice  v.  Ragland,  10  Humph.  545;  Sturdivant  v.  Hull,  59  Me.  172; 
Roache  v.  Roanoke  Classical  Seminary,  56  Ind.  203. 

'  Heist  V.  Hart,  73  Penn.  St.  286.         '  Foster  v.  Jolly,  1  Cramp.  M.  &  R.  703. 

'  Ridout  V.  Bristow,  1  Cromp.  &  J.  231.       *  Billings  v.  Billings,  10  Cusb.  178. 

'  Brown  v.  SpoflFord,  95  U.  S.  (5  Otto)  480  (1877) ;  see  Brown  v.  Wiley,  20 
How.  442;  Specbt  v.  Howard,  16  Wall.  564;  Forsyth  v.  Kimball,  91  U.S.  (1 
Otto)  291. 

'  Beard  v.  White,  1  Ala.  436;  5  Porter,  Ala.  94  ;  Carter  v.  Hamilton,  11  Barb. 
147 ;  Downs  v.  Webster,  Brayt.  79. 

'  Gazoway  v.  Moore,  Harper,  401.  "  Eaves  v.  Henderson,  17  Wend.  190. 

"  Featherston  v.  Wilson,  4  Ark.  154;  St.  Louis,  &c.  Ins.  Co.  v.  Homer,  9 
Mete.  39.  '"  Alsop  v.  Goodwin,  1  Root,  196. 

"  Noe  V.  Hodges,  3  Ilumpb.  162;  Cole  v.  Handley,  8  Smedes  &  M.  473;  Pack 
V.  Thomas,  13  Smedes  &  M.  11 ;  Baugb  v.  Ramsey,  4  T.  B.  Monroe,  155;  M'Minn 
V.  Owen,  2  Dallas,  173  ;  Hair  v.  La  Bronse,  10  Ala.  548 ;  Langenberger  v.  Kraeger, 
48  Cal.  147 ;  Clark  v.  Hart,  49  Ala.  86. 

"  Bradley  v.  Anderson,  5  Vt.  152;  Coe  v.  Wallace,  5  Blackf.  199. 


FORMALITY   IN   RESPECT  TO   STYLE  AND  MATERIAL.  71 

111  Missouri,  it  has  been  held  that  if  payable  in  the  "  cur- 
rency of  the  State,"  it  cannot  be  shown  that  anything  was  in- 
tended but  gold  and  silver,  or  notes  of  the  bank  of  Missouri.^ 

Nor  can  any  condition  be  engrafted  in  the  instrument  by 
verbal  testimony — as  that  it  should  be  void  unless  others 
interested  agreed  to  the  settlement  in  which  it  was  given  ;^ 
or  was  to  be  void  if  certain  bills  should  be  paid  at  maturity ; ' 
or  was  to  be  void  or  surrendered  up  in  the  event  the  case  in 
which  it  was  given  for  a  fee  were  compromised,*  or  in  any 
other  contingency.^  Nor  can  it  be  shown  that  it  was  only 
to  be  paid  out  of  a  particular  fund  or  estate.^  But  a  deliv- 
ery to  the  payee  to  take  eifect  only  upon  a  condition  prece- 
dent, it  has  been  held,  might  be  shown  as  between  the  origi- 
nal parties.'^ 

Evidence  of  want  of  consideration  is  admissible  between 
original  parties.  "Every  bill  or  note  imports  two  things, 
value  received,  and  an  agreement  to  pay  the  amount  on  cer- 
tain specified  terms.  Evidence  is  admissible  to  deny  the 
receipt  of  value,  but  not  to  vary  the  engagement."^  The 
cases  amply  sustain  the  foregoing  views,  which  seem  to  us 
altogether  correct.  It  has  been  held  that  it  is  competent  to 
show  by  parol  that  at  the  time  a  note  was  made,  it  w^as 
agreed  that  it  should  be  held  for  nothing  on  the  happening 
of  a  certain  event.^     But  unless  such  event  operated  a  failure 

'  Cockrill  V.  Kirkpatrick,  9  Mo.  688.  '  Ely  v.  Kilborn,  5  Denio,  514. 

=  Penny  v.  Graves,  13  111.  187.  *  Dale  v.  Pope,  4  Littell,  16G. 

'Brown  v.  Hull,  1  Denio,  400;  Holt  v.  Moore,  5  Ala.  521;  Adams  v.  Wil- 
son, 13  Mete.  138;  Spring  v.  Lovett,  11  Pick.  417;  Haverin  v.  Donnell,  7 
Smedes  &  M.  244;  Underwood  v.  Siuionds,  13  Mete.  375;  Rose  v.  Learned,  14 
Mass.  154;  Brown  v.  Langley,  5  Scott  N.  R.  249;  Sears  v.  Wright,  24  Me.  278; 
Dalev.  Pope,  4  Littell  16(5;  Tower  v.  Richardson,  6  Allen,  351;  Anderson  v. 
Magruder,  10  Cal.  419;  Calhoun  v.  Davis,  2  Ind.  532  ;  Goddard  v.  Cutts,  11  Me. 
440;  Miller  v.  White,  7  Blackf.  491 ;  Burge  v.  Dishman,  5  Ind.  273;  Potter  v. 
Earnest.  45  Ind.  418,  Osborn,  J.:  "A  verbal  contlition  cannot  be  annexed  to  a 
promissory  note." 

»  Adams  v.  Wilson,  13  Mete.  138;  Currier  v.  Hale,  8  Allen,  47;  Campbell  v. 
Hodgson,  Gow,  74 ;  Rawson  v.  AValker,  1  Stark.  361 ;  Brown  v.  Spofford,  95  U.  S. 
(5  Otto)  483  (1877). 

'  Benton  v.  Martin,  53  N.  Y.  574;  see  ante,  §  68. 

«  Abbott  V.  Hendricks,  1  M.  &  G.  795  (39  E.  C.  L.  R.)  See  Small  v.  Clewley, 
6?  Me.  155.  *  Bissinger  v.  Guiteman,  6  Ileisk.  377 


72  FORMAL   REQUISITES   OF   BILLS   AND   NOTES. 

of  consideration,  wo  cannot  perceive  upon  wliat   jH-inciple 
such  a  view  could  be  taken. 

Coteniporaueous  written  agreements  may  be  proven  to 
control  the  eftect  of  negotiable  or  other  instruments  as  be- 
tween immediate  parties,  and  those  having  notice;  ^  and  a  pur- 
chaser, after  maturity,  of  a  negotiable  instrument,  would  be 
bound  by  such  agreement  when  proven.^ 


SECTION  II. 

THE   FOKMAL,    ELEMENTS   AND   PHKASES    OF   BILLS    AND   NOTES. 

§  82.  We  have  now  to  consider:  1st,  The  date;  2d,  the 
amount ;  3d,  the  time  of  payment ;  4th,  the  place  of  pay- 
ment ;  5th,  name  of  the  drawer  or  maker ;  6th,  name  of  the 
drawee  (if  it  be  a  bill) ;  7th,  name  of  the  payee ;  8th,  the 
terms  of  negotiability ;  9th,  the  words  of  consideration  ;  10th, 
the  words  of  advice  ;  and  11th,  the  attestation. 

§  83.  In  the  first  place,  as  to  the  date,  this  is  usually 
written  in  the  right  hand  corner  of  the  instrument ;  but  no 
date  is  essential  to  the  validity  of  a  bill  or  note ;  ^  and  it  is 
of  no  consequence  on  what  portion  of  the  paper  it  is  written.* 
If  there  be  no  date,  it  ^vill  be  considered  as  dated  at  the  time 
it  was  made,^  and  parol  evidence  is  admissible  to  show  from 
what  time  an  undated  instrument  was  intended  to  operate,® 
or  to  sliow  that  there  was  a  mistake  in  the  date."^  When  a 
note  without  date  is  made  for  another's  accommodation,  the 

'  Goodwin  v.  Nickerson,  51  Cal.  166.  '  Munro  v.  King,  3  Colorado,  238. 

'  Michigan  Ins.  Co.  v.  Leavenworth,  30  Vt.  11 ;  Mechanics'  &c.  Bank  v.  Sclniy- 
ler,  7  Cowen,  337  ;  Byles  [*74],  166 ;  Edwards,  150 ;  Bay  ley,  21 ;  Story  on  Bills,  §  37. 

*  Shepherd  v.  Graves,  14  Howard,  505. 

"  Giles  V.  Bourne,  6  Maiile  &  S.  73;  De  la  Courtier  v.  Bellamy,  2  Show.  422; 
Seldenridge  v.  Connable,  32  Ind.  375. 

•  Davis  V.  Jones,  25  L.  J.  C.  P.  91;  17  C.  B.  625  (84  E.  C.  L.  R.);  Richard- 
son v.  Ellet,  10  Texas,  190;  Lean  v.  Lozardi,  27  Mich.  424;  Thomson  on  Bills, 
37. 

'  Drake  v.  Rogers,  32  Me.  524. 


FORMAL   ELEMENTS   OF   BILLS   AND   NOTES.  73 

maker  authorizes  him  to  fill  up  the  date  as  he  sees  fit.^  An 
indorsee  has  been  allowed  to  prove  against  the  maker  a  mis- 
take in  the  date  of  a  note,  though  by  such  proof  the  maker 
was  cut  off  from  a  defense  valid  as  to  the  payee.^  But  a 
maker  would  not  be  admitted  to  prove  a  different  date  as 
against  an  indorsee  for  value,  who  relied  on  its  apparent 
date.^     A  mistaken  date  may  be  rectified  in  equity.* 

§  84.  When  the  paper  is  payable  at  a  specified  time  after 
date,  it  is  almost  indispensable  that  the  date  should  appear 
on  its  face,  for  otherwise,  if  it  be  a  bill,  the  drawee  cannot 
tell  when  it  falls  due,  nor  can  an  indorsee  tell  whether  it  be 
a  bill  or  note.  Nor  can  the  holder  know  when  to  present  it 
for  payment,  nor  when  !t  will  be  considered  overdue.  When 
the  bill  or  note  is  payable  at  sight,  or  on  demand,  or  on  a 
certain  day,  the  date  is  not  so  material ;  but  to  avoid  diffi- 
culty, it  should  never  be  omitted.^  And  it  has  been  ques- 
tioned whether  or  not  the  drawee  might  not  reasonably  re- 
fuse to  accept  or  pay  an  undated  bill,  on  account  of  embarrass- 
ments, in  respect  to  remedy  and  evidence,  to  which  he  might 
be  subjected.^ 

§  85.  Bills,  checks  and  notes  are  sometimes  post-dated  or 
ante-dated  for  purposes  of  convenience ;  ^  and  the  fact  that 
they  are  negotiated  prior  to  the  day  of  date,  is  not  a  suspi- 
cious circumstance  against  which  parties  must  guard.^  The 
indorsee  of  a  bill  which  was  post-dated,  and  indorsed  by  the 
payee  who  died  the  day  before  the  day  of  date,  was  held  in 
an  English  case  to  have  derived  title  through  the  indorser, 
and  entitled  to  recover  against  the  drawer,®  and  this  case  has 
been  followed  in  the  United  States.^^     So  if  a  note  bear  date 

'  Androscoggin  Bank  v.  Kimball,  10  Cush.  373. 

'  Drake  v.  Rogers,  32  Me.  524;    Germania  Bank  of  Distler,  11  N.  Y.  S.  C.  (4 
Hun).  633. 

"  Huston  V.  Young,  33  Me.  85.  *  Paysant  v.  Ware,  1  Ala.  160. 

'  Story  on  Notes,  §  48.  •  Story  on  Bills,  §  37. 

'  Gray  v.  Wood,  2  Har.  &  J.  328 ;  Richter  v.  Selin,  8  Serg.  &  R.  425. 

'  Brewster  v.  McCardel,  8  Wend.  478;  Edwards  on  Bills,  151. 

'  Pasmore  v.  North,  13  East.  517;         '"  Brewster  v.  McCardel,  8  Wend.  478. 


74  FORMAL   REQUISITES  OF   BILLS  AND  NOTES. 

as  of  a  time  before  the  maker  became  of  age,  or  as  of  a 
tiDie  wlien  tlie  maker  was  disqualified  by  being  '3ifeme  covert, 
it  may  be  shown  in  answer  to  the  plea  of  infancy  or 
coverture,  that  the  period  of  its  actual  date  or  delivery  was 
when  no  such  incajjacity  or  disqualification  existed/  And 
if  the  bill  or  note  be  ante-dated  or  post-dated,  as  of  a  time 
when  it  would  be  valid,  it  may  be  shown  that  it  was  dated 
or  delivered  at  a  time  when  the  party  had  no  capacity  to  en- 
ter into  the  contract,  or  that  it  came  within  the  interdiction 
of  a  statute.^  And  whenever  there  is  a  false  date  to  evade 
the  law,  the  instrument  is  void  as  to  all  parties  having  no- 
tice."' If  the  date  does  not  correspond  with  the  declaration, 
the  discrepancy  must  be  explained.*  .But  where  it  is  alleged 
that  a  note  was  made  on  a  certain  day  (and  not  that  it  bore 
date  on  that  day)  it  is  not  a  fatal  variance  that  it  bears  date 
on  another  day.^ 

§  86.  Secondh/,  as  to  the  amount  or  sum payhle. — ^This  is 
usually  specified  in  figures  in  the  upper,  or  lower,  left  hand 
corner  of  the  instrument,  as  well,  as  in  writing  in  the  body 
of  it.  Where  a  difference  appears  between  the  words  and 
figures,  evidence  cannot  be  received  to  explain  it ;  but  the 
words  in  the  body  of  the  paper  must  control;®  and  if  there 
is  a  difference  between  printed  and  written  words,  the  writ- 

'  Pasniore  v.  North,  13  East,  517;  Story  on  Notes,  §  48. 

'  Bailey  v.  Taber,  Mass.  286. 

'  Serle  v.  Norton,  9  M.  &  W.  309;  Byles  on  Bills  [*r5],  168;  Edwards,  151. 

*  Fitch  V.  Jones,  5  Ellis  &  B.  238;  Faushavve  v.  Peet,  2  II.  &  N.  1. 

'  Coxon  V.  Lyon,  2  Camp.  307;  Smith  v.  Lord,  3  Dow.  &  L.  759. 

"Payne  v.  Clark,  19  Mo.  152;  Riley  v.  D,ckens,  19  III.  30;  Hears  v.  Gra- 
ham, 8  Blackf.  144;  Saunderson  v.  Piper,  5  Biug.  N.  C.  425.  In  Smith  v.  Smith, 
1  R.  I.  398,  it  appeared  a  bill  bore  the  marginal  figures  "$175  94,"  and  on  its 
face  called  for  the  payment  of  "  three  hundred  and  seventy-five  ,Vu  "  ex[)ressed  as 
indicated.  The  clerk  of  the  bank,  where  it  was  left  for  discount,  observing  the 
difference  between  the  marginal  figures  and  the  words  in  the  body,  changed  the 
marginal  figure  1  to  a  3,  thereby  conforming  them.  The  Court  said :  "  We  do 
not  think  the  marginal  notation  constitutes  any  part  of  the  bill.  It  is  simply  a 
memmorandum  or  abridgment  of  the  contents  of  the  bill  for  the  convenience  of 
reference.  The  contract  is  perfect  without  it.  If  this  is  so,  any  alteration  in 
the  figures  cannot  avoid  the  contract,  because  it  is  no  alteration,  eitiier  material 
or  immaterial,  in  the  contract."     Chitty  on  Bills  [*150J,  173;     Thomson,  40. 


FORMAL   ELEMENTS   OF   BILLS   AisD   NOTES.  75 

ten  must  control.^  If  the  words  are  so  obscurely  written  or 
printed  iis  to  be  indistinct,  tlie  figures  iu  the  margin  may  be 
referred  to  to  explain  them.^  If  by  inadvertence  the  amount 
is  expressed  in  figures  only,  it  will  sufiice.^  It  has  been  held 
in  the  United  States,  that  where  the  figures  were  in  the  mar- 
gin of  the  paper,  and  the  amount  was  left  blank  in  the  body 
of  it,  it  was  fatally  defective/     But  in  England,  where  the 

body  contained  the  Avord  "Fifty ,"  and  was  blank  as  to 

the  denomination  of  money  intended,  and  in  the  margin 
"  £  fifty  "  was  written,  it  was  held,  and  that  too  in  a  crim- 
inal case,  that  "  Fifty "  clearly  meant  "  fifty  pounds."  ^ 

If  it  had  really  been  the  intention  of  the  parties  to  the 
paper  that  the  words  should  be  written  so  as  to  conform  to 
the  figures,  it  seems  clear  that  there  was  implied  authority 
to  the  holder  to  fill  the  blank  accordingly.''  Where  the 
word  "dollars"  is  left  out,  or  the  dollar  mark  is  omitted, 
they  will,  nevertheless,  be  supplied  in  this  country,'''  where, 
under  the  like  circumstances,  "  pounds  "  would  be  supplied 
in  England.^     Where  "  three  hundred  dollars  "  was  expressed 

'  1  Parsons  li.  &  B.  28. 

=  Riley  v.  Dickens,  19  111.  29;  Corgan  v.  Frew,  39  111.  31;  Chitty  on  Bills 
[*149],  172. 

'  Sweetzcr  v.  French,  13  Mete.  262;  Petty  v.  Fleispel,  21  Tex.  169.  Corgan 
V.  Frew,  39  111,  31,  where  there  was  in  the  margin  "  $500,"  and  in  the  body  "five 
hundred,"  and  it  was  held  to  mean  "dollars."' 

In  Louisiana  it  is  provided  by  the  Revised  Statutes  of  1870.  as  follows: 

Sec.  319.  No  bill  of  exchange,  promissory  note,  or  other  obligation  for  the 
payment  of  money,  made  within  this  State,  shall  be  received  as  evidence  of  a 
debt,  when  the  whole  sum  shall  be  expressed  in  figure-;,  unless  the  same  sliall  be 
accompanied  by  proof  that  it  was  given  for  the  sum  therein  expressed.  The 
cents  or  fractional  parts  of  a  dollar  may  be  in  figures.'' 

*  Norwich  Bank  v.  Hyde,  13  Conn.  279;  but  see  Corgan  v.  Frew,  sujmv 
"  Rex  V.  Elliott,  2  East  P.  C.  951 ;  1  Leach  C.  L.  175. 

*  Bank  of  Commonwealth  v.  Curry,  2  Dana,  142 ;  Bank  of  Limestone  v. 
Penick,  5  Monroe,  25;  Norwich  Bank  v.  Hyde,  13  Conn.  279. 

'  Corgan  v.  Frew,  39  111.  31;  Williamson  v.  Smith,  1  Cold.  1 ;  McCoy  v.  Gil- 
more,  7  Ohio,  268;  Murrill  v.  Handy,  17  Mo.  406;  Coolbroth  v.  Purinton,  29  Me. 
469;  Sweetzer  v.  French,  13  Mete.  262;  Northrop  v.  Sanborn,  22  Vt.  433;  Booth 
V.  Wallace,  2  Root,  247;  Harman  v.  Howe,  27  Grat.  677, 

*  Rex  V,  Elliott.  1  Leach  C.  L.  175;  2  East  P.  C.  951;  Phipps  v.  Tanner,  5 
C.  &  P,  488.     . 


7G  FORMAL  REQUISITES  OF  BILLS  AND  NOTES. 

in  a  note,  it  was  left  to  a  jury  to  say  whether  or  not  "  three, 
ifec,"  was  intended/  and  a  note  for  "  the  sum  of  fifty-two, 
25-100,"  was  held  to  denote,  beyond  question,  that  the  frac- 
tion meant  was  "  dollai'S."  ^  So  where  the  note  was  for  "  one 
hundred  and  ninety-one,  fifty  cents,"  the  word  dollars  was 
supplied.^  The  marginal  figures  are  really  not  a  part  of  the 
instrument,  but  a  mere  memorandum  of  the  amount/ 

§  87.  The  term  dollars. — When  the  term  "  dollars  "  is  used 
in  any  security  for  money  given  in  any  of  the  United  States, 
it  is  understood  to  mean  dollars  "  of  the  lawful  money  of  the 
United  States;"  and  extraneous  evidence  will  not  l)e  permitted 
as  a  general  rule  to  give  it  a  different  signification.^  But 
under  peculiar  circumstances,  such  as  arose  during  the  ex- 
istence of  the  Confederate  States,  when  the  term  "dollars" 
was  ap})lied  to  Confederate  currency  in  all  circles,  parol  or 
other  evidence  will  be  permitted  to  explain  the  true  meaning 
and  intent  with  which  it  was  employed.*^  Thus,  in  a  case 
before  the  United  States  Supreme  Court,  involving  the  legal 
effect  of  a  note  for  $10,000,  dated  Montgomery,  Ala.  (which 
was  in  the  Confederate  States  during  the  war),  November 
28th,  1864,  Chief  Justice  Chase,  delivering  the  opinion  of 
the  court,  said  :  "  It  is  quite  clear  that  a  contract  to  pay 
dollars,  made  between  citizens  of  any  State  of  the  Union, 
wliile  maintaining  its  constitutional  relations  with  the  na- 
tional government,  is  a  contract  to  pay  lawful  money  of  the 
United  States,  and  cannot  be  modified  or  explained  by  parol 

>  Burnham  v.  Allen,  1  Gray,  496.  '  Murrlll  v.  Hundy,  17  Mo.  406. 

=  Beardsley  v.  Hill,  61  111.  354. 

*  Commonwealth  v.  Emigrant  Ins.  Co.  98  Mass.  12;  Smith  v.  Smith,  1  R.  I. 
398.     See  ante,  §  86,  and  notes. 

=•  Bank  v.  Supervisors,  7  Wall.  26;  Thorington  v.  Smith,  8  Wall.  12;  Omo- 
hundro  v.  Crump,  18  Grat.  705;  Lohman  v.  Crouch,  19  Grat.  321  ;  Smith  v. 
Walker,  1  Call,  24;  Commonwealth  v.  Beaumarchais,  3  Call,  107;  Wilcoxen  v. 
Reynolds,  46  Ala.  529;  Hightower  v.  Maull,  50  Ala.  495;  Stewart  v.  Salamon, 
94  U.  S.  (4  Ottoj,  43 i. 

«  Lohman  v.  Crouch,  19  Grat.  331;  Thorington  v.  Smith,  8  Wall.  12;  Donley 
V.  Tindall,  33  Tex.  43  ;  Stewart  v.  Salamon,  94  U.  S.  (4  Otto),  434  ;  Confederate 
Note  Case  19  Wall.  548  ;  Wilmington,  &c.  R.  R.  y.  King,  91  U.  S.  (1  Otto),  3. 


FORMAL  ELEMENTS  OF  BILLS  AND  NOTES.  77 

evidence.  But  it  is  equally  clear,  if  in  any  other  country 
coins  or  notes  denominated  dollars  should  be  authorized,  of 
different  value  from  the  coins  or  notes  which  are  current  here 
under  that  name,  that,  in  a  suit  upon  a  contract  to  pay  dollars 
made  in  that  country,  evidence  would  be  admitted  to  prove 
what  kind  of  dollars  were  intended,  and  if  it  should  turn  out 
that  foreign  dollars  were  meant,  to  prove  their  equivalent 
value  in  lawful  money  of  the  United  States.  Such  evidence 
does  not  modify  or  alter  the  contract.  It  simply  explains  an 
ambiguity  which,  under  the  general  rules  of  evidence,  may 
be  removed  by  parol  evidence."  ^  But  the  same  tribunal  has 
held  that  in  the  absense  of  parol  testimony  it  would  be  pre- 
sumed that  a  note  payable  in  one  of  tlie  Confederate  States, 
during  the  war,  in  "  dollars,"  was  presumptively  payable  in 
lawful  money  of  the  United  States.^  In  such  cases  the  Su- 
preme Court  of  the  U.  S.  holds  that  the  sum  payable  in  ac- 
tual money  must  be  ascertained  by  the  value  in  coin,  or  legal 
currency  of  the  United  States,  at  the  time  when  and.  place 
where  the  note  was  made,  of  the  Confederate  note,  equal  in 
nominal  amount  to  the  number  of  dollars  specified.^ 

§  88.  Thirdly^  as  to  the  time  of  imyment. — Bills  and  notes 
are  usually  drawn  payable  at  a  specified  time  after  date,  or 
after  sight,  or  at  sight.*  Sometimes  they  are  made  payable 
on  demand,  or  no  time  is  specified,  in  which  case  on  demand 
is  understood.^  A  note  promising  to  pay  when  the  maker 
can  make  it  convenient,  has  been  held  payable  within  a  rea- 
sonable time ;  ®  and  it  seems  that  notes  payable  within  a 
reasonable  time  are  generally  regarded  as  negotiable  in  the 

'  Thorington  v.  Smith,  8  Wall.  12. 

*  The  Confederate  Note  Case,  19  Wall.  548. 

'  Stewart  v.  Salamon,  94  U.  S.  (4  Otto),  434,  (1876). 

"  Story  on  Bills.  §  50. 

^Thompson  v.  Ketchum,  8  Johns.  189;  Green  v.  Drebillis,  1  Iowa,  553; 
Stover  V.  Hamilton,  21  Grat.  273;  Bowman  v.  McChesney,  22  Grat.  609;  Whit- 
lock  V.  Underwood,  2  B.  «&  C.  157;  Story  on  Bills,  §50;  Chitty  [*151],  174; 
and  interest  runs  from  date,  Collier  v.  Gray,  1  Tenn.  110;  see  ante,  §§  40,  44. 

*  Lewis  V.  Tipton,  10  Ohio,  N.  S.  88. 


78  FORMAL  REQUISITES   OF   BILLS  AND  NOTES. 

United  States,  the  la^y  fixing  a  definite  limit  to  tbe  period  to 
be  allowed.^ 

When  the  word  montli  is  used  in  specifying  tlie  time  of 
payment,  a  calendar  month  is  understood;  and  the  word 
year  signifies  a  calendar  year.'^ 

In  England,  foreign  bills  are  frequently  drawn  payable  at 
usance  or  usances ;  and  by  usance  is  meant  the  common 
period  fixed  by  customary  dealing  between  the  country  of 
the  drawer  and  the  country  of  the  place  of  payment  for  the 
payment  of  bills.^ 

§  89.  A  note  payable  "  when  demanded,"  *  or  "  on  call," 
or  "  when  called  for,"  ^  is  not  distinguishable  from  one  pay- 
able on  demand.  If  payable  with  interest  "  twelve  months 
after  notice,"  the  amount  is  due  whenever  demanded  after 
notice  has  been  given  and  twelve  months  have  expired  ;  ^  and 
where  the  expression  used  is  "  on  demand  with  interest  after 
four  months,"  it  is  due  when  four  months  have  expired.*^ 
But,  in  such  a  case,  it  has  been  held  that  demand  might 
be  made  immediately,  but  that  interest  would  not  begin 
until  after  the  time  specified.^ 

§  00.  Fourthhj. — The  place  of  payment  need  not  be 
specified  in  the  bill  or  note,  but  very  often  is.  If  the  drawer 
designate  in  the  bill  a  place  of  payment,  he  will  be  dis- 
charged, unless  it  be  there  presented  at  maturity,  as  will 
also  an  indorser ;  ^  but  as  to  the  maker  of  a  note  or  acceptor 
of  a  l)ill  payable  at  a  particular  place,  unless  the  restrictive 
words  "  only  and  not  elsewhere  "  be  added,  no  presentment 
there  at  maturity  or  afterwards  is  necessary  to  charge  him.^** 
Where  no  place  of  payment  is  expressed  in  a  note,  the  place 


'  Bowman  v.  McChesney,  supra. 

'  See  Ch.  XX  on  Presentment  for  Payment.  '  Story  on  Bills,  §  50, 

'  Bowman  v.  McChesney,  22  Grat.  GOO;  Kingsbury  v.  Butler,  4  Vt.  458. 

'  Bowman  v.  McChesney,  22  Grat.  609. 

•  Clayton  v.  Gosling.  5  B.  &  C.  360.  '  Hobarts  v.  Dodge,  1  Fairf.  156. 

'  Loring  v.  Gurney,  5  Pick.  15. 

°  Sec  Chapter  XX  on  Presentment  for  Payment. 

'°  See  Chapter  XX  on  Presentment  for  Payment. 


FORMAL  ELEMENTS  OF   BILLS  AND  NOTES.  70 

of  payment  is  understood  to  be  wliere  the  maker  resides;^ 
and  if  none  be  expressed  in  a  bill,  wliere  the  drawee  resides 
is  understood." 

Circumstances,  however,  may  control  this  inference. 
Thus,  if  a  bill  were  drawn  upon  a  merchant  abroad  ad- 
dressed to  him  "  at  Paris  or  at  London,"  the  place  of  pay- 
ment would  be  deemed  the  place  where  he  accepted  it, 
^Yhether  Paris  or  London.^  If  the  drawer  direct  on  the 
face  of  the  l)ill  that  it  be  paid  at  his  own  house,  it  creates  a 
presumption  that  it  is  an  accommodation  bill;  and  that  he 
was  to  pay  it ;  and  unless  he  rebut  it  by  showing  that  he 
really  had  effects  in  the  drawee's  hands,  notice  of  dishonor 
will  be  dispensed  with.^ 

The  execution  of  a  note,  on  its  face  payable  at  a  bank, 
the  place  for  the  name  of  which  is  left  blank,  at  a  town 
named,  authorizes  the  payee,  before  the  maturity  of  the  note, 
to  insert  the  name  of  a  particular  l)ank  at  such  town  in  the 
blank  space,  so  that,  whatever  limitation  of  authority  may 
have  been  imposed  by  the  maker  on  the  payee,  and  although, 
by  the  law  of  the  State,  no  note  is  negotiable  unless  payable 
at  a  specified  bank,  the  note  will  be  negotiable,  and  governed 
by  the  law  merchant  in  the  hands  of  a  bona  fide  indorsee.^ 
In  some  of  the  States  of  the  United  States  the  place  of  pay- 
ment  is   made   by   statute   the   criterion    of  negotiability.^ 

'  Story  on  Notes,  §  49. 

'  Chitty  on  Bills  (13  Am.  ed.),  [*151],  174;  Story  on  Bills,  §  48. 

'  Freese  v.  Brownell,  35  N.  J.  (Law),  285;  Story  on  Bills,  §  46. 

'  Sharp  V.  Bailey,  9  B.  &  C.  44. 

"  Gillaspie  V.  Kelly,  41  Ind.  158;  Spitler  v.  James,  33  Ind.  203.  See  foit, 
%  144. 

'  Thus  in  Alabama  it  is  provided  by  statute,  Code  of  1887,  §  1833,  that 
''  Bills  of  exchange  and  promissory  notes  payable  in  money  at  a  bank  or  private 
banking  house  are  governed  by  the  commercial  law,  except  so  far  as  the  same  is 
changed  by  this  Code." 

In  Indiana,  by  the  Revised  Statutes  of  1852,  c.  77,  §  6,  that  "  Notes  payable 
to  order,  or  bearer,  in  a  bank  in  this  State,  shall  be  negotiable  as  inland  bills  of 
exchange,  and  the  payees  and  indorsees  thereof  may  recover  as  in  case  of  such 
bills." 

It  has  been  held  in  Georgia,  that  a  note  payable  at ''  H.  &  J.,"  docs  not  upon 
its  face  show  that  it  was  made  for  the  purpose  of  negotiation  at  a  chartered 
bank;  and  that  the  fact  that  suit  thereon  is  brought  against  the  indorsers  by  H. 
&  J.,  and  who  aie  described  in   the   pleadings  as  lately  bankers  doing  business 


80  FORMAL  REQUISITES  OF  BILLS  AND  NOTES. 

Where  it  is  necessary  to  negotiability  that  the  note  be  pay- 
able at  a  bank  in  the  State,  and  a  note  is  made  in  the  State 
payable  at  a  bank,  it  will  be  presumed  that  the  bank  is  in 
the  State.^ 

§  91.  Flftlily,  as  to  the  name  of  the  drawer  or  maher. — 
It  is  of  the  first  importance,  indeed  indispensable,  that  the 
bill  or  note  should  point  out  with  certainty  the  party  who 
enters  into  the  contract  imported  by  its  terms,  and  if  tlie 
promise  be  in  the  alternative,  it  is  not  a  good  negotiable 
instrument.  Thus,  where  the  note  ran,  "I,  A.  B.,  promise  to 
pay,"  and  was  signed  "  A.  B.  or  else  C.  D.,"  the  court  said : 
"  This  is  not  a  promissory  note  against  this  defendant,  within 

under  the  name,  style  and  firm  of  H.  &  J.,  is  not  sufficient  to  prove  that  H.  &  J. 
is  a  chartered  bank.     Salmons  v.  Hoyt,  53  Ga.  493. 

In  Virginia,  the  Code  (see  Code  of  1873,  c.  141,  §  7)  provides  that  "  Every 
promissory  note,  or  check  for  money,  payable  in  this  State  (1)  at  a  particular 
bank,  or  (2)  at  a  particular  office  thereof  for  discount  and  deposit,  or  (3)  at  the 
place  of  business  of-  a  savings  institution  or  savings  bank,  or  (4)  at  the  ^^Zace  of 
iusiness  of  a  licensed  hroTcer ;  and  every  inland  bill  of  exchange  payable  in  this 
State  shall  be  deemed  negotiable,  and  may,  upon  being  dishonored  for  non- 
acceptance  or  non-payment,  be  protested,  and  the  protest  be  in  such  case  evi- 
dence of  dishonor  in  like  manner  as  in  the  case  of  a  foreign  bill  of  exchange.'' 

The  words  italicised,  "  at  the  place  of  husiness  of  a  licensed  broker,"  were  inter- 
polated by  an  amendment  of  the  Code  in  1866,  at  the  instance  of  the  Richmond 
brokers.     Acts  of  Assembly,  18C6,  p.  490. 

The  declaration  that  every  inland  bill  of  exchange  payable  in  this  State  shall 
be  deemed  negotiable,  is  only  confirmatory  of  the  common  law.  If  payable  in 
another  State,  its  negotiability  is  to  be  determined  there. 

In  the  Freeman's  Bank  v.  Ruckman,  16  Grat.  120,  the  note  sued  on  was  ex- 
ecuted in  Boston,  Mass.,  and  was  payable  ''  at  either  of  the  banking  houses  in 
Wheeling,  Va."  Judge  Moncure  said:  "  The  note  was  not  payable  at  a  particu- 
lar bank,  or  at  a  particular  office  thereof,  &c.  (following  the  statute),  but  'at 
either  of  the  banking  houses  in  Wheeling,  Va.,'  and  therefore  is  not  a  negotiable 
note."  It  is  not  necessary  in  Virginia  that  the  note  in  order  to  be  negotiable 
be  expressly  payable  in  that  State:  "  It  is  certainly  true  that  such  note,  &c.,  must 
on  its  face  be  payable  in  this  State,  because  the  section  so  requires.  But  it  does 
not  require  that  the  State  shall  be  expressly  named  in  the  note."  McVeigh  v. 
Bank  of  The  Old  Dominion,  26  Grat.  880.  Moncure,  P.  See  Woodward  v.  Gunn, 
Virginia  L.  J.  April,  1878,  p.  243.  In  this  case  it  was  held,  that  a  note  on  which 
the  place  of  payment,  after  the  word  at,  in  a  printed  note  was  left  blank,  but  was 
intended  to  be  tilled  with  the  name  of  a  bank  in  Virginia,  thus  making  the  note 
negotiable,  might  under  the  peculiar  circumstances  which  appeared  to  be  treated 
as  negotiable,  although  in  fact  the  blank  for  the  place  of  payment  was  never  filled. 

'  McGuirk  v.  Cummings,  54  Ind.  246.  See  McVeigh  v.  Bank  of  Old  Domin- 
ion, 26  Grat.  830,  and  snpra. 


FORMAL    ELEMENTS   OF   BILLS   AND  NOTES.  81 

the  statute  of  Anne.  It  operates  differently  as  to  the  two 
parties.  It  is  the  absolute  undertaking  on  the  part  of 
Corner  (A.)  to  pay,  and  it  is  conditional  only  on  the  part  of 
the  defendant  (B.),  who  undertakes  to  pay  only  in  the  event 
of  Corner's  Dot  paying."  ^  But  it  has  been  said  that  such  an 
instrument  would  be  a  good  note  as  against  A.' 

§  92.  The  name  of  the  drawer  is  absolutely  needful  upon 
the  face  of  the  bill ;  for  without  it  the  drawee  cannot  tell 
whether  he  should  accept  it  or  not,  or  any  holder  know  to 
whom  notice  should  be  given.  Indeed,  it  is  paradoxical  to 
speak  of  a  bill  without  a  drawer ;  for  the  very  term  imports 
a  negotiable  order  drawn  by  some  one.^  And  even  when 
such  an  instrument  bears  the  name  of  one  upon  it  who  signs 
as  acceptor,  it  is  still  nothing  more  than  an  inchoate  paper, 
which  cannot  be  sued  upon  unless  a  drawer's  name  is  au- 
thoritatively inserted  in  it."*  And  it  has  been  well  said  that 
it  is  "  an  abase  of  terms  to  say  that  one  w^as  the  acceptor  of  a 
bill  which  had  never  been  drawn ;  or,  in  other  w^ords,  that 
he  had  accepted  an  '  order,'  or  '  request,'  that  had  never 
been  made  upon  him."  ^ 

'  Ferris  v.  Bond,  4  Barn.  &  Aid.  679;  Story  on  Notes,  §  34;  1  Parsons  N.  & 
B.  36-7;  C'hitty  [*140],  163.. 

^  Byles  (Sharswood's  ed.)  [*93],  190;  see  Edwards  on  Bills,  134.  This  seems 
to  be  there  implied  by  the  author's  language. 

=  Story  on  Bills,  §  53. 

^McCallv.  Taylor,  19  C.  B.  N.  S.  30;  Tevis  v.  Young,  1  Mete.  (Ky.)  199; 
May  V.  Miller,  27  Ala.  515;  Byles  (Sharswood's  ed.)  [*83],  178. 

^  Tevis  V.  Young,  1  Mete.  (Ky.)  199.  In  this  case  the  instrument  sued  on 
was  in  the  form  of  a  bill,  but  no  name  was  signed  as  drawer.  It  was  dated 
Shelbyville,  and  addressed  "To  W.  G.  Rogers,  Shelbyville ; "  accepted  by 
Rogers,  and  indorsed  "  John  Tevis."  Suit  was  brought  by  Young  against  Tevis 
as  indorser,  and  Rogers  as  acceptor;  but  it  was  held  that  the  instrument  was 
incomplete,  and  the  action  could  not  be  maintained.  It  was  said  by  the  court, 
per  Duval,  J.  (Simpson,  J.,  dissenting):  "The  fallacy  of  all  the  reasoning  of 
counsel  upon  this  point,  consists  in  their  failure  to  recognize  the  distinction 
between  a  bill  of  exchange  and  the  mere  form  of  such  an  instrument.  The 
words  written  upon  the  face  of  the  paper  in  question  are  utterly  inoperative,  and 
without  force  or  legal  effect  for  any  purpose  as  a  commercial  instrument,  without 
the  name  of  a  drawer,  either  subscribed  to  the  paper,  or  inserted  in  the  body  of 
it.  Whether  the  name  of  the  drawer,  or  of  any  subsequent  party  to  the  bill,  be 
Vol.  I.— 6 


82  FORMAL   REQUISITES  OF  BILLS  AND  NOTES. 

§  93.  By  executing  a  promissory  note,  the  maker  engages 
to  pay  the  amount  therein  named  to  the  bearer,  if  it  be 
payable  to  bearer ;  to  the  payee  or  order,  if  it  be  payable  to 
a  particular  person  or  order.  By  the  very  act  of  engaging  to 
pay  to  a  particular  payee  he  acknowledges  his  capacity  to 
receive  the  money ;  and  also  his  capacity  to  order  it  to  be 
paid  to  another.  And  therefore  if  the  maker  is  sued  by  an 
indorsee  of  the  payee,  he  cannot  defend  himself  on  the  ground 
that  the  payee  had  no  capacity  to  indorse  it  by  reason  of 
being  an  infant,^  a  married  woman,''*  a  bankrupt,^  a  fictitious 
person,^  a  corporation  without  legal  existence,*^  or  that  such 
payee  was  insane  at  the  time  the  note  was  executed ;  ^  though, 
if  the  payee  became  insane  after  the  execution  of  the  note, 
his  indorsement  would  then  be  a  mere  nullity,  and  if  the 
acceptor  knew  of  such  insanity  he  would  not  be  justified  in 
making  payment  to  any  one  whose  title  w\as  afi^ected  by  it.^ 

forged  or  fictitious,  makes  no  difference  as  it  respects  the  liability  of  the  indorser. 
The  indorsement  implies  an  undertaking  that  the  antecedent  parties  are  compe- 
tent to  draw  and  accept  tiie  bill,  and  that  their  sigr.atnres  are  genuine.  Jkit  the 
indorsement  does  not  imply  an  undertaking  that  the  paper  indorsed  contains  the 
names  of  all  the  antecedent  parties  necessary  to  constitute  a  valid  bill  of  ex- 
change, when  the  face  of  the  paper  itself  shows  that  it  is  blank  as  to  all  or  any 
of  such  names.  The  indorsement  of  the  paper  Avould,  doubtless,  confer  upon 
the  party  intrusted  with  it,  authority  to  fill  up  the  blanks  with  the  names  of  any 
parties,  at  the  discretion  of  the  latter;  and  so,  the  indorsement  of  a  piece  of 
blank  paper  would  give  the  holder  authority  to  make  a  bill  of  exchange,  upon 
which  the  indorser  would  be  liable,  in  the  hands  of  an  innocent  holder  lor  value, 
for  whatever  amount,  or  in  the  names  of  whatever  parties  the  bill  might  be  sub- 
sequently drawn  and  accepted.  But  certainly  it  cannot  be  supposed  that  in 
either  of  the  cases  stated,  the  indorser  could  be  held  liable,  as  such,  until  the 
paper  should  have  been  drawn  and  executed  and  completed  as  a  bill  of  exchange. 
It  is  not  the  mere  authority  to  make  a  bill,  which  of  itself  creates  the  liability, 
but  it  is  the  execution  of  that  authority." 

'  Taylor  v.  Croker,  4  Esp.  187;  Jones  v.  Darch,  4  Price,  300;  Grey  v.  Cooper, 
3  Doug.  Go. 

»  Smith  V.  Marsack,  G  C.  B.  48G,  Wilde,  C.  J. 

'  Drayton  v.  Dale,  2  Barn.  &  Cress.  293.  *  Lane  v.  Krekle,  26  Wis. 

'  Ray  V.  Indianapolis  Ins.  Co.  39  Ind.  290;  John  v.  Farmer's  Bank,  2  Blackf. 
867;  Vater  v.  Lewis,  36  Ind.  291 ;  Snyder  v.  Studebaker,  19  Ind.  462;  Greiner  v. 
Ulery,  20  Iowa,  2uG.  «  See  Smith  v.  Marsack,  suj)ra. 

'  See  Bigelow  on  Estoppel,  450,  541;  Alcock  v.  Alcock,  3  Man.  A.  G.  268 
(42  E.  C.  L.  II.)  The  fact  of  lunacy  came  to  defendant's  knowledge  pending 
the  trial. 


FORMAL    ELEMENTS   OF   BILLS  AND  NOTES.  83 

There  are  authorities  which  hold  that  the  insanity  of  the 
payee  at  the  time  the  paper  was  executed  may  be  shown  ;  ^ 
but  they  have  been  sharply  criticised,*^  and  do  not  accord 
with  the  general  principle  of  estoppel  applied  to  negotiable 
paper. 

§  94.  Joint  and  sevei^al  notes. — A  note  by  two  or  more 
makers  may  be  either  joint,  or  joint  and  several.  A  note 
signed  by  more  than  one  person,  and  beginning  "  we  prom- 
ise," is  joint  only.^  A  joint  and  several  note  usually  expresses 
that  the  makers  jointly  and  severally  promise.  But  a  note 
signed  by  more  than  one  person,  and  beginning  "  I  promise," 
is  several  as  well  as  joint;*  and  so  also  is  one  signed  by 
two  makers,  and  running  "  we  or  either  of  us  promise  to 
pay."  ^ 

If  a  note  be  signed  by  a  person  in  the  name  of  a  firm, 
whether  that  name  represents  in  form  more  than  one  person, 
as  "  A.  &  Co.,"  or  only  one  person,  as  "  A.,"  it  is  in  both 
cases  the  joint  note  of  the  firm,  and  all  the  partners  will  be 
bound,  whether  the  language  be  "  I,"  or  "  We  "  promise.''  If 
the  note  runs  "  We  promise,"  and  is  signed  "A.  B.,  principal ; 
C.  D.,  surety,"  it  is  still  the  joint  note  of  both ;  and  if  it  were 
written  "  I  promise,"  and  signed  in  the  same  manner,  it  would 
be  the  joint  and  several  note  of  both."^  A  joint  and  several 
note,  though  on  one  piece  of  paper,  comprises  in  reality  and 
in  legal  effect,  several  notes.^  Thus  if  A.,  B.  <fe  C.  make  a 
joint  and  several  note,  there  is  the  several  note  of  each,  and 


'  Peaslee  v.  Bobbins,  3  Mete.  (Mass.)  164.         ^  Bigelow  on  Estoppel,  450,  451. 

'  Barrett  v.  Funay,  38  Ind.  86;  Thomson  on  Bills,  156. 

^  Monson  v.  Drakely,  40  Conn.  552;  Maiden  v.  Webster,  30  Ind.  317;  IIol- 
man  v.  Gilliam,  6  Rand.  39;  Hemmenway  v.  Stone,  7  Mass.  58;  Barrett  v.  Skin- 
ner, 2  Bailey,  88;  Marsh  v.  Ward,  Peake,  130;  Partridge  v.  Colby,  19  Barb. 
248 ;  Ladd  v.  Baker,  6  Fost.  76  ;  Lane  v.  Salter,  4  Rob.  (N.  Y.)  239 ;  Galvvay  v. 
Mathew,  1  Camp.  402. 

'  Pogue  V.  Clark,  25  III.  335;    Harvey  v.  Irvine,  11  Iowa,  82. 

'  Rees  V.  Abbott,  Cowper,  832. 

'  Hunt  V.  Adams,  Mass.  358;  Palmer  v.  Grant,  4  Conn.  389. 

*  Fletcher  v.  Dyte,  2  T.  R.  0;  Byles,  78. 


84  FORMAL   REQUISITES  OF  BILLS   AITD  NOTES. 

the  joint  note  of  all — in  all  four  uotes.^     The  joint  note  may 
be  valid,  thougli  the  several  notes  are  void." 

§  95.  Two  or  more  drawers. — The  drawer  of  a  bill  is  gen- 
erally a  single  person  or  a  copartnership  firm,  or  a  corpora- 
tion. But  two  or  more  persons  may  unite  in  drawing  a  bill.^ 
And  they  may  make  it  payable  to  their  joint  order,  or  to  the 
order  of  either  of  them,  or  to  a  third,  peison  or  order.  Some- 
times another  person  unites  with  the  drawer  as  a  surety,  and 
such  person  is  called  a  "  surety-drawer."  Where  several  per- 
sons unite  in  drawing  a  bill  of  exchange  upon  a  person  in 
whose  hands  they  have  no  funds,  and  the  bill  is  accepted  and 
paid,  all  of  them  are  bound  to  the  acceptor,  and  neither  one 
of  them  can  show  that  he  signed  as  surety  for  the  others,  and 
that  the  drawee  knew  the  fact  when  he  accepted  the  bill.^ 
The  doctrine  has  been  carried  farther,  and  it  has  been  held 
that  if  A.  and  B.  draw  on  C.  without  having  funds  in  his 
hands,  and  B.  signs  hims'elf  surety,  both  must  be  considered 
as  drawers  to  all  the  parties  to  the  bill,  as  well  to  the  acceptor 
as  the  payee,  for  the  acceptor  may  have  been  induced  to 
accept  the  bill  quite  as  much  as  the  payee  or  other  holder  to 
take  it,  because  B.,  as  surety  of  A.,  was  liable  to  him  for  pay- 
ment in  the  character  of  joint  drawers.'"^ 

In  New  York  a  different  view  is  taken,  on  the  ground 
that  the  liability  of  a  joint  drawer  extends  to  the  payee  or 
subsequent  holder  alone,  and  even  if  he  draws  the  bill,  with 
the  understanding  that  he  is  to  be  liable  to  the  acceptor,  such 
a  contract  would  be  a  parol  promise  to  pay  the  debt  of  an- 
other, and  void  imder  tlie  statute  of  fi-auds.''  But  this  view 
does  not  seem  to  us  tenable.^ 


'  King  V.  Home,  13  M.  &  W.  565. 

"^  McClae  v.  Sutherland,  3  E.  &  B.  1  (77  E  C.  L.  R.);  Byles  (Sbarswood's  ed.) 
^8],  79. 

=  Suydam  v.  Westfall,  4  Hill,  211  ;  2  Denio,  205. 

*  Suydam  y.  Westfall,  4  Hill,  211  ;  2  Denio,  205. 

"  Swilley  v.  Lyon,  18  Ala.  558;  Story  on  Bills,  §  420. 

•  Griffith  V.  Reed,  21  Wend.  502;  Wing  v.  Terry,  5  Hill,  160. 
'  Story  on  Bills,  §  420  ;  Edwards  on  Bills,  §  376. 


FORMAL    ELEMENTS  OF  BILLS  AND  NOTES.  85 

§  96.  Sixthhj  ;  as  to  the  drawee. — A  bill  of  exchange  being 
an  open  letter  of  request  from  tlie  drawer  to  a  third  person, 
supposed  to  be  under  obligation  to  accept  the  bill,  should  be 
regularly  addressed  to  such  person  by  his  christian  name 
and  surname,  and  also  by  a  designation  of  his  place  of  resi- 
dence ;  and  if  it  is  addressed  to  a  firm,  the  name  of  the  firm 
should  be  expressed  in  the  address.^ 

Such,  at  least,  is  requisite  to  perfect  the  bill  in  a  proper 
and  business-like  manner;  and  without  such  accuracy  in  the 
address,  it  does  not  appear  who  should  be  called  upon  to 
accept  or  pay  it,  or  who  would  be  justified  in  so  doing.  In 
an  early  English  case,  it  was  held  that  it  was  not  necessary 
that  the  bill  should  have  a  drawee ;  ^  but  that  case  has  been 
distinctly  repudiated,  and  both  in  England  and  in  the  United 
States  it  is  settled  doctrine  that  a  drawee  must  be  pointed 
out.^     But  the  ho na  fide  holder  of  a  check  without  a  drawee, 

•  Byles  (Sharswood's  ed.)  [*81],  179;  Chitty  on  Bills  (13tli  Am.  ed.)  [*1G4], 
188;  Story  on  Bills,  §  58. 

=*  Regina  v.  Hawkes,  2  Moo.  C.  C.  60. 

'  Peto  V.  Eeynolds,  9  Exch.  410.  Alderson,  B.,  said:  "With  respect  to  the 
question  whether  this  instrument  is  or  is  not  a  bill  of  exchange,  the  case  of 
Eegina  v.  Hawkes  is  undoubtedly  iu  point  I  must  own,  however,  that  I  now 
think  I  was  wrong  on  that  occasion.  The  case  seems  to  have  been  decided  on 
the  ground  that  Milner  v.  Gray,  8  Taunt.  739,  governed  it;  and  the  fact  was 
not  adverted  to,  that  Gray  v.  Milner  may  be  thus  explained:  that  a  bill  of  ex- 
change made  payable  at  a  particular  place  or  house,  is  meant  to  be  addressed  to 
the  person  who  resides  at  that  place  or  house.  Therefore,  in  that  case,  the  bill 
was  on  the  face  of  it  directed  to  some  one;  and  the  court  held,  that,  inasmuch 
as  the  defendant  promised  to  pay  it,  that  was  conclusive  evidence  that  he  was 
the  party  to  whom  it  was  addressed.  But  in  the  case  of  Regina  v.  Hawkes,  the 
instrument  was  addressed  to  no  one."  See,  also,  Reynolds  v.  Peto,  11  Exch.  418; 
Watrous  v.  Hallbrook,  39  Texas,  573. 

In  Ball  V.  Allen,  15  Mass.  435,  Parker,  C.  J.,  says:  "The  mere  possession  of 
a  paper  drawn  in  the  form  of  an  order,  there  being  no  drawee  in  existence,  we 
think,  cannot  entitle  the  possessor  to  an  action  in  any  form,  for  the  pa])er  may 
have  been  carelessly  dealt  with  as  being  imperfect,  and  may  have  come  to  the 
possessor  by  finding. 

"It  is  enough  for  the  purpose  of  justice,  that  the  holder  of  such  a  paper 
may  entitle  himself  to  recover,  merely  by  showing  that  he  paid  for  it,  or  that 
he  came  otherwise  fairly  by  it;  for  it  can  rarely  happen  that  he  will  be  unable 
to  produce  the  person  for  whom  he  received  it.  If  the  circumstances  are  such 
as  induce  him  to  decline  producing  evidence  of  the  manner  in  which  the  paper 


86  FORMAL  REQUISITES  OF  BILLS  AND  1?0TES. 

which  has  beeu  issued  as  a  memorandum  of  indebtedness, 
may  recover  on  account  for  money  had  and  received.^ 

§  97.  Where  a  bill  was  drawn  payable  to  the  drawer's 
order,  and  there  was  added  "  Payable  at  No.  1  Wilmot  street, 
opposite  the  Lamb,  Bethnal  Green,  London,"  and  was  accepted 
by  one  Milner,  it  was  held  sufficient,  upon  the  ground  that  it 
must  be  considered  as  directed  to  the  2')erson  residing  at  that 
bouse,  and  acceptance  by  tlie  defendant  was  acknowledg- 
ment that  he  was  intended  as  the  drawee.^  Sucli  a  bill — any 
accepted  bill  without  a  drawee — is  considered  by  many  au- 
thorities as  defective  in  its  inception,  but  perfected  by  accept- 
ance, the  acceptor  being  estopped  to  deny  that  he  was  the 
drawee.^  And  this  seems  the  correct  doctrine.  But  it  was 
regarded  in  tlie  case  above  cited  as  informal,  but  valid."* 
That  decision,  however,  has  been  questioned.^ 

§  98.  If  the  bill  be  addressed  to  A.,  or  in  bis  absence  to 
B.,  it  is  sufficient  and  valid,  and  will  bind  whichever  accepts 
as  accej^tor.*^  And  it  has  been  thought  that  a  direction  to  A. 
or  B.  in  the  alternative,  would  be  sufficient  if  both  were  at 
the  same  place  at  the  same  time.'''  If  the  bill  is  drawn  upon 
A.,  B.  and  C,  it  may  be  accepted  by  A.' and  B.  only,  and 
they  will  be  bound  as  acceptors,  and  it  will  be  no  variance 
to  allege  in  the  declaration  tliat  it  was  drawn  upon  A.  and 

came  to  him,  uo  probable  harm  will  he  the  result  of  his  loss  of  the  money." 
Story  on  Bills,  §  5'8;    1  Parsons  N.  &  B.  61 ;  2  Robinson's  Practice  (new  ed.)  144. 

'  Ellis  V.  Wheeler,  3  Pick.  19;  see  Ball  v.  Allen,  supra. 

■  Gray  v.  Milner,  8  Taunt.  739;  3  Moore,  90.  Dallas,  C.  J.,  said  (he  instru- 
ment was  clearly  a  bill  of  exchange;  and  that,  "it  being  directed  to  a  particular 
place,  could  only  mean  to  the  person  who  resided  there;  and  that  the  defendant, 
by  accepting  it,  acknowledged  that  he  was  the  person  to  whom  it  was  directed." 

'■'  Wheeler  v.  Webster,  1  E.  D.  Smith,  3;  Thomson  on  Bills,  4G;  Grierson  v. 
Sutherland,  Scotch  Case  therein  cited;  Chitty  on  Bills  [*164],  188;  1  Parsons 
N.  &  B.  288-9. 

■•  Gray  v.  Milner,  supra;  Edwards  on  Bills,  174. 

s  Davis  V.  Clarke,  G  Q.  B.  IG;  see,  also,  Peto  v.  Reynolds,  supra  ;  Story  on 
Bills  (Bennett's  ed.),  58;  1  Parsons  N.  &  B.  G2. 

"  Anonymous,  12  Mod.  447;  Chitty,  Junior,  216. 

'  Marius  on  Bills,  16;  Story  on  Bills  (Bennett's  ed.)  §  58. 


FOJRMAL    ELEMENTS   OF   BILLS   AND   NOTES.  87 

B.,  without  referring  to  C/  But  if  a  bill  is  intended  to  be 
accepted  by  two  persons,  it  should  be  addressed  to  both, 
otherwise,  though  accepted  by  both,  it  will  bind  only  the 
drawee  as  acceptor,  as  there  cannot  be  a  series  of  acceptors.^ 
The  drawer  and  drawee  may  be  the  same  person,  but  such 
an  instrument  would  be  actionable  without  acceptance.^ 

By  the  French  and  English  usage,  the  address  is  uni- 
formly at  the  left  hand  lower  corner,  u23on  the  face  of  the 
bill ;  but  the  Italians  and  Dutch,  as  it  seems,  write  it  on  the 
back  of  the  bill/  But  it  is  not  supposed  that  the  place  of 
the  address  is  essential,  if  it  distinctly  appear  what  was  in- 
tended. 

§  99.  Seventhly  ;  as  to  the  payee. — The  bill  or  note  must 
point  out  with  certainty  the  party  who  is  to  receive  the 
money — that  is,  it  must  designate  a  payee.^  But  the  j^ayee 
need  not  be  named  in  person,  it  being  sufficient  if  some  one 
be  indicated.  Thus  if  the  instrument  be  payable  to  A.  or 
bearer,  or  to  bearer,  or  to  the  holder,  or  to  order,  it  is  in- 
tended to  mean  whoever  comes  in  lawful  230ssession,  and  the 
holder  may  sue  upon  it.®  If  the  note  be  written  "  due  the 
bearer  $100,  which  I  promise  to  pay  A.  or  order,"  it  is  pay- 
able not  to  the  bearer,  but  to  A.  or  order.^  And  whenever 
a  bill  or  note  is  payable  to  a  certain  person  or  order,  it  is 
payable  to  whomsoever  the  payee  named  may  by  indorse- 
ment order  it  to  be  paid.® 

So  the  instrument,  though  not  naming  a  payee  on  its 
face,  yet  if  it  furnishes  a  sufficient  description  by  which  he 
may  be  ascertained,  it  is  sufficient;  the  maxim  applying  id 

'  Mountstepben  v.  Brooke,  1  Bani.  &  Aid.  224;  Story  on  Bills,  §  58. 
»  Davis  V.  Clarke,  6  Ad.  &  El.  N.  S.  16;   Jacksou  v.'  Hudson,  2  Camp.  447; 
see  Chai^ter  XVIII  on  Acceptance. 

'  See  Chapter  V  on  Irregular,  &c.  Instruments. 

*  Story  on  Bills  (Bennett's  ed.)  §  58,  note  1. 
"  Rich  V.  Starbuck,  51  Ind.  87. 

*  Mechanics'  Bank  v.  Straiton,  3  Abbott  N.  Y.  App.  269;  Hathwick  v.  Owen, 
44  Miss.  803. 

'  Cock  V,  Fellows,  1  Johns.  143;  see  post,  §  102. 
'  See  Chapter  XXI  on  Transfer  by  Indorsement. 


88  FORMAL  REQUISITES  OF  BILLS  AND  NOTES 

certum  est  quod  certum  reddi  'poted.  Thus  it  suffices  if  it  be 
payable  to  "  the  administrators  of  the  estate  of  A. ; "  ^  or  to 
the  "  trustees  acting  under  the  will  of  A. ; "  ^  or  to  the  "  heirs 
of  A.,"  though  A.  were  then  alive ;  ^  or  to  "  A.  or  his  heirs ;  "  * 
or  to  the  order  of  the  person  who  should  thereafter  indorse 
it ;  ^  for  in  all  such  cases  tlie  payee  is  ascertainable. 

§  100.  Where  the  writing  ran,  "  I  owe  the  estate  of  A.  B. 
$190,"  it  ^vas  held  that  no  payee  was  sufficiently  designated, 
and  it  was  inferred  under  the  circumstances  to  be  a  mere 
memorandum  of  a  balance  due.^  But  it  has  been  held  that 
a  note  regular  in  form,  payable  "  to  the  estate  of  T.  A. 
Thornton,"  might  be  sued  on  by  Thornton's  personal  repre- 
sentative."^ The  contrary  view,  how^ever,  has  been  taken.^  If 
a  note  is  payable  to  A.,  and  there  are  two  persons  of  the  same 
name,  father  and  son,  it  seems  that  it  .would  be  p-ima  facie 
payable  to  the  father ;  ^  but  the  son  being  in  possession,  and 
brini^injx  the  action,  would  be  entitled  to  recover.^*'  AVherever 
there  is  any  misdescription  or  misspelling  of  the  payees 
name,  it  may  be  shown  who  was  really  intended.^^ 

§  101.  If  the  note  were  made  payable  "  to  the  secretary 
for  the  time  being  of  a  certain   society,"  it  would  not  be 


'  Adams  v.  King,  16  111.  169;  Moody  v.  Thrclkeld,  13  Ga.  55. 

^  Megginson  v.  Harper,  2  Cromp.  &  M.  333. 

'  Bacon  v.  Fitch.  1  Root,  181.  "  Knight  v.  Joues,  21  Mich.  161. 

°  United  States  v.  White,  3  Hill,  59.  "  Bowles  v.  Lambert,  35  111.  239. 

^  Ilendrick's  Exs.  v.  Thornton,  45  Ala.  300. 

"  Tittle  V.  Thomas,  30  Miss.  132;  Lyon  v.  Marshall,  11  Barb.  248,  Edwards, 
J.:  "  The  instrument  sued  upon  (by  Lyon's  representatives)  was  made  payable 
to  the  '  estate  of  Moses  Lyon,  deceased,'  and  not  to  any  peison  or  persons  by 
name.  Such  an  instrument  is  clearly  not  a  promissory  note  under  the  statute. 
But  whatever  it  may  be  considered,  it  certainly  is  not  a  promise  to  pay  the 
testator,  for  he  is  described  as  deceased.  It  could  only  be  recovered  upon  as 
a  promise  to  pay  some  other  person  or  persons.  If  it  be  regarded  as  a  promise 
to  pay  the  plaintiffs,  as  it  was  treated  in  this  case,  there  was  no  necessity  for 
their  suing  in  a  representative  capacity ;  and  having  done  so  unnecessarily,  they 
are  liable  to  pay  costs,  without  a  special  motion  or  order  for  that  purpose." 

'  Sweeting  v.  Fowler,  1  Starkie,  106 ;  Wilson  v.  Stubbs,  tlobart,  330. 

■■>  Stebbing  v.  Spicer,  19  L.  J.  C.  P.  34;  8  C.  B.  827  (65  E.  C.  L.  R.). 

"  Jacobs  V.  Benson,  29  Me.  132;  Willis  v.  Barrett,  2  Starkie,  29;  Hall  v.  Tafts, 
18  Pick.  455. 


FORMAL   ELEMENTS   OF   BILLS   AND   NOTES.  89 

sufficient,  as  it  would  he  a  floating  promise,  the  performance 
of  which  would  be  made  to  the  person  being  secretary  at  its 
maturity ;  ^  but  if  it  be  payable  "  to  the  now  secretary  "  of  a 
certain  society,  it  would  be  different,  as  such  person  could  be 
immediately  and  definitely  ascertained.^  And  if  payable  to 
the  "  trustees  of  W.  Chapel,  or  their  treasurer  for  the  time 
being,"  it  would  suffice,  as  the  trustees  are  the  real  payees, 
the  treasurer  being  merely  designated  as  their  agent  to  re- 
ceive payment.^  So  it  would  suffice  if  payable  to  "the 
treasurer  or  his  successors  in  office  "  of  a  corporation  named ; 
for  the  corporation  would  then  be  the  real  payee,  and  the 
treasurer  its  agent  to  receive  payment.*  And  such  would 
also  be  the  effect  of  a  note  payable  "to  the  treasurer  of  a 
corporation,"  the  corporation,  but  not  the  treasurer,  being 
named.^ 

§  102.  If  no  one  be  named  or  definitely  referred  to  as 
payee,  the  instrument  is  fatally  incomplete ;  and  therefore 
•'  $500  on  demand,  value  received,"  ^  is  mere  waste  pa])er,  and 
so  also  papers  running  "  Good  for  one  hundred  and  twenty- 
six  dollars  on  demand,"  "^  and  "  pay  on  within  $750."  ^  But 
"  received  of  A.  one  hundred  dollars,  which  I  promise  to  pay 
on  demand,"  ^  is  regarded  as  sufficient,  it  being  inferred  that 
A.  is  the  payee. 

Pothier  puts  a  case  quite  similar  :  "  If,"  says  he,  "  the 
drawer  should  omit  the  name  of  the  payee,  but  should  draw 

'  storm  V.  Sterling,  3  Ellis  &  B.  382. 

'  Ibid.;  Robertson  v.  Steward,  1  Man.  &  G.  511;    Davis  v.  Garr,  3  Seld.  124; 
Rex  V.  Box,  6  Taunt.  325. 

'  Holmes  v.  Jacques,  1  Q.  B.  376. 

•  Fisher  v.  Ellis,  3  Pick.  322 ;  Rogers  v.  Gibson,  15  Ind.  218. 

'  McBrown  v.  Corporation  of  Lebanon,  31  Ind,  268;  Vater  r.  Lewis,  36  Ind. 
293. 

•  Gibson  v.  xMinet,  1  H.  Bl.  569. 

'  Brown  v.  Gilman.  13  Mass.  158;    see  also  Mayo  v.  Chenoweth,  Breese.  155; 
Mathews  v.  Redwine,  23  Miss.  233;  Enthoven  v.  Iloyle,  13  C.  B.  373. 
'  Douglass  V.  Wilkeson,  6  Wend.  637. 

•  Green  v.  Davies,  4  B.  &  C.  235;  Ashby  v.  Ashby,  3  Moore  &  P.  186;  Chad- 
wick  V.  Allen,  2  Stra.  706. 


90  FORMAL  REQUISITES  OF  BILLS  AND  NOTES. 

tlie  bill  ill  tbis  form :  "Pay  a  tlioiisaiul  livres  at  siglit,  value 
received  of  A.  B.,"  it  appears  to  me  reasonable  to  presume 
that  the  drawer  intended  that  the  bill  should  be  payable  to 
the  person  fi'om  whom  the  value  had  been  received,  as  no 
other  person  is  named,  to  whom  it  ought  to  be  paid."  ^  He 
adds,  however,  that  he  has  learned  from  an  experienced  mer- 
chant, that  bankers  would  make  a  difficulty  as  to  paying  such 
a  bill.2 

§  103.  Alternative  payees. — A  note  payable  to  A.  or 
to  B.  is  not  negotiable,  for,  as  said  by  Abbott,  C.  J.,  in 
an  English  case :  "  For  if  a  note  is  made  payable  to 
one  or  other  of  two  persons,  it  is  payable  to  either  of 
them  only  on  the  contingency  of  its  not  having  been  paid 
to  the  other,  and  is  not  a  good  promissory  note  within 
the  statute."  ^  The  same  views  have  obtained  in  some 
of  the  United  States,  l)ut  the  cases  are  not  uniform  on 
the  subject.  In  Illinois,  where  the  note  was  payable  to 
"  Olive  Fletcher  or  II.  H.  Oakes,  administrators  of  Winslow 
Fletcher,  deceased,"  Caton,  C.  J.,  said :  "  The  instrument  sued 
on  was  payable  in  the  alternative  to  one  of  two  persons,,  and 
for  that  reason  is  not  a  promissory  note,  and  could  not  be 
sued  on  as  such.  '^  "'  Here  the  promise  was  to  pay 
Fletcher  or  Oakes,  but  which  is  uncertain ;  which  of  them 
had  tlie  right  to  receive  the  pay  is  not  specified,  and  the 
legal  right  to  the  money  is  not  vested  in  either."  ^  In  New 
Yoik,  it  has  also  been  held  that  a  note  payable  in  the  al- 
ternative is  not  negotiable ;  but,  value  received  being  ex- 
pressed, it  might  be  sued  on  as  a  non-negotiable  note.^  And 
likewise  in  New  Hampshire,  but  it  was  thought  that  action 
might  be  brought  in  the  name  of  all  the  payees.^ 

'  Pothier  de  Change,  n.  31 ;  Story  on  Bills,  §  55. 
'  Story  on  Bills,  §  55. 

*  Blanckenhagen  v.  Blundell,  3  Barn.  &  Aid.  418  (1819);  Osgood  v.  Pearson, 
4  Gray,  455;  Carpenter  v.  Furnsworth,  106  Mass.  561 ;  Story  on  Bills,  §  54. 

♦  Musselman  v.  Oakos,  19  III.  81  (1857). 
'  Walrad  v.  Petrie,  4  Wend.  576  (1830). 

'  Willougbby  v.  Willoughby,  5  N.  H.  345  (1830),  approved  in  Quinby  v.  Mer- 
ritt,  11  Humph.  440  (1850). 


FORMAL  ELEMENTS  OF  BILLS  AND  NOTES.  91 

Opposing  decisions  have  been  rendered  in  South  Caro- 
lina/ and  by  one  of  the  Circuit  Courts  of  the  United  States,^ 
where  it  has  been  held  that  a  note  payable  in  the  alternative 
is  payable  to,  and  may  be  sued  upon  by,  either  one  of  the 
payees ;  but  in  neither  case  was  the  English  precedent  above 
quoted  before  the  court.  And  it  may  be  considered  as  set- 
tled that  a  bill  or  note  payable  in  the  alternative  is  not 
negotiable. 

§  104.  Li  the  eiglith  lylace ;  as  to  the  terms  of  nego- 
tiahility. — It  was  formerly  held  that  a  bill  payable  to  A.  or 
bearer  was  not  negotiable;^  but  the  contrary  doctrine  is 
now  well  established.*  It  was  also  at  one  time  a  matter  of 
doubt  whether  it  was  not  essential  to  the  character  of  a  bill 
of  exchange  that  it  should  be  negotiate — that  is  to  say, 
that  it  should  be  payable  "to  A.  or  order,"  or  "to  A.  or 
bearer,"  or  "  to  bearer ; "  for  otherwise  it  was  thought  to  be  a 
mere  common  law  contract.^  But  it  is  now  well  settled  that 
it  is  not  necessary  to  constitute  a  bill  of  exchange  that  it 
should  be  negotiable,  and  that  it  is  entitled  to  grace,  and  is 
in  all  respects  a  bill,  though  containing  no  negotial)le  words.^ 
Nor  are  such  words  necessary  to  the  character  of  a  promis- 
sory note,  nor  to  entitle  it  to  grace,  though  wherever  the 
statute  of  Anne  has  been  adopted,  or  its  principles  obtain, 

*  Ellis  V.  McLemore,  1  Bailey  (So.  Car.)  Las-  R.  13  (1830). 

*  Spaulding  v.  Evans,  2  McLean,  139  (1840). 
'  Ilodges  V.  Steward,  1  Salk.  125. 

*  Grant  v.  Vaughan,  3  Burr.  1516.  In  some  States  peculiar  phrases  are  essen- 
tial to  negotiability  of  promissory  notes.  In  Alabama,  Indiana  and  Virginia, 
they  must  be  expressed  to  be  payable  in  bank.  (See  ante^  chapter  on  Formal 
Requisites,  §  90— Place  of  payment.)  In  Arkansas  the  words  "without  defalca- 
tion "  must  be  used  (see  act  of  April  10,  18G9) ;  and  in  Missouri,  "  for  value 
received"  must  be  used  in  a  note,  but  not  in  a  bill;  Lowenstein  v.  Knopf,  2  Mo. 
App.  159  (see  Code  of  Missouri,  chap.  80,  §  15).  In  very  many  States  similar 
statutes  to  that  of  Anne  have  been  enacted.  In  Illinois  a  note  payable  to  >'A. 
or  bearer,"  is  not  under  the  statute  deemed  negotiable;  Garvin  v.  Wiswell,  83  111. 
218.     See  first  §§  663,  1496. 

"  Story  on  Bills,  §  60. 

*  Averett's  Adm'r  v.  Booker,  15  Grat.  167;  Michigan  Bank  v.  Eldred,  9  Wall. 
.')44;  WeFs  v.  Brigham,  6  Cush.  6;  Story  on  Bills,  §  GO;  Chitty  [*159],  183. 


92  FORMAL    REQUISITES    OF    BILLS   AND  NOTES. 

they  or  some  similar  words  are  requisite  to  its  negotiability ;  ^ 
and  they  are  also  requisite  to  the  negotiability  of  a  bill,  as  with- 
out some  such  words,  making  the  instrument  payable  to  A.  or 
order,  or  to  bearer,  or  to  A.  or  assigns,  the  power  to  transfer 
it  so  as  to  give  a  right  of  action  to  the  indorsee  against  prior 
parties  is  not  imparted.^  But  the  indorsement  would  give  a 
right  of  action  against  the  payee  himself,  as  it  is,  in  legal 
effect,  the  dra^ving  of  a  bill  on  the  party  who  is,  or  is  to  be, 
primarily  liable  for  payment",  that  is  the  drawee,  acceptor,  or 
maker.^ 

§  105.  If  the  bill  or  note  be  payable  to  a  certain  person 
only,  it  is  not  negotiable  so  as  to  bind  the  maker  or  drawer 
in  the  hands  of  any  other  person  than  the  payee,^  though  the 
payee,  if  he  indorse  it,  will  be  bound  thereon  to  his  inmie- 
diate  indorsee.^  If'it  be  payable  "to  the  bearer  A.,"  it  is 
the  same  as  if  simply  payable  to  A.,  and  is  not  negotiable.^ 
But  if  payable  to  A.  or  bearer,  it  is  the  same  as  if  payable 
to  bearer.'^  And  if  payable  to  order  only,  it  has  been  held 
the  same  as  payable  to  bearer.^  But  if  payable  "  to  the  order 
of  A.,"  it  is  the  same  as  if  payable  to  A.  or  order.^ 

§  106.  No  precise  form  of  words  is  necessary  to  impart 
negotiability.  As  has  been  said  in  Pennsylvania,  "  *  order ' 
or  •l)L'arer'  are  convenient  and  expressive,  but  clearly  not 
the  only  words  which  will  communicate  the  quality  of  nego- 
tiability.    Some  equivalent  words  should  be  used.     Words 


'  Ibid. ;  Smith  v.  Kendall,  6  T.  R.  123;  1  Esp.  231 ;  Rex  v.  Box,  6  Taunt. 
328;  Burchell  v.  Slocock,  2  Lord  Raym.  1545;  1  Parsons  N.  &  B.  227  ;  Maule  v. 
Crawford,  21  N.  Y.  S.  C.  (14  Hun),  193;  Hislbrd  v.  Stone,  7  Nebraska,  380;  and 
words  "without  defalcation  or  discount"  will  not  suffice. 

"  Douglass  V.  Wilkeson,  6  Wend.  G37;  United  States  v.  White,  2  Hill  (N.  Y.) 
59;   Story  on  Bills,  §  60. 

="11111^.  Lswis,  1  Salk.  132;  Ballingalls  v.  Gloster,  3  East,  482;  Smallwood 
V.  Vernon,  1  Strange,  478;  Thomson  on  Bills,  53  ;  Story  on  Bills,  §  60. 

*  Hackney  v.  Jones,  3  Humph.  612 ;  Warren  v.  Scott,  32  Iowa,  23 ;  Hill  v.  Lewis, 
1  Salk.  132.     See  post,  §  033.  '  See  Story  on  Bills,  §§  119,  199,  202. 

'  Warren  V.  Scott,  32  Iowa,  22.  '  Eddy  v.  Bond,  19  Me.  461. 

"  Davega  v.  Moore,  3  McCord,  482. 

•  Frederick  v.  Cotton,  2  Shower,  8;  Smith  v.  McClure,  5  East,  476  ;  Story  on 
Bills,  §  56;  Howard  v.  Palmer,  64  Me.  88;  Durgin  v.  Bartol,  Id.  473. 


FORMAL   ELEMENTS  OF   BILLS  AND  NOTES.  93 

in  a  bill,  from  which  it  can  be  inferred  that  the  person  mak- 
ing it,  or  any  other  party  to  it,  intended  it  to  be  negotiable, 
will  give  it  a  transferable  quality  against  that  person.  The 
concession,  therefore,"  may  be  made,  that  if  the  makers  of  this 
note,  having  omitted  the  usual  words  to  express  negotiabil- 
ity, had  said,  '  this  note  is  and  shall  be  negotiable '  it  w^ould 
have  been  negotiable."  ^ 

§  107.  A  note  may  be  made  negotiable  at  one  bank,  and 
payable  at  another,  the  word  negotiable  not  importing,  as  we 
have  already  een,  that  the  note  is  also  payable  where  it  is 
negotiable.  But  making  the  note  negotiable  at  a  particular 
bank  has  in  itself  a  meaning.  And  in  a  case  where  the  note 
was  negotiable  at  the  Union  Bank  of  Georgetown,  in  Mary- 
land, but  payable  at  the  Bank  of  Potomac,  in  Alexandria, 
Virginia,  Chief  Justice  Marshall  said :  ^  "By  making  a  note 
negotiable  in  bank,  the  maker  authorizes  the  bank  to  ad- 
vance on  his  credit  to  the  owner  the  sum  expressed  on  its 
face.  It  would  be  a  fraud  in  the  bank  to  set  up  offsets 
against  this  note  in  consequence  of  any  transactions  between 
the  parties.  These  offsets  are  w^aived,  and  cannot,  after  the 
note  has  been  discounted,  be  again  set  up."  At  the  time  of 
the  decision,  by  the  laws  in  force  in  Alexandria,  Virginia,  an 
offset  might  have  been  pleaded  against  the  assignee,  as  the 
note  was  not  under  the  Virginia  laws  negotiable,  while,  if 
governed  by  the  laws  of  Maryland  in  force  in  Georgetown, 
it  was  a  negotiable  note ;  but  the  chief  justice  thought  it 
entirely  immaterial  whether  the  question  was  governed  by 
the  laws  of  the  one  State  or  the  other,  on  the  grounds  above 
stated.^ 

§  108.  In  the  nint\  ;  lace  ;  as  to  the  ivords  of  considera- 
tion.— The  words  "  value  received"  are  almost  invariably  ex- 
pressed in  bills  of  exchange  and  promissory  notes,  and  they 
were  at  one  time  thought  essential ,  by  the  custom  of  mer- 


'  Raymond  v.  Middleton,  39  Penn.  St.  530,  Porter,  J. ;  see  U.  S.  v.  White,  2 
Hill  (N.  Y.)  59. 

''  Mandeville  v.  Union  Bank,  9  Cranch,  9  (1815).  '  See  post,  §  325-6. 


94  FORMAL  REQUISITES  OF   BILLS  AND  NOTES. 

chants,  to  impart  negotiability  to  the  instrument.^  But  it  is 
now  well  settled  that  they  only  express  what  the  law  itself 
implies  from  the  execution  of  the  paper  ;^  and  it  has  been 
said  tliat  they  "  are  only  inserted  ex  majori  cautela,  in  order 
that  the  payee  may  be  able  to  recover  upon  it  in  an  action 
for  money  lent,  or  money  had  and  received,  in  case  the  in- 
strument should  be  defective  in  other  respects,  as  a  bill  of 
exchange."  ^ 

AVhen  the  words  "  value  received  "  are  inserted  in  a  note, 
it  is  obvious  that  they  import  value  received  by  the  maker 
from  the  payee  ;^  but  where  a  bill  is  drawn  payable  to  the 
order  of  a  third  person,  they  are  ambiguous. 

They  may  mean  either  value  received  by  the  acceptor 
from  the  drawer,  or  by  the  drawer  of  the  payee.  But  the 
latter  is  the  more  natural  and  probable  construction  ;  for,  as 
said  by  Lord  Ellenborough,  it  is  more  natural  "  that  the 
party  who  draws  the  bill  should  inform  the  drawee  of  a 
fact  which  he  does  not  know,  than  one  of  which  he  must  be 
well  aware."  ^  When,  however,  the  bill  is  drawn  payable 
to  the  drawer's  own  order,  the  words  "value  received  "  must 
mean  received  by  the  acceptor  of  the  drawer ;  and  in  such  a 
bill,  if  the  declaration  state  that  it  was  for  value  received 
by  the  drawer,  it  will  be  a  variance.^     A  declaration  on  an 

'  Byles  on  Bills  (Sharswoofl's  ed.)  [*82],  176;  Edwards  on  Bills,  56;  see  2 
Bl.  Com.  468.  In  Missouri  tliey  are  essential  to  the  negotiability  of  promissory 
notes  under  the  statute,  but  not  to  bills.  Code,  chap.  86,  §  15;  Bailey  v.  Smock, 
61  Mo.  213;  Lowenstein  v.  Knopf,  2  Mo.  App.  159. 

'  Poplewell  V.  Wilson,  1  Strange,  274  (1719) ;  Macleod  v.  Snee,  2  Ld.  Raym, 
1481  (1727);  Grant  v.  Da  Costa,  3  Maule  &  S.  351  (1815);  Hatch  v.  Frayes,  11 
Ad.  &  El.  702;  Underbill  v.  Phillips,  17  N.  Y.  S.  C.  (10  Hun),  591  ;  Kendall  v. 
Galvin,  15  Me.  131 ;  Townsend  v,  Derby,  3  Mete.  363  ;  Hubble  v.  Fogartie,  3  Rich, 
413;  Leonard  v.  "Walker,  Brayton,  203;  Arnold  v.  Sprague,  34  Vt.  402;  Hughes 
V.  Wheeler,  8  Cow.  77 ;  People  v.  McDcrmott,  8  Cal.  288 ;  1  Parsons  N.  &  B. 
103 ;  Baylcy  on  Bills,  33  ;  Thomson,  53 ;  Byles  (Sharswood's  ed.)  [•*82J,  177  ; 
Chitty  [*161],  185  ;  Story  on  Bills,  §  63  ;  Story  on  Notes,  §  51 ;  Edwards  on  Bills, 
56,  169. 

'  White  V.  Ledwick.  4  Doug.  247  (1785),  Ashurst,  J. 

♦  Clayton  v.  Gosling,  5  B.  &  C.  301  (11  E.  C.  L.  R.)  ;  8  D.  &  R.  110. 

'  Grant  v.  Da  Costa.  3  Maule  &  S.  351. 

'  Highmore  v.  Primrose,  5  Maule  &  S.  65. 


FORMAL  ELEMEJITS  OF  BILLS  AND  NOTES.  95 

action  on  a  l)ill  of  exchange  need  not  state  that  any 
value  has  been  received,  althou2;h  it  is  stated  on  the  face  of 
the  bill/  and  the  like  rule  applies  to  actions  on  note.^ 

§  109.  Li  the  tenth  place^  as  to  the  tvords  of  advice. — 
Sometimes  the  words  "  without  further  advice,"  or,  "  as  per 
advice,"  are  inserted  in  bills  of  exchange ;  and  when  the 
latter  appear,  they  warn  the  drawee  not  to  accept  or  pay 
the  bill  until  he  receives  advice  respecting  it.  And  if  he 
disregards  the  intimation,  he  acts  at  his  peril.^  Such  words 
are  altogether  unnecessary;  but  by  admonisliing  the  drawee 
to  await  advice,  they  sometimes  serve  as  safeguards  against 
alterations;  and  Mr.  Chitty  saj^s  that  every  prudent  drawer 
ought  to  send  a  distinct  letter  of  advice,  and  that  no  prudent 
drawee  should  accept  without  having  previously  received 
one,  stating  the  sum  for  which  the  bill  is  drawn.^ 

§  110.  In  the  eleventh  place^  as  to  the  statement  of  ac- 
count.— Words  are  frequently  inserted  in  bills  of  exchange, 
indicating  the  account  to  which  they  are  to  be  charged; 
but  tliey  are  not  essential.'^  If  the  drawee  be  debtor  to 
the  drawer,  "put  it  to  your  account,"  is  usually  inserted; 
but  if  the  drawer  is  himself  to  be  the  debtor,  he  inserts 
"  and  put  it  to  my  account."  And  where  the  amount  is  to  be 
credited  to  a  third  person,  "put  to  the  account  of  x\.  B."^ 

In  Indiana,  where  A.  sued  B.  upon  the  following  instru- 
ment : 

"Mr.  B.: 

"Sir,  Please  pay   to  *A.'  or  order  the  sum  of  one  hundred  and 
nineteen  dollars  on  said  bill  of  If  in.  lumber,  and  oblige  the  firm  of 

[Signed]  "  C.  «Sc  Co." 

"  I  accept.  "  [Signed]  "  B." 


'  Grant  v.  Da  Costa,  3  Maule  &  S.  351. 

'  Underbill  v  Phillips,  17  N.  Y.  S.  C.  (10  Hun),  591. 

•  Byles  on  Bills  [*86],  182  ;  Edwards  on  Bills,  173 ;  Story  on  Bills,  §  Go. 

*  Chitty  on  Bills  [*162],  187. 

*  Laing  v.  Barclay,  1  B.  &  C.  392 ;  2  D.  &  R.  53^ ;  Chittv  on  Bills  [*162],  186. 

•  Ibid. 


96  FORMAL  REQUISITES  OF   BILLS  AND  NOTES. 

it  was  held  that  the  instrument  possessed  all  the  character- 
istics of  a  bill  of  exchange.^ 

§  111.  Provision  incase  of  need. — Sometimes  provision 
is  made,  in  the  bill,  that  the  holder  in  case  of  need  shall  ap- 
ply to  another  drawee ;  by  which  is  meant,  that  if  the  first 
drawee  refuse  to  honor  the  bill,  the  second  shall  be  resorted 
to.  The  holder  is  bound  to  apply  to  the  party  so  indicated, 
and  he  may  accept  or  pay  the  bill  without  protest.  The 
usual  form  is :  "  In  ease  of  need.,  apply  to  Messrs.  C.  &  D.^ 
at  jSI,"  '^  or  in  French,  "  an  hesoin  cliez  Messrs.  C.  d:  D.^  a  E^ 
In  the  event  that  the  party  so  pointed  out  pays  the  bill,  the 
drawer  will  be  liable  to  him  for  the  full  amount.^ 

§  112.  In  the  tio elf tli  place  ;  as  to  the  attestation. — It  is 
not  necessary  that  there  should  be  an  attesting  witness  to  a 
bill  or  note,  though  in  many  cases  one  is  resorted  to  as  matter 
of  convenience.^  Where  the  instrument  is  signed  by  a 
marksman,  or  by  initials  only,  it  may  be  important  to  have 
the  act  attested  by  a  witness,  in  order  to  establish  the  genu- 
ineness of  the  mark  or  initials,  and  the  occasion  of  its  execu- 
tion.^ When  there  is  an  attesting  witness,  the  signature  or 
mark  to  the  instrument  must  be  proved  by  him  and  not 
otherwise,  unless  by  reason  of  his  death,  absence  from  the 
country,  or  other  cause,  he  cannot  be  produced  at  the  trial ; " 
but  when  such  is  the  case,  the  next  best  evidence,  that  is, 
proof  of  the  party's  signature  or  mark,  is  not  required,  but 
proof  of  the  attesting  witness'  signature  is  required  instead." 

•'  Spurgin  v.  McPheeters,  42  Ind.  527. 

^  Chitty  on  Bills  [*165],   189;  Story  on  Bills,  §  65.  » Ibid. 

*  Chitty  on  Bills  (13  Am.  ed.)  [*1GG],  190;  Story  on  Notes,  §  54;  Edwards  on 
Bills,  175. 

'"  Story  on  Notes,  §  54. 

"  Grcenlcaf  on  Evidence,  §§  569,  572;  Chitty  on  Bills  [*16G],  190;  Edwards 
on  Bills,  175;  2  Parsons  N.  &  B.  474;  Stone  v.  Metcalf,  1  Starkie,  53;  Lemon 
V.  Deane,  2  Camp.  636;  M'Craw  v.  Gentry  3  Camp.  232;  liurt  v.  Walker,  4  Barn. 
&  Aid.  697;  Richards  v.  Fraukum,  9  Car.  &  P.  211;  January  v.  Goodman,  1 
Dallas,  208. 

'  Greenleaf  on  Evidence,  §  575;  Stoiy  on  Notes,  §  54  ;  Chitty  on  Bills  (13 
Am.  ed.)  [*166],  190  ;  2  Parsons  N.  &  B.  480;  Page  v.  Newman,  Mood.  &  M.  79; 


SEVERAL  PARTS  OF  A  FOREIGN  BILL  CALLED  A   SET.       97 

Sucli  is  also  the  rule  where  the  attesting  witness  is  blind  ^  or 
insane.^  Such  are  the  rules  of  evidence  of  the  common  law 
on  this  subject.  In  regard  to  promissory  notes  the  rule  has 
been  so  far  relaxed,  in  some  cases,  that  the  admission  of  the 
party  that  he  executed  the  instrument  may  be  shown  with- 
out calling  the  subscribing  witness.^  And  the  doctrine  has 
been  repudiated  that  those  who  attest  such  an  instrument 
are  agreed  upon  as  the  only  witnesses  to  prove  it ;  but  only 
applied  where  the  note  is  fully  identified,  and  there  is  no 
chance  of  mistake  in  respect  to  what  the  party  intended  to 
admit.*  In  England,  by  statute  of  1854,  such  instruments 
may  be  proved  by  other  than  subscribing  witnesses.^ 

If  the  attesting  witness  is  not  able  to  prove  the  signature, 
by  reason  of  not  having  seen  the  party  write,  secondary  evi- 
dence is  admissible.^  So  if  he  does  not  recollect  his  own  sio-na- 
ture,  it  may  be  proved  by  other  testimony ;  ^  and  so  if  his 
own  testimony  is  not  clear.^ 


SECTIOIN'  III. 

THE    SEVERAL   PAKTS    OF    A    FOREIGN    BILL     CALLED   A    SET. 

§  113.  In  order  to  avoid  delay  and  inconvenience  which 
may  result  from  the  loss  or  miscarriage  of  a  foreign  bill,  and 
to  facilitate  and  expedite  its  transmission  for  acceptance  or 
payment,  the  custom  has  prevailed  from  an  early  period  for 
the  drawer  to  draw  and  deliver  to  the  payee  several  parts  of 
the   same    bill  of  exchange,  which  may  be   forwarded   by 

Kay  V.   Brookman,  Id.    286 ;    Shiver  v.    Johnson,   2  Brev.  397 ;    Dunbar    v. 
Murden,  13  N.  H.  311. 

'  Wood  V.  Doury,  1  Ld.  Raym.  734.     But  see  Cronk  v.  Frith,  9  Car.  &  P.  179. 

*  Nelson  v.  Whittall,  1  B.  &  Aid.  22,  note ;   Carrie  v.  Child,  3  Camp.  293. 

'  Shaver  v.  Ehle,  16  Johns.  201 ;  Hall  v.  Phelps,  2  Id.  451  ;  Henry  v.  Bishop, 
2  Wend,  575  ;  Williams  v.  Floyd,  1 1  Penn.  St.  499  ;  Hodges  v.  Eastman,  12  Vt. 
358;   Edwards  on  Bills,  176. 

*  Shaver  v.  Ehle,  15  Johns.  201 ;  Edwards  on  Bills,  176. 

'  Edwards  on  Bills,  176.  «  Lemon  v.  Dean,  2  Camp.  636. 

'  Shiver  v.  Johnson,  2  Brev.  397  ;  Quimby  v.  Buzzell,  16  Me.  470. 

*  Walker  v.  Warfield,  6  Mete.  466. 

Vol.  I.— 7 


98  FORMAL  REQUISITES  OF   BILLS  AND  NOTES. 

different  conveyances,  and  any  one  of  them  being  paid  the 
others  are  to  be  void.  These  several  parts  are  called  a  set, 
and  constitute  in  law  one  and  the  same  bill.^  Sometimes 
there  are  four,  but  usually  three  parts.^  And  if  any  person 
undertakes  to  draw  or  deliver  a  foreign  bill  to  another  per- 
son, it  seems  that  he  is  bound  to  deliver  the  usual  number 
of  parts,^  and  it  has  been  thought  that  the  promisee  may  in 
such  a  case  demand  as  many  parts  as  he  pleases.*  But  this 
is  questionable.^ 

In  Europe,  it  Js  not  unusual  for  the  original  bill  to  be 
forwaided  for  acceptance,  and,  in  the  meantime,  a  copy  of  it 
negotiated.^  But  this  practice  is  not  followed  in  England  or 
in  the  United  States.''^ 

§  114.  It  is  usual  for  the  drawer,  and  to  his  protection  it 
is  essential,  to  incorporate  in  each  part  of  the  set,  a  condition 
that  it  shall  only  be  payable  provided  the  other  remain  un- 
paid ;  in  other  respects  the  parts  are  identical  in  terms. 
Thus  the  first  part  should  be  expressed  :  "  Pay  this  my  first 
of  exchange — second  and  third  remaining  unpaid,"  where 
there  are  three  parts,  or  where  there  are  four  2:)arts  there 
should  be  added,  "  second,  third,  and  fourth  remaining  un- 
paid." ^  This  condition  operates  as  notice  to  the  world  that 
all  the  parts  constitute  one  bill,  and  that  if  the  drawee  pay 
any  part  the  whole  is  extinguished.^  The  condition  should 
mention  every  part  of  the  set,  for  if  a  person  intending  to 
make  a  set  of  three  parts  should  omit  the  condition  in  the 

>  Story  on  Bills,  §  G6;  Edwards  on  Bills,  161;  Bylcs  [*376],  555;  Chitty 
[*155].  178;  1  Parsons  N.  &  B.  58,  60;  Thomson  on  Bills,  45;  Bayley  on  Bills,  24. 

»  Ibid. 

'Kearney  V.  West  Granada  Mining  Co.  1  II.  &  N.  412;  Byles  f*376],  555; 
Thomson,  46,  92. 

*  Chitty  on  Bills  [*154],  178;  Edwards,  151;  Bylcs  [*37G],  556. 

"  Story  on  Bills,  §  60.  "  Byles  on  Bills  (Sharswood's  ed.)  [*377],  557. 

"•  1  Parsons  N.  &  B.  60. 

•  Thomson  on  Bills,  45;  Bayley,  24;  Chitty  ["155],  178. 

»  Iloldsworth  v.  Hunter,  10  B.  &  C,  449;  Wells  v.  Whitehead,  15  Wend.  527; 
Durldn  v.  Cranston,  7  Johns.  442;  Ingraham  v.  Gibbs,  2  Dallas,  134;  Bylcs 
[*37G],  555;  Edwards,  161. 


SEVERAL  PARTS  OF   A  FOREIGN  BILL   CALLED  A  SET.       99 

jfirst,  and  make  the  second  with,  a  condition,  mentioning  the 
first  only,  and  in  the  third  take  notice  only  of  the  other 
two,  he  might  be  obliged  to  pay  each,  for  it  would  be  no 
defense  to  an  action  by  a  hona  fide  holder  on  the  second  that 
he  had  paid  the  third,  nor  to  an  action  on  the  first  that  he 
had  paid  either  of  the  others.^  But  an  omission  is  not  ma- 
terial, perhaps,  which  upon  the  face  of  the  condition  must 
necessarily  have  arisen  from  a  mistake,  as  if  mention  of  an 
intermediate  part  were  omitted,  for  instance,  "  pay  this  my 
first  of  exchange,  second  and  fourth  unpaid.^ 

§  115.  The  indorser  or  transferer  is  bound  to  pass  to  his 
transferee  all  the  parts  of  the  bill  in  his  possession,  and  he 
may  be  even  liable  to  hand  them  over  to  a  subsequent  trans- 
feree if  he  have  them  still  in  his  possession.^  If  the  indorser 
improperly  circulate  two  parts  to  distinct  holders  he  may  be 
liable  on  each.* 

§  116.  The  drawee  should  accept  but  one  part  of  the  set. 
And  having  accepted  one  part,  he  should  not  pay  another 
part,  for  he  would  still  be  liable  on  the  accepted  part.^  When 
however  he  pays  the  part  he  accepts,  the  whole  bill  is 
extinguished.^  The  party  entitled  to  the  bill  should  claim 
and  hold  all  the  parts,  for  payment  of  any  one  part  to  another 
person  might  defeat  him.^  But  he  to  whom  any  one  part  of 
the  set  is  first  transferred  acquires  a  property  in  all  the 
other  parts  and  may  maintain  trover  even  against  a  hona 
fide  holder,  who  subsequently  by  transfer  or  otherwise,  gets 
possession  of  another  part  of  the  set.^     For  it  is  the  duty  of 

'  Davison  \.  Robertson,  3  Dow.  218;  Thomson  on  Bills,  4c;  Byles  (Shars- 
wood's  ed.)  [*376],  556;  Chitty  [*lo5],  178. 

-  Chitty  [*155],  178. 

"  Pinard  v.  Klockman,  32  L.  J.  Q.  B.  82 ;  3  Best  &  Smith,  388  (113  E.  C  L.  R.) 

'  Holdsworth  v.  Hunter,  10  B.  &  C.  449. 

'  Holdsworth  v.  Hunter,  10  B.  &  C.  449;  Chitty  on  Bills  [*155],  ITS;  Byles 
[*377],  556. 

"  Ibid.  '  Holdsworth  r.  Hunter,  10  B.  &  C.  449. 

'  Perreira  v.  Jopp,  10  B.  &  C.  450,  note  a;  Chitty,  Jr.,  1477;  Holdsworth  v. 
Hunter,  10  B.  &  C.  449  ;   Byles  on  Bills  [*376],  556.  ' 


100  FORMAL  REQUISITES  OF  BILLS  AND  NOTES. 

the  person  taking  one  part  to  inqnire  after  the  others ;  and 
be  is  advertised  by  their  absence,  that  they,  or  one  of  them, 
may  be  outstanding  in  the  hands  of  a  prior  bona  fide  holder.* 

§  117.  In  a  suit  against  the  drawer  or  indorser,  the  very 
part  of  the  set  which  has  been  protested,  must  be  produced,^ 
and  there  is  authority  for  the  view,  that  in  a  suit  against  the 
indorser,  all  of  the  set  must  be  produced,  or  their  non-pro- 
duction satisfactorily  accounted  for.^  But  the  United  States 
Supreme  Court  has  held  that,  wdien  the  part  which  has  been 
protested  is  produced,  it  is  sufficient.  The  indorser  may 
defend  by  showing  that  another  person  than  the  plaintitf 
has  a  superior  adverse  claim  by  reason  of  prior  acquisition 
of  another  part,  but  unless  he  can  prove  that  fact,  the  law 
protects  him  in  making  payment  to  the  holder  of  the  part 
protested,  and  requires  no  explanation  from  him  as  to  the 
wdiereabouts  of  the  other  parts.^ 

>  Lang  V.  Smyth,  7  Bing.  284,  294  (30  E.  C.  L.  R.) ;  5  M.  &  P.  78. 
»  W^ells  V.  Whitehead,  15  Wend.  527;  3  Kent's  Com.  109. 
»  Byles  on  Bills  (Sharswood's  ed.)  [*  377],  557;  2  Starkie  on  Ev.  142. 
*  Downes  v.  Church,  13  Peters,  205,  Story,  J.     But  see  Wells  v.  W^hitehead, 
15  Wend.  527.  and  Edwards  on  Bills,  163. 


CHAPTER  IV. 

STA3IPS    UPON^   NEGOTIABLE    INSTRUMENTS. 

§  118.  It  seems  that  stamp  duties  were  first  levied  on 
the  continent  of  Europe,  in  Holland,  in  the  year  1G24,  being 
employed  to  raise  revenues  for  the  prosecution  of  war  against 
Spain.^  In  England,  they  were  first  imposed  in  1694,  war 
then  beinoj  washed  aojainst  France.'^  In  the  United  States, 
individual  States  have  at  different  periods  imposed  stamp 
duties ;  but  such  duties  were  never  imposed  by  the  Federal 
Government  until  July  1st,  1862,  during  the  progress  of  the 
war  against  the  Confederate  States.  At  that  time,  a  sweep- 
ing act,  requiring  deeds,  bills,  notes,  checks,  and  other  agree- 
ments and  evidences  of  debt  to  be  stamped,  was  passed,  be- 
ing framed  for  the  most  part  upon  the  model  of  the  British 
statutes.  That  act  has  been  much  curtailed  by  various 
amendments;  and,  at  the  present  writing  (April  1,  1875), 
the  following  provision  of  the  act  of  Congress,  approved 
February  8th,  1875,  contains  the  only  requisition  on  the  sub- 
ject of  stamps  applicable  to  negotiable  instruments,  to  wit : 

Be  it  enacted  (sec.  15),  tha  the  words  "  bank  check, 
draft,  or  order  for  the  payment  of  any  sum  of  money  what- 
soever, drawn  upon  any  bank,  banker,  or  trust  company,  at 
sight  or  on  demand,  two  cents,"  in  Schedule  B  of  the  Act 
of  June  30th,  eighteen  hundred  and  sixty-four,  be,  and  the 
same  is  hereby,  stricken  out,  and  the  following  paragraph 
inserted  in  lieu  thereof : 

"  Bank  check,  draft,  order,  or  voucher  for  the  payment 
of  any  sum  of  money  whatsoever,  drawn  upon  any  l)ank, 
banker,  or  trust  company,  two  cents." 

'  Edwards  on  Stamp  Act,  2.  '  Edwards  on  Stamp  Act,  3. 


102  STAMPS  UPON  NEGOTIABLE  INSTRUMENTS. 

§  119.  The  original  provisions  of  tlie  stamp  act  can 
therefore  be  now  of  but  limited  interest  to  the  legal  profes- 
sion, and  the  public  generally.  But  we  append  the  portion 
of  the  schedule  in  force  iu  1S70.  Instruments  executed  be- 
fore that  time  have  generally  been  barred  by  statutes  of 
limitation.^ 

'  We  transcribe  also  a  few  of  tlie  notes  of  Mr.  Orlando  F.  Bump  to  his  anno- 
tated edition  of  the  stamp  act. 

I.  Bank  check,  draft,  or  order  for  the  payment  of  any  sum  of  money  what- 
soever, drawn  upon  any  bank,  banker,  or  trust  company,  or  for  any  sum  exceed- 
ing ten  dollars  drawn  upon  any  other  person  or  persons,  companies,  or  corpora- 
tions, at  sight  or  on  demand,  two  cents. 

Checks  drawn  on  a  bank  by  one  of  its  proprietors  for  his  daily  expenses,  or 
by  Its  employees  for  their  wages,  must  be  stamped.     Bout.  344. 

The  check  of  a  correspondent  on  money  to  his  credit,  to  transfer  an  amount 
of  money  collected  for  him,  must  be  stamped.  Checks  drawn  by  a  State  for 
moneys  belonging  to  the  State  are  exempt.     Bout.  345. 

When  a  note  is  made  payal)le  at  a  certain  bank,  and  a  check  is  drawn  upon 
the  same  bank  for  the  amount  thereof,  the  check  must  be  stamped.  When  the 
note  is  simply  charged  at  the  bank  to  the  account  of  the  promisor  without  the 
use  of  a  check,  no  stamp  is  required.     Bout.  347. 

If  a  check  upon  a  book-keeper  is  used  merely  as  a  memorandum  to  show  the 
liability  of  the  drawer  to  the  firm  of  which  he  is  a  member,  it  is  exempt;  but  if 
used  for  any  other  purpose,  and  especially  if  paid  out  or  transferred,  or  negotia- 
ble to  a  third  party,  it  should  be  stamped.     Bout.  349. 

II.  Bill  of  exchange  (inland),  draft,  or  order  for  the  payment  of  any  sum 
of  money  not  exceeding  one  hundred  dollars,  otherwise  than  at  sight  or  on  de- 
mand, or  any  promissory  note  (except  bank  notes  issued  for  circulation,  and 
checks  made  and  intended  to  be  forthwith  presented,  and  which  shall  be  pre- 
sented to  a  bank  or  banker  for  payment),  or  any  memorandum,  check,  receipt,  or 
other  written  or  printed  evidence  of  an  amount  of  money  to  be  paid  on  demand, 
or  at  a  time  designated,  for  a  sum  not  exceeding  one  hundred  dollars,  five  cents, 
and  for  every  additional  hundred  dollars,  or  fractional  part  thereof  in  excess  of 
one  hundred  dollars,  five  cents.  Promissory  notes  for  a  less  sum  than  one 
hundred  dollars  are  exempt. 

A  check  payable  at  sight,  but  post-dated,  which  has  been  put  into  circulation 
prior  to  the  day  of  its  date,  should  be  stamped  the  same  as  a  promissory  note, 
and  not  as  a  check  payable  on  demand.     Pope  v.  Bumset  et  ah  4  I.  R.  R.  133. 

An  agreement  jointly  and  severally  to  pay  the  sums  set  opposite  to  the  repect- 
ive  names  of  the  makers  is  a  promissory  note.  Ballard  v.  Burnside,  49  Barb. 
102. 

A  due  bill  is  a  promissory  note  under  the  Illinois  statutes,  and  in  that  State 
should  be  so  stamped,     Jacquin  v.  AVarren,  40  111  459. 

III.  Bell  of  exchange  (foreign),  or  letter  of  credit,  drawn  in  but  payable 
out  of  the  United  States,  if  drawn  singly,  or  otherwise  than  in  a  set  of  three  or 
more,  according  to  the  custom  of  merchants  and  bankers,  shall  pay  the  same 


STAMPS  UPON  NEGOTIABLE  INSTRUMENTS.  103 

§  120.  Schedule  B  of  the  Act  of  Congress  of  July  1st, 
1862,  entitled  "  An  act  to  provide  internal  revenue  to  sup- 
rates  of  duty  as  inland  bills  of  exchange  or  promissory  notes.  If  drawn  in  sets 
of  three  or  more:  for  every  bill  of  each  set  where  the  sums  made  payable  shall 
not  exceed  one  hundred  dollars,  or  the  equivalent  thereof,  in  any  foreign  cur- 
rency in  which  such  bills  may  be  expressed,  according  to  the  standard  of  value 
fixed  by  the  United  States,  two  cents.  And  for  every  additional  hundred  dollars, 
or  fractional  part  thereof  in  excess  of  one  hundred  dollars,  two  cents. 

A  foreign  bill  of  exchange  or  letter  of  credit,  drawn  in,  but  payable  out  of 
the  United  States,  if  drawn  according  to  the  custom  of  merchants  and  bankers, 
is  liable  to  the  same  stamp  tax  as  an  inland  bill  of  exchange,  i.  e.,  if  drawn  at 
sight  or  on  demand  it  is  liable  to  a  tax  of  two  cents;  if  drawn  otherwise  than  at 
sight  or  on  demand  it  should  be  stamped  at  the  rate  of  five  cents  for  each  $100 
or  fractional  part  thereof.  Duplicates  require  the  same  amount  of  stamps  as  the 
original.     9  I.  R.  R.  165. 

The  phrase  "  letter  of  credit "  is  construed  to  refer  to  such  letters  as  are 
equivalent  to  a  bill  of  exchange,  the  payment  of  which  is  not  contingent  upon 
any  other  transaction.     Bout.  353. 

IV.  Bill  op  Lading  or  receipt  (other  than  charter-party),  for  any  goods, 
merchandise,  or  effects,  to  be  exported  from  a  port  or  place  in  the  United  States 
to  any  foreign  port  or  place,  ten  cents. 

An  inland  or  domestic  bill  of  lading  is  exempt.     9  I  R.  R.  161. 

A  bill  of  lading  to  any  port  in  British  North  America  is  exempt.     9  I.  R.  R.  161. 

V.  Bond  of  any  description,  other  than  such  as  may  be  required  in  legal  pro- 
ceedings, or  used  in  connection  with  mortgage  deeds,  and  not  otherwise  charged 
in  this  schedule,  twenty-five  cents. 

State  and  city  securities  are  exempt  from  stamp  duty.  1  I.  R.  R.  75 ;  3  1.  R.  R. 
14;  see  Bumj^'s  ed.  Stamp  Act,  41. 

VI.  Certificate  of  stock  in  any  incorporated  company,  twenty-five  cents. 

VII.  Certificate  of  j^rofits,  or  any  certificate  or  memorandum  showing  an 
interest  in  the  property  or  accumulations  of  any  incorporated  company,  if  for  a 
sum  not  less  than  ten  dollars  and  not  exceeding  fifty  dollars,  ten  cents.  Exceed- 
ing fifty  dollars  and  not  exceeding  one  thousand  dollars,  twenty-five  cents.  Ex- 
ceeding one  thousand  dollars,  for  every  additional  one  thousand  dollars,  or  frac- 
tional part  thereof,  twenty-five  cents. 

VIII.  Certificate.  Any  certificate  of  damage,  or  otherwise,  and  all  other 
certificates  or  documents  issued  by  any  port  warden,  marine  surveyor,  or  other 
person  acting  as  such,  twenty-five  cents. 

IX.  Certificate  of  deposit  of  any  sum  of  money  in  any  bank  or  trust  com- 
pany, or  with  any  banker  or  person  acting  as  such  : 

If  for  a  sum  not  exceeding  one  hundred  dollars,  two  cents. 

For  a  sum  exceeding  one  hundred  dollars,  five  cents. 

When  money  is  received  as  a  lona  fide  deposit,  against  which  the  depositor 
may  draw,  the  certificate  need  only  be  stamped  with  a  two  cent  or  a  five  cent 
stamp,  according  to  whether  the  amount  exceeds  one  hundred  dollars  or  not, 
even  though  the  deposit  draws  interest  for  part  or  for  all  the  time  it  remains  in 
bank.  It  I.  R.  R.  4,  5. 
.     X.  Certificate  of  any  other  description  than  those  specified,  five  cents. 


104  STAMPS  UPON   NEGOTIABLR  INSTRUMENTS. 

port  the  government,  and  to  pay  interest  ou  the  public  debt," 
contained  the  provisions  respecting  the  stamps  required  upon 
negotiable  instruments,  including  bills  of  exchange,  promis- 
sory notes,  clieclvS,  bills  of  lading,  negotiable  bonds,  and 
certificates  of  deposit ;  and  this  schedule,  either  in  its  original 
form,  or  as  subsequently  amended,  continued  in  force  until 
the  first  day  of  October,  1872,  when  it  was  repealed  ''  ex- 
cepting only  the  tax  of  two  cents  on  bank  checks,  drafts  or 
orders,"  by  tlie  subjoined  section  of  the  act  of  that  date.^ 


'  17  U.  S.  Stat,  at  Large,  c.  315,  sec.  36,  p.  256 : 

Sec.  36.  That  on  and  after  the  first  day  of  October,  eighteen  hundred  and 
seventy-two,  all  the  taxes  imposed  by  stamps  under  and  by  virtue  of  Schedule  B 
of  section  one  hundred  and  seventy  of  the  act  approved  June  thirtieth,  eighteen 
hundred  and  sixty-four,  and  the  several  acts  amendatory  thereof,  be,  and  the 
same  are  hereby  repealed,  excepting  only  the  tax  of  two  cents  on  bank  checks, 
drafts,  or  orders:  Provided,  that  where  any  mortgage  has  been  executed  and 
recorded,  or  may  be  executed  and  recorded,  before  the  first  day  of  October, 
Anno  Domini  eighteen  hundred  and  seventy-two,  to  secure  the  payment  of  bonds, 
or  obligations  that  may  be  made  and  issued  from  time  to  time,  and  such  mort- 
frarre  Dot  bciiig  stamped,  all  such  bonds  or  obligations  so  made  and  issued  on  or 
after  the  first  said  day  of  October,  Anno  Domini  eighteen  hundred  and  seventy- 
two,  shall  not  be  subject  to  any  stamp  duty,  but  only  such  of  their  bonds  or  obli- 
gations as  may  have  been  made  and  issued  before  the  day  last  aforesaid  :  And 
provided  further.  That,  in  the  meantime,  the  holder  of  any  instrument  of  writing 
of  whatever  kind  and  description,  which  has  been  made  or  issued  without  being 
duly  stamped,  or  with  a  defunct  [deficient]  stamp,  may  make  application  to  any 
collector  of  internal  revenue,  and  that  upon  sucli  application  such  collector  shall 
thereupon  affix  the  stamp  provided  by  such  holder  upon  such  instrument  of  writ- 
in"  as  [is]  required  by  law  to  be  put  upon  the  same,  and  subject  to  the  provisions 
of  section  one  hundred  and  fifty-eiglit  of  the  internal  revenue  laws. 

It  is  also  provided  by  c.  462,  p.  250,  Stat.  1873-4,  as  follows: 

An  Act  to  provide  for  the  stamping  of  unstamped  instruments,  documents  or 
papers: 

Be  it  enacted,  by  the  Senate  and  House  of  Representatives  of  the  United 
States  of  America,  in  Congress  assembled.  That  all  instruments,  documents  and 
papers,  heretofore  made,  signed  or  is-ued,  and  subject  to  a  stamp  duty  or  tax 
under  any  law  heretofore  existing,  and  remaining  unstamped,  may  be  stamped  by 
any  person  liaving  an  interest  therein,  or,  where  the  original  is  lost,  a  copy 
thereof,  at  any  time  prior  to  the  first  of  January,  eighteen  hundred  and  seventy- 
six.  And  said  instruments,  documents  and  papers,  and  any  record  thereof, 
shall  be  as  valid,  to  all  intents  and  purposes,  as  if  stamped  when  made,  signed 
or  issued,  but  no  right  acquired  in  good  faith  shall  in  any  manner  be  aflfected  by 
such  stamping  a?  aforesaid.  Provided,  That  to  render  such  stamping  valid,  the 
person  desiring  to  stamp  the  same,  shall  appear  with  the  instrument,  document. 


STAMPS   UPON   NEGOTIABLE   INSTRUMENTS.  105 

§  121.  It  is  uot  within  the  j^urview  of  this  work  to  treat 
otherwise  than  incidentally  and  briefly  on  the  subject  of 
stamps.  In  Edwards  on  the  Stamp  Act,  Bump's  Annotated 
edition  of  the  Stamp  Act,  and  in  the  appendix  to  the  second 
volume  of  Parsons  on  Notes  and  Bills,  will  be  found  very 
ample  infcn-mation  respecting  the  act  of  Congress,  with  the 
decisions  of  the  American  courts,  and  also  of  the  British 
courts  i)i  pari  materia.  Herein  we  shall  only  touch  upon 
some  of  the  most  prominent  and  important  points,  the  act  no 
longer  having  application,  except  in  a  very  limited  degree,  to 
the  subject  of  this  treatise. 

§  122.  As  to  the  construction  of  the  stamp  act. — It  will 
be  observed  tbat  section  163  of  the  act  relating  to  stamps 
does  not  in  terms  apply  to  instruments  recorded,  admitted  or 
offered  as  evidence  in  the  State  courts.  It  is  therefore  the 
conclusion  of  reason,  and  of  the  majority  of  the  adjudicated 
cases,  that  Congress  did  not  intend  the  act  to  apply  to  the 
State  courts.  It  can  have  full  operation  and  effect,  if  con- 
strued to  apply  to  those  courts  only  which  have  been  estab- 
lished under  the  Constitution  of  the  United  States,  and  by 
acts  of  Conojress,  and  over  which  the  Federal  leo;islature  can 
legitimately  exercise  control,  and  to  which  they  can  proj^erly 
prescribe  rules  regulating  the  course  of  justice,  and  the 
mode  of  administering  the  law.^     A  broader  interpretation 

or  paper,  or  copy  thereof,  before  some  judge  or  clerk  of  a  court  of  record,  and 
before  him  affix  the  proper  stamp;  and  the  said  judge  or  clerk  shall  indorse  on 
such  writing  or  copy  a  certificate,  under  his  hand,  when  made  by  said  judge, 
and  under  his  hand  and  seal,  when  made  by  said  clerk,  setting  forth  the  date  at 
which,  and  the  place  where,  the  stamp  was  so  affixed,  the  name  of  the  person 
presenting  said  writing  or  copy,  the  fact  that  it  was  thus  affixed,  and  that  the 
stamp  was  duly  canceled  in  his  presence. 

Sec.  2.  That  all  laws  or  parts  of  laws  in  conflict  with  the  above,  are  hereby 
repealed.     Approved,  June  28d,  1874. 

'  Green  v.  Holway,  101  Mass.  343;  Moore  v.  Quirk,  105  Mass.  49;  Carpenter 
V.  Snelling,  97  Mass.  452;  Beebe  v.  Hutton,  47  Barb.  187;  Daily  v.  Coker,  38 
Tex.  815 ;  Davis  v.  Richardson,  45  Miss.  499 ;  Moore  v.  Moore,  47  N.  H.  467 ; 
People  V.  Gates,  43  N.  Y.  40 ;  Griffin  v.  Ranney,  35  Conn.  239 ;  Sammons  v. 
Ilalloway,  21  Mich.  1G2;  Fifield  v.  Clu«e  15  Mich.  505;  Clement  v.  Conradt, 
19  Mich.  170;    Bowen  v.  Byrne,  55  111.  4G7  ;    Bumpass  v.  Taggart,  26  Ark.  398; 


lOG  STAMPS  UPON   NEGOTIABLE  INSTRUMENTS. 

should  not  be  given  it.     But    the  contrary  view  has  been 
been  taken. ^ 

§  123.  Where  the  stamp  laws  of  the  United  States 
are  recognized  as  binding  in  the  State  courts,  the  defense 
that  the  note  was  not  stamped  until  after  it  was  issued, 
is  not  pennitted  to  be  made  against  a  hona  fide  holder  for 
value,  who  received  it  after  it  was  stamped.^  Bearing  all 
the  appearances  of  an  instrument  conforming  to  every  legal 
requirement,  it  would  only  facilitate  fraud  to  permit  this- 
latent  defect  to  be  pleaded  against  an  innocent  party ;  and 
therefore  the  instrument  is  enforced. 

If  a  bill  or  note  be  void  for  want  of  a  stamp,  the  creditor 
may  nevertheless  recover  on  the  original  consideration.^ 

§  124.  There  must  be  express  proof  that  the  stamp  was 
omitted  with  the  intent  to  evade  the  act,  in  order  to  invali- 
date the  instrument.  The  section  of  the  stamp  act  de- 
claring invalid  the  instrument,  and  sultjecting  to  a  j)enalty 
of  fifty  dollars  every  person  who  makes,  signs,  accepts  or 
issues  a  bill,  note,  or  draft  for  money  without  a  stamp,  "  with 
intent  to  evade  the  provisions  of  this  act,"  has  been  the  subject 
of  numerous  adjudications:  and  it  is  distinctly  settled  by 
weight  of  authority,  that  the  words  "  with  intent  to  evade  the 
provisions  of  this  act,"  are  connected  with  and  qualify  both 
the  clause  declaring  the  instrument  invalid,  and  that  impos- 
ing the  penalty  of  fifty  dollars.^  "  It  is  a  fraudulent  and  not 
an  accidental  omission  at  which  the  penalty  of  the  statute  " 


Burson  v.  Huntington,  21  Mich.  415;  Atkins  v.  Plympton,  44  Vt.  21;  Fifield  v. 
Cluse,  33  Ind.  276;  Rockwell  v.  Hunt,  40  Conn.  328;  Duflfy  v.  Hobson,  40 
Cal.  340  (overruling  llallock  v.  Jaudin,  34  Cal.  171). 

'  City  of  Muscatine  v.  Sterneman,  80  Iowa,  586. 

"  Sperry  v.  Horr,  33  Iowa,  184;  Robinson  v.  Law,  31  Iowa,  9;  Blackwcll  v. 
Denie,  20  Iowa,  63;  Pearson  v.  Cummings,  28  Iowa,  344. 

'  Wilson  V.  Carey,  40  Vt.  179. 

'  Ilari^cr  v.  Clark,  17  Ohio  St.  190;  Rhemstron  v.  Cone,  26  Wis.  163; 
Hitchcock  V.  Sawyer,  39  Vt.  412;  Desmond  v.  Norris,  10  Allen,  250  ;  llallock  v. 
Jaudin,  34  Cal.  167;  Sawyer  v.  Parker,  57  Me.  39.  Redlich  v.  Doll,  54  N.  Y.  241 ; 
Green  v.  Hal  way,  101  Mass.  243. 


STAMrS  UPON  NEGOTIABLE  INSTRUMENTS.  107 

is  levied,  says  the  United  States  Supreme  Court,  concurrin<^^ 
in  efiect  with  the  State  authorities  herein  cited.^ 

§  125.  A  number  of  cases  concede  that  there  must  l>e  a 
fraudulent  "  intent  to  evade  the  provisions  of  the  act,"  iu 
order  for  the  instrument  to  be  invalid,  or  the  party  to  be 
subject  to  tlie  penalty  imposed ;  but  maintain  that  the  mere 
omission  to  put  the  proper  stamp  on  the  paper  is  presump- 
tive evidence  that  such  intent  to  evade  the  act  existed,  on  the 
ground  that  every  person  must  be  presumed  to  know  the 
law,  and  is  chargeable  with  the  duty  to  comply  with  it.^ 
But  penal  laws  and  laws  concerning  revenues  must  be 
strictly  construed.  Stamps  are  frequently  omitted  by  inad- 
vertence, or  mistake ;  and  to  throw  the  burden  of  proving 
the  negative  proposition  that  he  had  no  intent  to  evade  the 
act  upon  the  party  would  be  a  harshness  of  construction  un- 
familiar to  the  liberal  principles  of  the  common  law.  And 
the  cases  which  hold  that  the  intent  to  evade  the  act  must  be 
affirmatively  shown,  in  addition  to  the  mere  fact  of  omission^ 
commend  themselves  to  favor  as  embodying  the  better 
opinion  of  this  question.^  It  will,  therefore,  never  avail  to 
demur  to  an  unstamped  instrument.* 

§  126.  Poioer  of  Congress. — The  gravest  question  which 
the  Federal  stamp  act  can  give  rise  to,  is  wl^ether  or  not  Con- 

*  Campbell  v.  Wilcox,  10  Wall.  421. 

'  Harper  v.  Clark,  17  Ohio,  190;  Miller  v.  Morrow,  3  Cold.  587;  Beebe  v. 
ITutton.  47  Barb.  187 ;  Howe  v.  Carpenter,  53  Barb.  382  ;  Miller  v.  Larmon,  38 
How.  Pr.  R  417;  MajTiard  v.  Johnson,  2  Nev.  16;  Wayman  v.  Torreyson,  4 
Nev.  124. 

'Campbell   v.  Wilcox.  10    Wall.  421;  Daily  v.  Coker,   33  Tex.  815;   Moore 
V.  Moore,  47  N.  Y.  467;  Green  v.  Holway,  101  Mass.  243;  Moore   v.  Quirk,  105 
Mass.  49;  Powell  v.  Feely,  49  111.  143;  U.  S.  Express  Co.  v.  Haines,  48  111.  248  ; 
Craig  V.  Dimock,  47  111.  308  ;   Morris  v.  McMorris,  44  Miss.  441 ;  Davis  v.  Rich- 
ardson, 45   Miss.  499 ;  Hallock  v.  Jaudin,  34   Cal.   167 ;  Mitchell   v.  Mitchell 
32  Iowa,  421,  overruling  former  cases  in  order  to  conform  with  decisions  of  Su 
preme  Court  of  U.  S.  (see  former  case  of  Muscatine  v.  Sterneman,  30  Iowa,  526) 
Trull  V.  Meneton,  12  Allen,  396 ;  Lynch  v.  Morse,  97  Mass.  458  ;  Sawyer  v.  Parker 
57  Me.  39  ;  AVhiteman  v.  Sheckle,  43  Mo.  537 ;  McGovern  v.  lloesback,  53  Pcnn 
St.  177. 

*  Campbell  v.  Wilcox,  supra. 


108  STAMPS  UPON  NEGOTIABLE  INSTRUMENTS. 

gress  has  tlie  power  so  to  frame  its  laws  for  taxation  as  to 
prescribe  the  formalities  of  contracts,  and  records  of  process 
to  constitute  suits,  and  of  evidence  to  sustain  them.  The 
power  of  Congress  to  raise  revenue  by  taxation  is  admitted  ; 
but  still  it  must  be  remembered  that  the  Federal  and  State 
governments  can  neither  trench  upon  the  independent  ex- 
istence of  the  other,  and  must,  therefore,  exercise  the  powers 
existing  in  each,  in  a  manner  consistent  with  the  legitimate 
freedom  of  both  within  their  proper  spheres.  The  United 
States  Supreme  Court  has,  accordingly,  held  that  a  State  can- 
not tax  the  branches  of  the  national  banks,  or  their  stocks 
and  securities,  or  the  salaries  of  government  officers.^  And 
reciprocally,  the  doctrine  has  been  established  by  preponder- 
ance in  numbers  of  cases,  and  by  the  weight  of  reason  and 
xiuthority,  that  the  Federal  government  has  no  power,  in  the 
form  of  taxation  or  otherwise,  to  prescribe  the  formalities  of 
contracts,  records,  process,  or  evidence  ;  and  that  in  so  far  as 
the  stamp  act  of  Congress,  or  any  other  act,  undertakes  so  to 
do,  it  is  unconstitutional  and  void.'^  'i'hey  might,  therefore, 
be  admitted  as  evidence  in  State  courts,  although  unstamped. 
But  Congress  has  power  to  establish  the  rules  of  evidence  in 
the  Federal  courts,  and  also  to  provide  appropriate  remedies 
by  fine  or  imprisonment  for  the  enforcement  of  its  revenue 
laws.^  « 

§  127.  It  has  been  held  that  the  United  States  internal 
revenue  laws  were  not  in  operation  in  the  Confederate  States 
during  the  war  between  them  and  the  United  States,  and 
that  it  was,  therefore,  unnecessary  to  stamp  promissory  notes 
made  during  the  war,  in  order  to  give  them  validity.'* 

'  McCulIough  V.  state  of  Maryland,  4  Wheat.  316;  Weston  v.  City  of  Charles- 
ton, 3  Peters,  442;  Dobbins  v.  Comr's  of  Erie,  16  Peters,  435. 

^  Craig  V.  Dimock,  47  111.  308;  Latham  v.  Smith,  45  111.  29;  Bumpass  v. 
Taggart,  26  Ark.  398 ;  Davis  v.  Richardson,  45  Miss.  499 ;  Hunter  v.  Cobb,  1 
Bush  (Ky.)  239. 

'  Craig  V.  Dimock,  47  III.  308;  Clemens  v.  Conrad,  19  Mich.  170. 

"  McElvain  v.  Meedd,  44  Ala.  48;  Susoug  v.  Williams,  1  Heiskell,  625. 


CHAPTER   V. 

IREEGULAK,    AMBIGUOUS    AND    FICTITIOUS   INSTRUMENTS,    AND 
INSTRUMENTS    IN   BLANK. 


SECTION     I. 
IKEEGULAK   ANT)   AIMBIGUOUS    INSTRUMENTS. 

§  128.  Ordinarily,  as  we  have  already  seen,  a  bill  of 
exchange  comprises  three  separate  and  distinct  parties,  a 
drawer,  a  drawee,  and  a  payee.  But  sometimes  the  drawer,, 
and  payee  are  the  same  person,  as  where  the  drawer  expresses 
the  bill  to  be  payable  to  himself  only  ;  or  to  himself  or 
order.  And  in  such  case  when  indorsed,  it  becomes  payable 
to  order,  or  bearer  as  the  case  may  be.^  There  is  no  doubt 
that  there  may  be  a  bill  to  which  only  one  individual  is  a 
party,  as  where  the  drawer  draws  a  bill  upon  himself,  payable 
to  his  own  order.^  He  may  also  draw  a  bill  upon  himself, 
payable  to  the  order  of  a  third  party.^  But  in  all  cases 
where  the  drawer  and  drawee  are  the  same  person,  the 
instrument,  although  it  be  declared  upon  as  a  bill,  may  be 
regarded  as  in  legal  effect  a  promissory  note  ;   in  which  case 

'  Rice  V.  Hogan,  8  Dana,  134;  Woods  v.  Ridley,  11  Humph.  194;  Ilall  v. 
Shorter,  46  Ala.  453. 

*  Harvey  v.  Kay,  9  Barn.  &  Ores.  334;  Planters'  Bank  v.  Evans,  36  Texas, 
592;  Walton  v.  Williams,  44  Ahi.  347;  Randolph  v.  Parish,  9  Porter,  76  ;  Chitty 
on  Bills  (13  Am.  ed.)  [*2.)],  33  ;  Byles  (Sharswood's  ed.)  [*89],  185. 

'Roach  v.  Ostler,  1  Man.  &  Ry.  130;  Dehers  v.  Harriott.  1  Shower,  163 
(1691);  Robinson  V.  Bland,  2  Burr.  1077  (1760);  Mayor  v.  Hammond,  Chitty, 
Jr.,  1423;  Harvey  v.  Kay,  9  B.  &  C.  364;  French  v.  Gordon,  10  Kans.  370; 
Planters'  Bank  v.  Evans,  36  Texas,  592.  In  this  case  suit  was  brought  by  an  in- 
dorsee against  the  maker  of  the  following  paper  :  "  Ten  months  after  date  pay  to 
the  order  of  myself,  thirty-nine  hundred  dollars,  for  value  received,  and  charge 
to  account  of  yours,  H.  E.    To  M.  C.  &  Co.,  New  Orleans,  La. ;  "  which  instrument 


110  IRREGULAR  INSTRUMENTS. 

the  drawer  will  be  bound  without  notice  of  dishonor ;  ^  or 
what  is  the  same  as  a  promissory  note,  it  may  be  regarded  as 
an  accepted  bill,  the  drawer's  engagement  that  he  himself, 
•who  is  the  drawee  also,  will  pay  it,  being  equivalent  to 
acceptance."  A  third  party  writing  his  name  across  the  face 
of  such  a  paper,  could  not  be  the  acceptor,  because  not  the 
drawee,  and  would  be  regarded  as  an  indorser.^ 

In  practice,  it  is  usual  to  declare  upon  such  instruments 
as  bills  of  exchange,  not  admitting  the  identity  of  the  drawer, 
and  drawee,*  And  their  identity,  as  it  seems,  must  be  proved 
by  the  party  alleging  it.^  Where  an  agent  draws  a  bill  upon 
liis  principal  by  his  authority,  and  for  money  obtained  and 
used  in  his  business,  the  drawer  and  drawee,  it  has  been  held, 
may  be  treated  as  in  fact  the  same  party,  and  held  without 
demand  or  notice.*^ 

§  129.  Where  a  copartnership  carries  on  business  at  two 
places,  and  at  one  place  draws  a  bill  upon  the  firm  at  another, 
the  drawer  and  drawee  being  the  same,  the  bill  may  be 
treated  as  a  promissory  note,  or  as  a  bill  at  the  holder's  option. 
Thus  where  the  manager  of  a  branch  of  a  joint  stock  bank. 


was  accepted  by  M.  C.  &  Co.,  and  bore  the  iodorsemcnt  in  blank  of  the  maker 
and  payee.  Held  (1)  tliat  it  was  oj^tional  with  the  indorsee,  either  to  treat  this 
instrument  as  a  bill  of  exchange,  and  sue  the  drawer  and  the  acceptor  together; 
or  to  treat  it  as  a  promissory  note,  and  sue  the  maker  alone.  Held  further,  (2) 
that  such  an  instrument,  when  delivered  to  the  drawee,  imports  that  it  is  not 
drawn  against  funds  of  the  drawer,  in  the  hands  of  the  drawee.  And  as  the 
indorsee  acquired  the  instrument  before  maturity.  It  is  further  held  (3)  that  no 
defense  was  presented  by  an  answer  which  alleged  that  the  defendant  had  settled 
it  with  M.  C.  &  Co.,  the  drawees,  without  notice  of  its  transfer  to  the  plaintiff. 
(Evans,  P.  .!.,  dissenting.)     Planters'  Bank  v.  Evans,  36  Texas,  593. 

'Roach  V.  Ostler,  1  Man.  &  Ry.  130;  Randolph  v.  Parish,  9  Porter  (Ala.) 
78;  Wardens  of  St.  James  Church  v.  Moore,  1  lud.  (Carter),  289;  Chicago  R.  R. 
Co.  v.  West,  37  Inil.  2ll ;  Planters'  Bank  v.  Evans,  36  Texas,  593.  See  Armfield 
V.  Allport,  37  L.  J.  Exch.  43. 

'■'Cunningham  v.  Wardwell,  3  Fairfax,  456;  Planters'  Bunk  v.  Evans,  38 
Texas,  593. 

'  Walton  V.  Williams,  44  Ala.  347. 

^  Roach  v.  Ostler,  1  Man.  &  Ry.  130;  Harvey  v.  Kay,  9  Barn.  &  C.  364; 
Starke  v.  Cheeseman,  Carthew,  509. 

''  Cooper  V.  Poston,  1  Duval,  417. 

«  Raymond  v.  Mann,  45  Texas,  301  (1870). 


IRREGULAR  AND  A3IB1GU0US  INSTRUMENTS.  Ill 

drew  a  bill  npou  the  bank  at  auotlier  place,  Maule,  J.,  said  : 
*'  This  is  a  bill  drawn  by  tlie  whole  company,  acting  by  their 
directors,  upon  the  whole  company.  It  is  a  promise,  acting 
on  behalf  of  the  company,  under  the  order  of  the  directors, 
that  the  company  shall  pay.  It  is  a  promise  made  by  the 
company  at  Dorking  to  pay  in  London.  It  is  therefore  in 
effect  a  promissory  note."  ^  In  a  recent  case  it  was  held  that 
where  a  firm  in  one  country  drew  upon  the  same  fii-m  in 
another  country,  and  the  bill  was  accepted,  the  paper  was  per- 
haps strictly  a  promissory  note,  but  the  holder  might  treat  it 
either  as  a  bill  or  a  note;  and  where  it  appears  to  have  been 
the  intention  that  it  should  be  negotiable  in  the  market  as 
a  bill  of  exchange,  it  should  be  so  treated.^  The  same  prin- 
dple  applies  where  the  duly  authorized  officer  of  an  incor- 
porated company  draws  on  its  behalf  upon  another  officer, 
having  custody  of  its  funds ;  and  the  instrument  may  be 
treated  as  the  note  of  the  corporation.^ 

§  130.  A  note  must  have  two  parties,  a  maker  and  a 
payee,  and  a  note  made  by  a  person  jiayable  to  himself,  or  to 
himself  or  order,  is  a  nullity;  but  if  he  then  indorse  it,  it  be- 
comes in  legal  effect  payable  to  the  bearer,  or  to  the  indorsee 
or  order,  according  to  the  terms  of  indorsement;  and  it  may 
be  so  treated  and  declared  on,^  but  there  are  decisions  to 


'  Miller  v.  Thompson,  3  Man.  &  Gr.  576. 

^  Willaus  V.  Ayres,  3  App.  Gas.  133. 

'  See  Chapter  XIV  on  drafts  or  warrants  of  one  corporate  officer  upon  another. 
In  1  Parsons  K  &  B.  63,  it  is  said  :  "  Where  a  duly  authorized  agent  or  officer 
of  an  incorporated  company,  draws  in  behalf  of  the  company  upon  the  treasurer, 
cashier,  or  other  officer  of  tlie  company  who  has  the  custody  of,  and  is  charged 
with  the  duty  of  disbursing  the  company's  funds,  this  is  in  substance,  it  should 
seem,  a  draft  by  the  company  upon  itself;  and  may  be  treated  either  as  a  bill  of 
exchange  or  a  promissory  note." 

*  Wood  V.  Mytton,  10  Q.  B.  803  (1847);  Hooper  v.  Williams,  2  Exch.  13 
(1848).  In  this  case  Parke,  B.,  said :  "The  principal  question  was,  what  the 
effect  of  this  instrument  was  as  it  stood  originally  before  it  was  indorsed,  and 
whether  it  was,  within  the  statute  of  3  &  4  Anne,  c.  9,  a  good  and  valid  note  pay- 
able to  the  order  ot  the  maker.  The  opinions  of  this  court  and  of  the  Queen's 
Bench  as  to  this  point  are  at  variance  with  one  another.  In  Flight  v.  Maclean, 
this  court  held,  on  special  demurrer  to  the  first  count  of  a  declaration — stating  a 


112  IRREGULAR  INSTRUMENTS, 

the  effect  that  such  instruments  are  nullities.^     Notes  of  this 

note  payable  to  the  order  of  the  maker,  and  indorsed  to  the  plaintiffs — that  the 
count  was  bad,  such  a  note  not  being  witliin  the  statute  of  Anne.  The  case  of 
Wood  V.  Mytton  afterward  came  on  in  the  Queen's  Bench.  It  was  an  action  on 
a  similar  note  indorsed  to  the  plaintiff.  After  verdict  for  the  plaintiff,  a  motion 
was  made  in  arrest  of  judgment,  and  the  court  discharged  the  rule,  holding, 
after  a  minute  examination  of  all  the  provisions  of  the  statute  of  Anne,  that  such 
a  note  was  within  that  statute,  and  assignable  by  indorsement.  Though  these 
decisions  are  not  at  variance,  as  will  be  afterwards  explained,  the  construction  of 
the  statute  by  the  two  courts  differs.  After  a  careful  perusal  of  the  statute,  Ave 
must  say  that  we  do  not  think  that  it  ever  contemplated  the  case  of  notes  pay- 
able to  the  maker's  order,  which  are  incomplete  instruments,  and  have  no  bind- 
ing effect  on  any  one  till  indorsed.  The  Court  of  Queen's  Bench  thought  that, 
though  the  first  part  of  the  1st  section  of  the  statute  of  Anne  applied  only  to 
notes  payable  to  another  person,  or  his  order,  or  to  bearer,  which  notes  it  makes 
obligatory  between  the  parties,  yet  that  the  second  part  applies  lo  every  note 
payable  to  any  person,  and  therefore  includes  a  note  payable  to  the  maker  or  his 
order.  It  appears  to  us  that  this  is  not  the  meaning  of  this  part  of  the  section, 
which  is,  as  we  think,  intended  to  make  tliose  instruments  to  which  it  had  pre- 
viously given  an  obligatory  effect  between  the  original  parties  transferable  to 
third  persons,  so  as  to  enable  them  to  sue  upon  them  as  upon  the  transfer  of  bills 
of  exchange.  The  previous  part  of  the  section  had  given  to  the  payee  when  the 
note  was  made  payable  to  another  person,  or  to  another  person  or  order,  and  to 
the  bearer,  whoever  at  any  time  he  might  be,  a  right  to  sue,  thus  providing  en- 
tirely for  notes  payable  to  bearer,  whether  in  the  hands  of  the  original  or  a  sub- 
sequent bearer;  and  then  the  section  proceeds  to  make  the  class  of  notes  payable 
to  a  person  or  order  transferable.  We  think  that  the  legislature,  by  the  second 
part  of  the  section,  could  only  mean  to  make  that  instrument  which  gave  a  right 
to  sue  assignable,  and  no  right  to  sue  could  exist  in  any  one  in  the  case  of  a  note 
payable  to  the  maker's  order  until  the  order  was  made  in  the  shape  of  an  indorse- 
ment. Until  that  indorsement  was  made,  it  was  an  imperfect  instrument,  and, 
in  truth,  not  a  promissory  note  at  all,  and  consequently  not  transferable  under 
the  statute.  What,  then,  is  the  effect  of  the  indorsement  to  another  person  ? 
We  think  it  was  to  perfect  the  incomplete  instrument,  so  that  the  original  writ- 
ing and  indorsement  taken  together  became  a  binding  contract,  though  an 
informal  one,  between  the  maker  and  the  indorsee;  and  then,  and  not  till  then, 
it  became  an  assignable  note.  ***[(;  appears  to  us,  then,  that  the  instru- 
ment in  this  case  was,  when  it  first  became  a  binding  ])romissory  note,  a  note 
payable  to  bearer,  and  consequently  was  properly  described  in  the  declaration. 
This  view  of  the  case  reconciles  the  decision  of  this  court  in  Fliglit  v.  Maclean 
with  that  of  the  Queen's  Bench  in  Wood  v.  Mytton,  but  not  the  reasons  given 
for  those  decisions.  In  the  case  in  this  court,  the  declaration  was  bad  on  special 
demurrer,  as  it  did  not  set  out  the  legal  effect  of  the  instrument.     In  that  in  the 

'  Muhling  v.  Sattler,  3  ^Ictc.  (Ky.)  286.  The  utmost  effect  given  such  papers 
being  to  admit  them  as  evidence  of  indebtedness  from  maker  and  indorser  to  in- 
dorsee, when  executed  for  such  indebtedness,  and  not  then  unless  so  averred. 


IRREGULAR  AND  AMBIGUOUS  INSTRUMENTS.  113 

kind  are  of  common  use  in  England  and  in  this  country,  and 
thougli  characterized  as  "  informal,  if  not  absurd  in  form," 
they  are  designed  to  enable  the  holder  to  pass  them  without 
indorsement,  and  are  simply  roundabout  notes  payable  to 
bearer. 

The  fact  that  tlie  name  of  the  payee  is  the  same  as  that 
of  the  maker  does  not  show  that  they  are  the  same  person ; 
on  the  contrary,  when  such  a  note  is  sued  on,  it  will  be  pre- 
sumed that  they  are  different  persons  until  their  identity  is 
proved.^  It  might  be  urged  with  force  that  the  maker  is 
estopped  from  showing  his  identity  with  the  payee. 

§  131.  If  the  instrument  be  so  ambiguous  that  it  is 
doubtful  whether  it  be  a  bill  or  note,  the  holder  may  treat 
it  as  either  at  his  election.  Thus,  where  the  form  of  the 
instrument  was  : 

"  £44  lis.   bd.  "  London,  5th  August,  1833. 

Three  months  after  date  I  promise  to  pay  Mr.  John  Bury,  or  order, 

forty -four  pounds  eleven  shillings  and  five  pence.     Value  received. 

"  John  BuRr. 
"J.  B.  Grutherot, 

"  35  Montague  Place,  Bedford  Place." 

Queen's  Bench,  the  motion  being  for  arrest  of  judgment,  the  declaration  was  in 
substance  good,  for  it  set  out  an  inartificial  contract,  which  had  the  legal  effect 
of  a  valid  note  payable,  as  stated  on  the  record,  to  the  plaintiff.  The  difference 
between  the  two  courts  in  the  construction  of  the  statute  is  of  no  practical  con- 
sequence, as  in  our  view  of  the  case  securities  in  this  informal,  not  to  say 
absurd  form,  are  still  not  invalid;  and  it  might  be  of  much  inconvenience  if 
they  were,  for  there  is  no  doubt  that  this  form  of  note,  probably  introduced  long 
after  the  statute  of  Anne — and  for  what  good  reason  no  one  can  tell — ^has  become 
of  late  years  exceedingly  common ;  -and  it  is  obvious  that,  until  they  are  in- 
dorsed, they  must  always  remain  in  the  hands  of  the  maker  himself,  and  so  he 
can  never  be  liable  upon  them."  See  Brown  v.  De  Winton,  17  L.  J.  C.  P.  280  (60 
E.  C.  L.  R.) ;  Gay  v.  Lander,  17  L.  J.  C.  P.  287  (60  E.  C.  L.  R.) ;  Plets  v.  John- 
son,  3  Hill,  114;  Hall  v.  Shorter,  46  Ala.  453;  Muldrow  v.  Caldwell,  7  Mo.  763; 
Scull  V.  Edwards,  8  Eng.  24 ;  Miller  v.  Weeks,  22  Peun.  St.  89 ;  Smalley  v.  White, 
44  Me.  442;  Woods  v.  Ridley,  11  Humph.  194;  Wilder  v.  De  Wolf,  24  111.  190; 
1  Parsons  N.  &  B.  17,  18;  Byles  on  Bills  (Sharswood's  ed.)  [*6]  75,  [*87]  183; 
Thomson  on  Bills,  52. 

But  in  Flight  v.  McLean,  16  M.  &  W.  51,  a  demurrer  to  a  declaration  charg- 
ing that  the  defendant  made  his  note,  and  thereby  promised  to  pay  to  defendant 
£500,  and  that  the  defendant  indorsed  the  same  to  plaintiff  was  sustained. 

'  Cooper  V.  Poston,  1  Duval,  417. 
Vol.  L— 8 


114  IRREGULAR  INSTRUMENTS. 

And  Gutherot'3  name  was  written  across  the  paper  as  an 
acceptance,  and  Buiy's  name  on  the  back  as  an  indorsement ; 
it  was  held  that  Bury  might  be  treated  either  as  a  drawer 
of  a  bill  on  Grutherot  or  as  the  maker  of  a  note,  and  there- 
fore was  bound  without  notice  of  dishonor.  Ilolroyd,  J., 
said :  "  Until  Grutherot  put  his  name  to  this  instrument  it 
was  clearly  in  terms  a  promissory  note,  and  having  been 
once  such  the  fact  of  his  havnng  afterward  put  his  name  to 
it  as  acceptor  cannot  alter  the  nature  of  it,"  ^ 

§  132.  In  a  later  case,  where  the  instrument  ran  "Two 
months  after  date  1  promise  to  pay  A.  B.  or  order  £dO 
(signed)  II.  Olivei-,"  and  was  addressed  to  J.  E.  Oliver,  and 
accepted  by  him,  it  was  held  that  it  might  clearly  be  de- 
clared on  against  H.  Oliver  as  a  bill  of  exchange.  Erie,  J., 
said:  "It  is  not  unjust  to  presume  that  it  was  drawn  in  this 
form  for  the  purpose  of  suing  upon  it  either  as  a  promissory 
note  or  as  a  bill  of  exchange."  And  Crompton,  J.,  said  it 
was  most  important  that  the  decision  should  not  be  im- 
peached; "that  equivocal  instruments  of  this  kind,  possess- 
ing the  character  both  of  promissory  notes  and  bills  of 
exchange,  may  be  treated  as  either."  ^ 

§  133.  Sometimes  the  instrument  is  in  the  common  form 
of  a  bill  of  exchange,  except  that  the  word  "  at "  is  substi- 
tuted for  "  to "  before  the  name  of  the  drawee — as  in  the 
following  manner : 

"  Two   months   after   date,  pay  to   the    order   of  John   Jenkins 
78/.  lis.,  value  received. 

"Thos.  Stevens." 
*'  At  Messrs.  John  Mersen  &  Co." 

Such  an  instrument  may  be  undoubtedly  declared  on  as  a  bill, 
and  Lord  EUenborough  thouglit  that,  perhaps,  it  might  be 
treated  as  a  note,  at  the  option  of  the  holder.*^     But  in   a 


•  Edis  V.  Bury,  6  Barn.  &  Cres.  433  (13  E.  C.  L.  R  ) 

'  Lloyd  V.  Oliver,  18  Q.  B.  471  (83  E.  C.  L.  R.)  To  same  effect  see  Brazeltim 
V.  McMurray,  44  Ala.  323. 

'  Shutlkworlh  v.  Steven?,  1  Camp.  407  (1808)  ;  see  also  Allan  v.  Mawaon,  4 
(amp.  115  (1814). 


IRREGULAR  AND  AMBIGUOUS  INSTRUMENTS.  115 

later  case,  where  an  indictment  for  forgery  described  a  simi- 
lar instrument  as  a  promissory  note,  it  was  held  a  variance, 
as  it  was  in  law  a  bill  of  exchange.^  Mr.  Chitty  says  that 
if  such  word  "  at "  before  the  drawee's  name  "  is  written  so 
small,  or  in  a  manner  so  indistinct,  as  to  be  capable  of  de- 
ceiving, it  might  be  declared  on  either  as  a  bill  or  as  a  prom- 
issory note  after  it  is  due."  ^  But  the  authority  cited  only 
establishes  that  it  undoubtedly  is  a  bill,^  and  this  seems  to 
us  the  correct  conclusion. 

§  134.  As  to  certified  wofes.— There  is  no  such  thing  as 
acceptance  of  a  regular  promissoiy  note  ;  but  when  notes  are 
expressed  to  be  payable  at  a  particular  bank,  there  may  be 
a  custom  for  the  bank,  with  the  consent  of  the  holder,  in- 
stead of  paying  it  at  maturity,  when  authorized  to  do  so,  to 
certify  it  as  "good,"  in  like  manner  as  checks  are  often  certi- 
fied. By  such  certificate  the  bank  becomes  the  debtor,  and 
the  parties  to  the  note  are  discharged  ;  and  the  bank  cannot 
afterwards  say  that  there  were  no  funds  of  the  maker  on  de- 
posit, or  that  it  was  not  authorized  so  to  appropriate  them. 
In  New  York  it  has  been  said  on  this  subject:  "The  j)resen- 
tation  of  the  note  at  the  counter  of  the  bank,  on  its  matu- 
rity for  payment,  was  in  the  ordinary  course  of  business ;  and 
so  was  the  certificate  then  and  there  indorsed  by  the  teller, 
certifying  that  the  same  was  good.  The  legal  effect  and 
force  of  such  certificate  was,  that  the  maker  had  deposited 
funds  in  the  bank  to  meet  said  note ;  and  that  the  bank  then 
held  the  same  in  deposit  for  that  purpose,  and  would  pay 
the  amount  upon  request.  *  *  *  Xhe  indorsement 
was,  in  effect,  an  absolute  engagement  on  the  part  of  the 
bank  to  pay  the  note,  and  dispense  with  protest,  or  steps  to 
charge  the  indorser,  as  much  so  as  if  the  defendant  had 
actually  received  the  cash  on  the  presentation  of  the  note,  in- 

'  Rex  V.  Hunter,  Russ.  &  Ry.  C.  C.  511. 

"  Chitty  on  Bills  (l:Jth  Am.  ed.)  [*35],  33,  citing   Allan  v.  Mawson,  4  Camp. 
115;  sse  also  Chitty,  Jr.  11. 

'  Allan  V.  Mawson,  4  Camp.  Ho,  Gibbs,  C.  J. 


116  IRREGULAR  INSTRUMENTS. 

stead  of  taking  the  certificate  of  tlie  teller  that  the  note  was 
good.^ " 

§  135.  In  another  New  York  case  it  appeared  that  on  the 
day  a  note  payable  at  the  Irving  Bank  matured,  it  was  there 
presented,  certified  as  good,  and  charged  in  account  against 
the  maker.  The  maker  had  no  funds  to  meet  it,  wliicli  was 
discovered  before  3  o'clock  on  the  same  day;  and  the  Irving 
Bank  requested  that  its  certificate  be  canceled.  This  was 
refused ;  whereupon  the  Irving  Bank  took  up  the  note,  pre- 
sented it  at  its  own  counter,  refused  payment,  and  notified 
the  indorsers.  It  was  held  that  the  Irving  Bank,  under 
these  circumstances,  had  a  right  to  retract  its  certificate  ; 
that  it  took  tlie  note  as  a  purchaser,  and  not  as,  a  payor,  and 
that  although  it  was  marked  as  paid  by  the  Seventh  Ward 
Bank,  which  held  it  for  collection ;  and,  therefore,  that  the 
maker  and  indorsers  were  bound  to  the  Irving  Bank.^ 


SECTION"  II. 

BILLS   AND    NOTES   TO    WHICH    THERE    ARE    FICTITIOUS    OR    NON-EXISTING 

PARTIES. 

§  136.  The  law  abhors  fraud  and  discountenances  the  in- 
struments by  which  it  may  be  committed.  For  this  reason 
bills  and  notes  payable  to  fictitious  payees  are  not  tolerated, 
and  will  never  be  enforced,  save  when  in  the  hands  of  a 
boma  fide  holder,  who  received  them  w^ithout  knowledge  of 
their  true  character.  The  appearance  of  a  name  upon  the 
paper  as  a  payee  and  indorser  is  naturally  calculated,  and 
has  been  often  used  as  a  means  to  give  it  fictitious  credit, 
whereby  innocent  parties  are  beguiled  into  purchasing  it. 
The  use  of  fictitious  names  in  this  manner  has  been  highly 
censured,  and  the  person  fraudulently  indorsing  such  a  name 


•  Mead  v.  Merchants'  Bank,  25  N.  Y.  148. 
'  Irviug  Bank  v.  Wctlierald,  3G  N.  Y.  337. 


FICITITIOUS  PARTIES.  117 

upon  a  hill  or  note,  to  give  it  currency,  would  be  guilty  of 
forgery.^ 

There  is  no  doiiht  that  if  the  holder  knew,  at  the  time 
that  he  took  the  bill,  that  the  payee  was  a  fictitious  person, 
he  cannot  recover  upon  it  against  the  acceptor,  though  the 
acceptor  also  had  knowledire  of  the  fiction,  it  being  the 
policy  of  the  law  to  interdict  the  circulation  of  such  decep- 
tive instruments.^  Nor  is  there  any  doubt  that  such  a  bill 
or  note  is,  in  effect,  payable  to  bearer,  and  may  be  declared 
on  as  such,  by  a  bona  fide  holder,  who  acquired  it  in  igno- 
rance of  the  fact,  against  the  drawer,^  and  also  against  the 
acceptor,  supra  protest^  who  is  subrogated  for  the  drawer.* 
He  may  also  recover  against  an  acceptor  in  the  ordinary 
course  of  business,  if  he  knew  of  the  fiction  when  he  ac- 
cepted, and  thus  participated  in  the  fraud.^ 

§  137.  In  a  case  before  Lord  EUenborough,  where  the 
acceptor  of  a  bill  having  a  fictitious  payee  was  sued,  it  was 
held  that  such  a  bill  was  neither,  in  effect,  payable  to  the 
order  of  the  drawer,  or  to  bearer,  but  was  utterly  void.  On 
a  motion  for  a  new  trial,  howevei*.  Lord  EUenborough  said 
that  he  conceived  himself  bound  by  Minet  v.  Gibson,  and 
other  cases  which  had  been  carried  up  to  the  House  of  Lords, 
and  though  by  no  means  disposed  to  give  them  any  exten- 
sion, yet  if  it  had  appeared  that  the  acceptor  knew  the  payee 
to  be  a  fictitious  person  when  he  accepted,  he  should  have 


'  Thomson  on  Bills,  53;  see  Chapter  on  Forgery. 

"  Hunter  v.  Jeffery,  Peake's  Ad.  Cas. ;  Chitty.  Jr.  587  (1797);  Minet  v.  Gibson, 
3  T.  E.  481  (178y),  affirmed  in  the  House  of  Lords,  1  H.  Bl.  569 ;  2  Brown  Par. 
Cas.  48  (1791). 

=  Collis  V.  Emett,  1  H.  Bl.  313  (1790) ;  see  also  Vere  v.  Lewis,  3  Term  R.  298 
(1789),  Lord  Kenyon,  C.  J.,  Ashurst  and  Buller,  JJ. ;  Phillips  v.  Inthun,  18  J. 
Scott,  N.  S.  694  (114  E.  C.  L.  R);  Byles  on  Bills  (Sharswood's  ed.)  [*79J,  173; 
Lane  v.  Krekle,  22  la.  404 ;  Forbes  v.  Espy,  21  Ohio,  N.  S.  483;  Rogers  v.  Ware, 
3  Neb.  29. 

*  Phillips  V.  Inthun,  18  J.  Scott,  694  (114  E.  C.  L.  R.) 

'  Edwards  on  Bills,  125,  6,  8;  Hunter  v.  Blodgett,  2  Yeates,  489;  Tatlock  v. 
Harris,  3  T.  R.  174  (Chitty,  Jr.  453);  Vere  v.  Lewis,  Id.  182  K^hitty,  Jr.  455) ; 
Minet  v.  Gibson,  1  H.  Bl.  569  ;  Gibson  v.  Hunter,  2  H.  Bl.  187,  288. 


118  IRREGULAR  INSTRUMENTS. 

directed  the  jury  to  find  for  the  plaintift?  And  this  seems 
to  be  the  rule  of  the  English  law,  that  the  acceptor  must 
have  participated  in  the  fraud  in  order  to  be  bound.^ 

§  138.  We  cannot  perceive  the  wisdom  or  pliilosopby  of 
applying  the  test  of  the  acceptor's  knowledge  of  the  fiction. 
If  the  holder  has  acquired  the  Inll  bona  fide,  he  may  cer- 
tainly sue  the  drawer,  althougli  he  makes  title  against  him 
through  the  name  of  a  fictitious  person, — why  may  lie  not 
also  sue  the  acceptor  who,  by  acceptance,  admits  that  he  has 
funds  of  the  drawer  in  his  hands  ?     If,  indeed,  the  name  of 

'  Bennett  v.  Famell,  1  Camp.  130  (1807);  see  also  Were  v.  Taylor,  therein 
cited,  and  Gibson  v.  Hunter,  3  II.  BI.  187.  The  reporter  appends  the  following 
note  to  the  case  of  Bennett  v.  Farnell:  "  Almost  all  the  modern  cases  upon  this 
question  arose  out  of  the  bankruptcy  of  Livesay  &  Co.  and  Gibson  &  Co.,  who 
Dejj;otiated  bills,  with  fictitious  names  ujion  them,  to  the  amount  of  nearly  a 
million  sterling  a  year.  The  first  case  was  Tatlock  v.  Harris,  3  T.  R.  174,  in  which 
the  Court  of  King's  Bench  held  that  the  lona  ficWhoXiXcv  for  a  valuable  considera- 
tion of  a  bill  drawn  payable  to  a  fictitious  person,  and  indorsed  in  that  name  by 
the  drawer,  might  recover  the  amount  of  it  in  an  action  against  the  acceptor,  for 
money  paid  or  money  had  and  received,  upon  the  idea  that  there  was  an  appro- 
priation of  so  much  money  to  be  paid  to  the  person  who  should  become  the 
holder  of  the  bill.  In  Vere  v.  Lewis,  3  T.  R.  183,  decided  the  same  day,  the 
court  held  there  was  no  occasion  to  prove  that  the  defendant  had  received  any 
value  for  the  bill,  as  the  mere  circumstance  of  his  acceptance  was  sufficient  evi- 
dence of  this;  and  three  of  the  judges  thought  the  plaintiff  might  recover  on  a 
count  which  stated  that  the  bill  was  drawn  payable  to  bearer.  Minct  v.  Gibson, 
3  T.  K.  481,  put  this  point  directly  in  issue,  and  the  unanimous  opinion  of  the 
court  was,  that  where  the  circumstance  of  the  paye3  being  a  fictitious  person  is 
known  to  the  acceptor,  the  bill  is  in  elfect  payable  to  bearer.  Soon  after  the 
Court  of  Common  Pleas  laid  down  the  same  doctrine,  in  Collis  v.  Emett,  1  H.  Bl. 
313.  This  decision  was  acquiesced,  in,  but  Minct  v.  Gibson  was  carried  up  to  the 
House  of  Lords,  1  H.  Bl.  oG9.  The  oj)iniou  of  the  judges  being  then  taken,  Eyre, 
C  B.  (p.  618)  and  Heath,  J.  (p.  G19)  were  for  reversing  the  judgment  of  the  court 
below,  and  Lord  Thurlow,  C,  coincided  with  them  (p.  625) ;  but  the  other  judges 
thinking  otherwise,  judgment  was  affirmed  (Pari.  Gas.  8vo,  ii,  48).  The  last 
case  upon  the  subject  reported  is  Gibson  v.  Hunter,  3  II.  Bl.  187,  288,  which 
came  before  the  House  of  Peers  upon  a  demurrer  to  evidence,  and  in  which  it 
was  held  that,  in  an  action  on  a  bill  of  this  sort  against  the  acceptor,  to  show 
that  he  was  aware  of  the  paj'cc  being  fictitious,  evidence  is  admissible  of  the 
circumstances  under  which  he  had  accepted  other  bills  payable  to  fictitious 
persons." 

=  Chitty  on  Bills  [*157],  181  (13  Am.  ed.);  Edwards  on  Bills.  128;  1  Parsons 
N.  (fc  B.  32 ;  Byles  (Sharswood's  ed.)  [*79J,  173  ;  Thomson  on  Bills,  53;  Story  on 
Bills,  §  200,  §  56. 


FICTITIOUS  PARTIES.  119 

an  existing  payee  were  forged,  tlie  holder  could  not  sue  the 
acceptor,  because  the  amount  in  his  hands  would  be  due 
such  real  payee.  But  where  the  payee's  name  is  fictitious, 
the  acceptor  is  not  concerned  ;  for  the  reason  that  the  drawer 
has  directed  him  to  pay  the  money  to  the  order  of  that 
name,  and  if  it  be  thereon  indorsed  by  the  drawer  or  by  the 
holder,  he  would  fulfill  that  direction  and  discharge  the  debt.^ 
The  language  of  Lord  Loughborough,  in  a  previous  case,  is 
broad  enough  to  sustain  our  view ;  ^  and  the  better  opinion 
is,  as  it  seems  to  us,  that  a  bill  with  a  fictitious  payee  may 
be  treated  by  the  innocent  holder  precisely  as  if  payable  to 
bearer.^  • 

§  139.  In  the  case  of  a  note  payable  to  a  fictitious  per- 
son, it  appears  to  be  well  settled  that  any  bona  fide  holder 
may  recover  on  it  against  the  maker  as  upon  a  note  payable 
to  bearer."*  It  will  be  no  defense  against  such  hona  fide 
holder  for  the  maker  to  set  up  that  he  did  not  know  the 
payee  to  be  fictitious.  By  making  it  payable  to  such  person 
he  avers  his  existence,  and  he  is  estopped  as  against  a  holder 
ignorant  of  the  contrary  to  assert  the  fiction.^  It  has  been 
held  that  if  a  party  takes  a  note  payable  to  a  fictitious  per- 
son for  a  debt  due  himself,  he  may  recover  on  the  common 
counts,^  though  not,  as  it  seems,  upon  the  note  itself,  as  he 
has  participated  in  the  wrong  by  taking  a  fictitious  paper. '^ 

Where  a  note  has  as  its  payee  a  fictitious  firm,  and  the 
holder  indorses  it  assuming  the  firm's  name,  a  hona  fide  in- 
dorsee may  recover  against  the  maker.^ 

*  See  Ch.  XXIII  on  Acceptance.  '  See  CoUis  v.  Emett,  1  H.  Bl.  313. 

*  See  Rogers  v.  Ware,  2  Neb.  29. 

*  Faros  worth  v.  Drake,  11  Ind.  103;  Plets  v.  Johnson,  3  Hill  (N.  Y.)  115  ; 
Bronson,  J.,  held  to  be  the  coramon  law;  Stevens  v.  Strong,  2  Sandf.  139  (by 
N.  Y.  statute) ;  Rogers  v.  Ware,  2  Neb.  29  ;  see  also  Blodgett  v.  Jackson,  40  N. 
H.  26.  Recovery  on  common  counts  allowed.  Forbes  v.  Espy,  21  Ohio,  N.  S. 
483. 

*  Lane  v.  Krekle,  22  la.  404.  But  in  New  York,  by  statute,  the  maker  is  not 
bound  to  an  indorsee  even,  unless  he,  the  maker,  knew  of  the  fiction  at  the  time 
of  signing.     Mancort  v.  Roberts,  4  E.  D.  Smith,  84. 

'  Foster  v.  Shattuck,  2  N.  H.  447.  '  See  ante,  §  136. 

'  Blodgett  V.  Jackson,  40  N.  H.  26. 


120  IRREGULAR  INSTRUMENTS. 

§  140.  If  the  bill  or  note  be  payable  to  some  person  who 
had  no  interest  in  it.  and  was  not  intended  to  become  a  party 
to  it,  Avhetlier  such  person  is  or  is  not  known  to  exist,  the 
payee  may  be  deemed  fictitious.  But  if  it  be  payable  to 
Bome  person  known  at  the  time  to  exist,  and  present  to  the 
mind  of  the  drawer  when  he  made  it,  as  the  party  to  whose 
order  it  was  to  be  paid,  tbe  genuine  indorsement  of  such 
payee  is  necessary,  in  order  to  a  recovery  thereon  by  an  in- 
dorsee, even  though  he  have  no  interest  in  it,  and  the  drawer 
knew  that  fact.^ 

§  141.  Adopted  names. — Parties  sometimes  adopt  and  use 
fictitious  names  as  their  own,  and  when  there  is  a  real  party 
in  existence  who  uses  a  fictitious  name  as  descriptive  of,  and 
with  intent  to  bind  himself,  it  is  the  same  in  law  as  if  it  were 
his  real  name;  and  he  may  be  sued  by  the  holder,  and  de- 
clared against  as  having  contracted  by  such  adopted  name.'' 
But  if  it  were  not  a  name  which  he  adopted  and  used  as  his 
own,  the  only  civil  remedy  of  the  holder  would  be  a  suit  in 
tort  for  the  false  representation.^ 


SECTION  III. 

NEGOTIABLE   IN8TKUMENTS    EXECUTED   IN   BLANK. 

§  142.  In  subsequent  portions  of  this  work  will  be  found 
the  citation  and  discussion  of  cases  illustrating  the  rights  of 
holders  of  Negotiable  Instruments  intrusted  to  another  with 
blanks,*  and  of  holders  of  such  instruments  altered  after 
issue ;  ^  but  \f  e  deem  it  proper  here  to  state  the  general  prin- 
ciples applicable  to  them.  Parties  often  lend  their  mercantile 
credit  to  others  by  signing  their  names  to  blank  pa2:)ers  to  be 
afterwards  filled  as  bills  of  exchange  or  promissory  notes 
written  over  their  signatures  as  drawers  or  makers ;  or  by 

'  Rogers  v.  Ware,  2  Neb.  29.  =  Lackl  v.  Rogers,  11  Allen,  209. 

'  Bartlott  V.  Tucker,  104  Mass.  345. 

*  See  Chapter  XXVI,  Sec.  Ill,  Vol.  T,  §  843  et  scq. 

"  See  Chapter  XLIII,  Sec.  VI,  Vol.  11,  §  1405  et  seq. 


NEGOTIABLE   INSTRUMENTS  EXECUTED  IN  BLANK.        121 

signing  their  names  in  the  appropriate  manner  to  indicate 
that  they  design  to  bind  themselves  as  acceptors  or  indorsers 
of  the  instrument  which  it  is  contemptated  to  complete  upon 
such  blank  papers.  And  it  is  a  settled  principle  of  commer- 
cial law,  that  when  such  instruments  are  afterward  com- 
pleted by  the  holder  of  such  blanks,  to  whom  they  are  loaned, 
such  parties  become  as  absolutely  bound  as  if  they  had  signed 
tliem  after  their  terms  were  written  out ;  and  further,  that 
the  presence  of  their  names  upon  blanks  purports  an  author- 
ity granted  to  the  holder  to  fill  them  for  any  sum,  and  with 
any  terms  as  to  time,  place  and  conditions  of  payment. 
And  that  although  the  party  may  prescribe  limits  to  the 
holder,  a  ho7ia  fide  transferee  from  him,  ignorant  of  such 
limitation  of  authority,  when  he  takes  an  instrument  which 
has  exceeded  it,  may  recover  upon  it.  In  an  early  case,  where 
the  party  had  indorsed  his  name  on  the  back  of  five  copper- 
plate checks,  blank  as  to  sums,  dates  and  times  of  payment, 
and  Galley,  the  holder,  filled  them  up  as  his  own  notes,  with 
difterent  dates,  sums  and  times  of  payment,  the  indorser  was 
held  bound  to  the  plaintiff  who  had  discounted  them,  and 
Lord  Mansfield  said :  "  The  indorsement  on  a  blank  note  is 
a  letter  of  credit  for  an  indefinite  sum.  The  defendant  said : 
*  Trust  Galley  to  any  amount,  and  I  will  be  his  security.'  It 
does  not  lie  in  his  mouth  to  say  the  indorsements  wei-e  not 
regular."^  And  this  admirable  statement  of  the  law  is 
almost  universally  quoted  with  approval,  and  followed  as  a 
precedent,  applying  equally  to  maker,  acceptor  and  drawer, 
as  to  the  indorser.^     The  United  States  Supreme  Court  has 

'  Russel  V.  Langstaffe,  2  Doug.  514  (1781). 

=  Usher  v.  Dauncey,  4  Camp.  97  (1814)  (Bill);  Bulkley  v.  Butler,  3  B.  &  C. 
425 ;  (Bill  held  good,  though  sum  not  filled  up  till  after  bankruptcy  of  acceptor) ; 
Powell  V.  DuflF,  3  Camp.  183;  Schultz  v.  Astley,  39  E.  C.  L.  R.  414;  Mahone  v. 
Central  Bank,  17  Ga.  Ill;  FuUerton  v.  Stiirgiss,  4  Ohio,  N.  S.  539;  Bauk  of 
Commonwealth  v.  Curry,  3  Dana,  143;  Bank  of  iiimestone  v.  Perrick,  5  T.  B.  Mon. 
25 ;  Jones  v.  Shelbyville  Ins.  Co.  1  IMetc.  (Ky.)  58 ;  Michigan  Ins.  Co.  v.  Leaven- 
worth, 30  Vt.  11;  Androscoggin  Bank  v.  Kimball,  10  Cush.  373;  Nichol  v.  Bate, 
10  Yerg.  429;  Ives  v.  Farmers'  Bank,  3  Allen,  23G;  Rich  v.  Starbuck,  51  Ind,  87; 
Hardy  v.  Norton,  66  Barbour,  527;  Joseph  v.  National  Bank,  17  Kansas,  359; 
Waldron  v.  Young,  9  Heiskell,  777 ;  Thomson  on  Bills,  87. 


122  IRREGULAR  INSTRUMENTS. 

said,  on  the  same  subject :  "  Where  a  party  to  a  negotiable 
instrument  intrusts  it  to  the  custody  of  another,  with  blanks 
not  filled  up,  whether  it  be  for  the  purpose  to  accommodate 
the  person  to  whom  it  was  intrusted,  or  to  be  used  for  his 
own  l)enefit,  such  negotiable  instrument  carries  on  its  face 
an  implied  authority  to  fill  up  the  blanks  and  perfect  the 
instrument;  and  as  between  sucli  party  and  innocent  third 
parties,  the  person  to  whom  it  was  so  intrusted  must  be 
deemed  the  agent  of  the  party  who  committed  such  instru- 
ment to  his  custody — or,  in  other  words,  it  is  the  act  of  the 
principal,  and  he  is  bound  by  it."  ^  And  again :  "  But  the 
authority  implied  from  the  existence  of  the  blanks  would  not 
authorize  the  person  intrusted  with  the  instrument  to  vary 
or  alter  the  material  terms  of  the  instrument  by  erasing  what 
is  written  or  printed  as  part  of  the  same,  nor  pervert  the 
meaning  and  scope  of  the  same  by  filling  the  blanks  with 
stipulations  repugnant  to  what  was  plainly  and  clearly  ex- 
pressed in  the  instrument  before  it  was  so  delivered."  2  *  * 
"  And  it  does  not  confer  authority  to  make  any  additions  to 
the  terms  of  the  note ;  and  if  any  such  of  a  material  character 
are  made  by  such  a  party,  without  the  consent  of  the  party 
from  whom  the  paper  was  received,  it  will  avoid  the  note 
even  in  the  hands  of  an  innocent  holder."^ 

§  143.  The  authority  implied  by  a  signature  to  a  blank, 
and  the  credit  granted,  are  so  extensive,  that  the  party  so 
signing  will  be  bound,  though  the  holder  was  only  authorized 
to  use  it  for  one  purpose,  and  has  perverted  it  to  another;* 
and  though  the  authority  was  limited  to  a  time  which  has 
expired,^  or  was  only  to  be  exercised  upon  a  condition  which 

'  Bank  of  Pittsburgh  v.  Neal,  22  How.  107;  Davidson  v.  Lanier,  4  Wall.  457; 
Angle  V.  N.  W.  &c.  Ins.  Co.  92  U.  S.  (2  Otto),  330. 

^  Angle  V.  N.  W.  Mut.  Life.  Ins.  Co.  92  U.  S.  (2  Otto),  331.  See  also  Good- 
man V.  Sinionds,  ?.0  Howard,  3G1 ;  Bank  of  Pittsburgh  v.  Neal,  22  Id.  108. 

3  Coburn  v.  Webb,  50  ind.  100;  Ivory  v.  Michael,  33  Mo.  400;  see  McGrath 
V.  Clark,  50  X.  Y.  .36,  and  vol.  IL  §  1406.' 

*  Putnam  v.  Sullivan,  4  Mass.  45.  Sec  Chapter  XXVI,  on  Rights  of  Bona  Fide 
Holder,  and  Chapter  XI,  for  Agents. 

*  Montague  v.  Perkins,  22  Eng.  L.  &  Eq.  516. 


NEGOTIABLE  INSTRUMENTS  EXECUTED  IN   BLANK.        123 

has  not  happened/  If  the  date  be  left  blank,  any  holder 
has  a  rio;ht  to  insert  the  true  date ;  and  should  he  insert  an 
improper  date,  and  the  parties  will  still  be  bound  to  a  hona 
-fide  holder  for  value  and  without  notice  of  the  impropriety,^ 
but  a  party  having  notice,  could  not  recover,  unless  he  ac- 
quired it  from  one  who  took  it  hona  fide  without  notice.^ 
The  marginal  figures  being  no  part  of  the  instrument,  it  has 
been  held  that  where  the  holder  of  a  note,  in  blank,  filled 
it  up  and  negotiated  it  for  a  larger  amount  than  was  indi- 
cated by  the  marginal  figures,  this  did  not  vitiate  the  note 
although  he  also  altered  the  figures.*  If  the  place  of  payment 
be  left  blank,  the  principles  above  stated  apply .^ 

§  144.  The  authority  implied  by  one  signing  a  blank 
paper  is  so  extensive  that  such  paper  will  be  valid  in  the 
hands  of  a  hona  fide  holder,  whether  it  be  framed  as  a  ne- 
gotiable instrument  or  otherwise.  Virginia,  where  a  paper 
was  signed  and  indorsed  in  blank,  and  intrusted  to  the  maker 
for  whose  accommodation  it  was  made,  it  was  held  that  a 
hona  fide  holder  who  had  advanced  money  upon  it,  and  who 
knew  that  it  was  made  in  blank,  could  recover  against  such 
party  whether  it  were  filled  up  as  a  common  promissory  note, 
or  as  a  negotiable  note.^     So  in  Indiana,  where  a  note  was 


*  See  Chapter  XXVI,  on  Rights  of  Bona  Fide  Holder. 

'  Page  V.  Morrel,  3  Abb.  N.  Y.  App.  Dec.  433 ;  Redlich  v.  Doll,  54  N.  Y.  338. 

'  Emmons  v.  Meeker,  55  Ind.  331. 

'  Schryver  v.  Hawkes,  32  Ohio  St.  308.        ^  Redlich  v.  Doll,  54  N.  Y.  338. 

"  Orrick  v.  Colston,  7  Grat.  189  (1850);  Daniel  J.,  saying:  "It  is  well 
settled  that  a  blank  iudorsment  on  a  negotiable  instrument,  blank  as  to  date  or 
amount  at  the  time  of  the  indorsement,  if  made  for  the  purpose  of  giving  a 
credit  to  the  drawer,  is  as  effectual  to  bind  the  indorser  for  any  amount  with 
which  the  instrument  may  be  filled  up  by  the  drawer,  or  an  innocent  holder  for 
value,  as  if  the  instrument  had  been  completed  at  the  time  of  the  indorsement. 
In  the  case  of  Russell  v.  LangstafFe,  3  Doug.  R.  514,  the  Court  of  King's  Bench 
held,  in  the  language  of  Lord  Mansfield,  that  such  an  indorsement  'is  a  letter 
of  credit  for  an  indefinite  sum,' — that  the  indorser  in  effect  said,  '  trust  the 
drawer  to  any  amount,  and  I  will  be  his  security.'  So  in  Schultz  v.  Astley,  29 
Eng.  C.  L.  R.  414,  which  was  the  case  of  an  acceptance  written  on  a  paper,  be. 
fore  entirely  blank,  it  was  held  that  the  blank  acceptance  was  an  acceptance  of 
the  bill  afterward  put  upon  it;  and   that  there  is  no  distinction  iu  principle, 


124  IRREGULAR   INSTRUMENTS. 

filled  up  as  non-negotiable,  under  express  stipulation  with  the 
indorsers,  for  accommodation  of  the  makers,  that  it  should 
not  be  made  payable  at  bank ;  but  the  indorsee  had  inserted 
a  provision  making  it  payable  "  at  the  Bank  of  Indiana,  at 
the  Laporte  branch,"  in  a  blank  space  left  on  the  face  of 
the  note,  and  then  transferred  it,  it  was  held  that  the  holder 
could  recover;  and  Ray,  J.,  said:  "The  surety  who  has  not 
scrupled  to  trust  his  })rincipal  with  the  semblance  of  a  gen- 
eral authority  to  make  the  delivery,  must  stand  the  hazard 
he  has  incurred."  ^  So  where  the  paper  was  drawn  in  the 
form  of  a  blank  bill  of  exchange,  and  it  was  filled  up  by  the 
party  for  whose  accommodation  it  was  drawn  as  a  negotiable 
note,  the  party  who  signed  the  blank  was  held  liable." 

§  145.  Payee  in  hlaiik. — Bills  and  notes  are  also  often  ex- 
ecuted in  full  with  the  exception  of  the  name  of  the  payee, 
which  is  left  blank  in  order  that  it  may  be  afterward  filled  up 
with  the  name  of  the  actual  holder  who  demands  payment,  the 
design  of  this  form  of  paper  being  to  enable  the  o\vner  to  pass 
it  ofi:'  to  anotl:er  without  incurring  the  responsibility  of  an  in- 
dorser,  and  witliout   risking  a  depreciation   of  its   current 

when  the  bill  has  passed  into  the  hands  of  third  persons,  between  holding  the 
acce[)tor  liable  to  a  given  amount,  when  the  bill  is  afterward  drawn  in  the  name 
of  the  party  who  has  obtained  the  acceptance,  and  when  it  is  drawn  by  a  stranger 
who  becomes  the  drawer  at  the  instance  of  the  party  to  whom  the  acceptance  is 
given.  And  in  the  case  of  Douglass  v.  Scott  and  Fry,  decided  by  this  court,  8 
Leigh,  43,  where  the  paper  was  signed  in  blank  and  indorsed  in  blank,  and  de- 
livered to  another  to  be  filled  up  and  used  as  a  negotial)le  instrument  to  raise 
money  on,  the  decision  was  founded  on  the  pi'oposition,  that  the  negotiable  note 
afterward  drawn  over  the  signature  of  the  maker,  did,  together  with  its  indorse- 
ments bind  all  the  parties  to  the  same  extent  as  if  the  maker  had  signed  and 
the  indorsers  indorsed  the  paper  in  its  perfect  form."  Sec  Morehead  v.  Parken- 
burg  Nat.  Bank,  5  W.  Va.  74. 

Mr.  Conway  Robinson,  in  his  Practice  (vol.  2,  new  ed.  p.  136),  dissents  from 
the  view  expressed  in  this  opinion.  It  may  be  observed  that  he  was  opposing 
counsel  in  the  case  when  it  was  decided. 

'  Spitler  V.  James,  32  Ind.  203  (1869) ;  Gillespie  v.  Kelley,  41  Ind.  158  (1872). 
See  contra  Morehead  v.  Parkenburg  Nat.  Bank,  5  W.  Va.  74.  In  this  case  the  Court 
does  not  seem  to  have  paid  sufficient  attention  to  the  fact  that  the  space  left 
afibrded  opportunity  for  the  alteration  by  adding  the  place  of  payment  which 
made  the  note  negotiable.     See  iwst^  §  1405,  1409. 

"  Luellen  v.  Hare,  33  Ind.  211  (1869). 


NEGOTIABLE   INSTRUMENTS  EXECUTED  IN  BLANK.        125 

value,  wbicli  might  possibly  result  from  indorsing  it  "  with- 
out recourse."  ^  The  same  result  might  be  attained  by  mak- 
ing the  instrument  payable  to  the  drawer's  or  maker's  order,  or 
to  bearer ;  but  a  bill  or  note  with  the  payee  blank  is  to  almost 
every  legal  intent  and  purpose  payable  to  bearer.  It  passes 
from  hand  to  hand  by  delivery.-  Any  hona  fide  holder  for 
value  may  fill  it  up  with  his  own  name  and  sue  upon  it.'^ 
And  although  thus  brought  in  apparent  privity  with  the 
maker  or  drawer,  he  may,  by  proving  tliat  he  was  not  the 
party  to  whom  it  was  first  delivered,  exclude  defenses  valid 
as  against  such  first  party,  and  enjoy  all  the  rights  of  a  hona 
fide  holder  for  value  and  without  notice.* 

But  the  holder  must  actually  fill  up  the  blank  with  his 
name  before  he  can  recover  upon  the  instrument,  as  until 

*  Brummel  v.  Enders,  18  Grat.  895 ;  Harding  v.  State,  54  Ind.  359. 

=  Wookey  v.  Pole,  4  Barn.  &  Aid.  6  (6  E.  C.  L.  R.  323). 

^  In  Brummel  v.  Enders,  18  Grat.  895,  the  case  of  a  note  blank  originally 
as  to  the  name  of  the  payee,  it  was  said  by  Joynes,  J.  :  "The  question  as  to 
the  eflFect  of  such  an  instrument  came  before  the  Court  of  King's  Bench  in  the 
year  1813,  in  the  case  of  Crutchley  v.  Clarence,  2  Maule  &  Sel.  R.  90,  which  is 
the  leading  case.  That  was  an  action  against  the  drawer  of  a  bill  of  exchange 
payable  to  the  order  of (the  name  of  the  payee  being  left  blank).  It  was  in- 
dorsed to  the  payee  by  one  Vashon,  and  the  plaintiff  inserted  his  own  name  as 
payee,  and  the  case  was  distinguished  from  Russel  v.  Laugstaffe,  Doug.  R.  514, 
because  the  bill  in  that  case  was  filled  up  by  one  of  the  original  parties.  But 
the  court  overruled  the  objection,  and  held  that  the  plaintiff  was  entitled  to  re- 
cover. Lord  EUenborough,  C.  J. :  '  As  the  defendant  has  chosen  to  send  the 
bill  into  the  world  in  this  form,  the  world  ought  not  to  be  deceived  by  his  acts. 
The  defendant,  by  leaving  the  blank,  undertook  to  be  answerable  for  it  when 
filled  up  in  the  shape  of  a  bill.'  *  =*=  *  Though  the  bill  in  this  case  was 
indorsed  to  the  plaintiff,  the  title  to  it  did  not  pass  by  the  indorsement  because 
the  name  of  the  indorser  was  not  in  the  bill.  It  passed  by  the  delivery.  In  the 
following  year  the  same  question  came  before  the  Court  of  Common  Bench  in 
an  action  against  the  acceptor  of  the  same  bill.  Crutchley  v.  Mann,  5  Taunt.  R. 
529  (1  Eng.  C.  L.  R.  179).  It  was  objected  that  the  authority  given  to  the 
person  to  whom  the  bill  was  first  delivered,  to  insert  his  name  as  payee,  was  not 
transferable  from  hand  to  hand.  But  the  court  held  that  the  plaintiff  had  a 
right  to  insert  his  name  as  payee,  and  was  entitled  to  recover.  Upon  the  author- 
ity of  these  cases,  it  is  laid  down  in  all  the  treatises  that  any  'bonafide  holder  of 
a  bill  or  note  which  is  blank  as  to  the  name  of  the  payee  may  insert  his  own 
name,  and  thus  acquire  all  the  rights  of  payee."    Rich  v.  Starbuck,  51  Ind.  87. 

"  Brummel  V.  Enders,  18  Grat.  905;  Nelson  v.  Cowing,  6  11111,336;  Pindar 
V.  Barlow,  31  Vt.  539;  Rich  v.  Starbuck,  51  Ind.  87.  See  also  Chapter  VII  on 
Consideration,  sec.  3,  and  cases  cited. 


126  IRREGULAR  INSTRUMENTS. 

tlien  it  does  not  import  a  contract  with  liim.'^  And  unless 
so  filled  up,  a  description  of  it  as  a  bill  or  note  in  an  indict- 
ment would  not  be  sustained.^ 

§  14G.  Not  only  may  the  holder  of  a  note  in  which  there 
is  left  a  blank  as  to  the  name  of  the  payee,  fill  it  up  with  his 
own  name,  but  where  it  is  delivered  with  such  blank  to  a 
party,  and  by  him  indoi'sed  in  blank,  the  holder  may  fill  up 
the  blank  in  the  body  of  it  with  the  name  of  the  indorser, 
and  then  complete  tlie  indorsement  by  filling  it  up  to  himself. 
He  thus  perfects  the  instrument  upon  its  skeleton  form,  and 
makes  it  what  it  was  evidently  designed  to  be;"^ 

In  Massachusetts  the  following  skeleton  note  : 
"  $1,585  90.  Brooklyn,  September  20,  1858. 

after  date  promise  to  pay  to  the  order  of 

Dec.  23,  dollars  at  value  received. 

Geo.  R.  Ives." 
was  delivered  to  Yale  as  a  mere  memorandum,  and  not  to  be 
used  as  a  note.  Yale  filled  it  up  as  a  note  for  $1,585  90, 
payable  to  his  own  order  at  the  Atlantic  Bank,  New  York, 
and  indorsed  it  to  the  plaintiff,  who  discounted  it  for  him. 
The  court  held  all  evidence  as  to  any  agreement  between  the 
original  parties  inadmissible,  and  the  holder  entitled  to  re- 
cover.* 

It  is  clear,  however,  that  a  holder  who  knew  when  he 
took  the  paper  that  the  authority  to  fill  it  up  had  been  de- 
parted from,  cannot  recover.^ 

'  Greenliow  v.  Boyle,  7  Blackf.  50;  Seay  v.  Bank  of  Tennessee,  3  Sneed,  558. 

'  In  Box  V.  Randall,  Russ.  &  Ry.  C.  C.  195,  it  was  held  that  a  bill  blank  as 
to  the  name  of  the  payee  did  not  answer  the  description  of  a  bill  of  exehiinge  in 
an  indictment.  But  however  that  may  be,  "  the  cases  cited  abundantly  establish 
that  a  party  to  such  a  bill  is  liable  upon  it  as  if  it  was  filled  up.  It  has  been  held, 
too,  that  while  a  bill  or  note  is  blank  as  to  the  payee,  the  holder  cannot  sue  upon 
it  as  bearer,  but  that  he  must  insert  his  name  as  payee.  Greenhow  v.  Boyle,  7 
Blackf.  50;  Seay  v.  Bank  of  Tennessee,  o  Sneed,  558.  But  these  cases  fully  rec- 
ognize the  doctrine  of  the  case  of  Crutchley  v.  Clarence  (see  ante,  §§144,  145,  and 
notes).  They  only  hold  that  the  insertion  of  the  name  of  the  plaintiff,  so  that 
the  paper  may  on  its  face  import  a  contract  with  him,  is  necessary  to  enable  him 
to  sue  upon  it."    See  Rees  v.  Conococheague  Bank,  5  Rand.  326. 

»  Elliott  V.  Chesnut,  30  Md.  502. 

*  Ives  V.  Fanners'  Bank,  2  Allen,  286;   Brummel  v.  Enders,  18  Grat.  897, 

'  Wagner  v.  Diedrich,  50  Mo.  484;  Glower  v.  Wynn,  59  Ga.  246. 


NEGOTIABLE  INSTRUMENTS  EXECUTED  IN   BLANK.        127 

§  147.  If  the  holder  exceed  the  terms  of  his  authority  in 
filling  up  the  blank,  he  can  have  no  benefit  from  it,  even  to 
the  extent  of  his  authority,  for  his  wrongful  act  is  an  utter 
nullity  as  to  himself;^  and  if  the  party  who  takes  such  paper 
from  the  holder  have  notice  that  he  has  exceeded  his  author- 
ity, he  participates  in  the  wrongful  act  by  negotiating  for  it, 
and  cannot  recover  ngainst  the  party  who  signed  the  blank.^ 
Bnt  what  charges  the  transferee  with  notice  is  a  matter  on 
which  the  authorities  differ.  By  some  authoi'ities  it  is  held 
that  if  he  knew  that  the  paper  had  been  signed  as  a  blank, 
and  filled  uj)  by  force  of  authority  by  the  holder,  he  should 
inquire  as  to  the  extent  of  such  authority,  and  if  he  fails  to 
do  so,  he  takes  the  paper  at  his  peril.^  And  Vice  Chancellor 
Stuart  said  in  an  Euo-lish  case :  "  If  the  holder  has  notice  of 
the  imperfection  [that  the  signature  was  made  in  blank]  he 
can  be  in  no  better  situation  than  the  person  who  gave  it  in 
blank."  ■*  But  this  qualification  of  Lord  Mansfield's  doctrine, 
that  the  blank  signature  is  "  a  letter  of  credit  for  an  indefi- 
nite sum,"  does  not  impress  us  as  an  improvement  upon  it. 
The  paper  being  limitless  in  its  terms,  \s  prima  facie  limit- 
less as  to  the  authority  it  confers.  The  holder  is  invested 
with  a  general  authority  as  to  that  paper,^  and  the  graphic 
phrase  of  Lord  Mansfield  describes  it  to  perfection.     High 

'  Van  Duzer  v.  Howe,  21  K  Y.  531  ;  Putnam  v.  Sullivan,  4  Mass.  45. 

'  Davidson  v.  Lanier,  4  Wall.  456.  The  Court  said  :  "  The  delivery  of  a  bill 
of  exchange  signed  and  indorsed  in  blank,  only  authorizes  the  receiver  to  fill  it 
up  in  conibrmity  with  the  authority  given  him.  If  there  has  been  no  agreement, 
the  authority  is  general ;  if  there  has,  it  must  be  pursued.  The  burden  of  proof 
that  there  was  an  agreement,  and  that  its  terms  have  been  violated,  is,  in  such  a 
case,  upon  the  defendant;  but  if  he  can  make  the  proof  it  will  avail  him.  No 
person  unless  authorized,  either  directly  or  by  just  inference  from  the  nature  of 
the  transaction,  can  fill  up  a  blank  bill  for  his  own  benefit,  nor  can  such  a  bill 
be  enforced  against  the  drawer  and  indorser  against  any  one  who  takes  it  in  bad 
faitli — that  is,  with  knowledge  that  it  has  been  filled  up  without  authority  or  in 
fraud."  Hatch  v.  Searles,  3  Sm.  &  Gif.  147;  Johnson  v.  Blasdale,  1  Smedes  & 
M.  17 ;  Hemphill  v.  Bank  of  Alabama,  (5  Smedes  &  M.  44. 

'  Van  Duzer  v.  Howe,  21  N.  Y.  5;J1 ;  Byles  (Shars wood's  ed.)  [*182],  308. 

'  Hatch  V.  Searles,  2  Sm.  &  Gif.  147. 

'  Chitty  on  Bills  [*29],  38. 


128  IRREGULAR  INSTRUMENTS. 

authorities,  including    Story  and   Parsons,  concur  in  these 
views,  ^\  hich  seem  to  us  clearly  the  most  philosophical.^ 

§  148.  Bonds  loith  hlanhs. — A  bond — that  is  "  a  deed 
whereby  the  obligor  promises  to  pay  a  sum  of  money 
to  another  on  a  day  appointed  "  - — stands  upon  a  footing  en- 
tirely different  from  bills  and  notes,  and  other  negotiable 
instruments.  It  cannot  be  left  blank  either  as  to  the  sum, 
name  of  tlie  obligee,  or  other  material  part,  and  filled  up 
afterward  by  an  agent,  so  as  to  bind  the  obligor.  In  other 
words,  it  must  be  perfected  in  every  respect  before .  it 
amounts  to  anything.  The  reason  of  the  distinction  is,  that 
authority  to  make  a  deed  can  only  be  imparted  to  an  agent 
by  an  instrument  of  equal  dignity — that  is,  by  deed.  In  an 
early  English  case,  a  different  doctrine  was  announced  by 
Lord  Mansfield,^  and  it  has  been  followed  in  some  American 
cases.^  But  that  decision  has  been  overruled  in  England  ;  ^ 
and  in  the  United  States  the  doctrine  of  the  text  has  been 
approved.*^  It  may  be  stated,  however,  as  a  limitation  of 
this  doctrine,  that  it  does  not  extend  so  far  as  to  apply  to 
that  peculiar  class  of  instruments  which  pass  under  the  gen- 
eral title  of  "  coupon  bonds."  They  are  now  universally 
regarded  as  ne2:otiable,  when  so  framed  as  to  indicate  an  in- 
tention  to  make  them  so.  And  being  negotiable,  are  gov- 
erned, for  the  most  part,  by  the  rules  applicable  to  commer- 
cial securities,  and  not  by  common  law  principles.'^  Indi- 
vidual bonds,  when  made  negotiable  by  statute,  would 
doubtless  stand  on  the  same  footing. 

■  Orrick  v.  Colston,  7  Grat.   189;    Huntington  v.  Branch  Bank,  3   Ala.  186; 
Story  on  Bills,  §  222 ;  1  Parsons  N.  &  B.  109 ;  see  also  Edwards,  252-3. 
'  2  Blackstone's  Com.  346 ;  Preston  v.  Hull,  23  Grat.  602,  Staples,  J. 

*  Toxira  v.  Evans,  1  Anstr ;  see  2  Robinson's  Practice  (new  ed.)  13. 

*  Woolley  V.  Constant,  4  Johns.  60 ;  ex  ]mrt6  Decker,  6  Cow.  60 ;  ex  'parte 
Kerwin,  8  Cow.  118;  Duncan  v.  Hodges,  4  McCord,  239;  Gonslin  v.  Commander, 
&c.  6  Rich.  497. 

'  Hibblewhite  v.  McMowrie,  6  Mees.  &  W.  200;  Entlioren  v.  Hoyle,  9  Eng.  L. 
&  Eq.  434 ;  Sheppard's  Touchstone,  68. 

°  Preston  v.  Hull,  23  Grat.  602  ;  Davenport  v.  Sleight,  2  Dev.  &  Bat.  (Law) 
381  ;  Burden  v.  Sutherland,  70  N.  C.  528;  Bland  v.  O'llagan,  64  N.  C.  471. 

'  White  V.  Vermont,  &c.  R.  R.  Co.  21  How.  575;  Preston  v.  Hull,  23  Grat. 
613. 


CHAPTEK  VI. 

JTEMORAISTDA     UPON    BILLS     AND     NOTES,    AND    COLLATERAL 

AGREEMENTS. 


SECTION   I. 
MEMORANDA   UPON    BILLS    AND   NOTES. 

§  149.  As  to  memoranda  upon  bills  and  notes,  questions 
have  frequently  arisen  as  to  wlietlier  or  not  they  were  to  be 
regarded  as  incorporated  into  the  instruments  themselves.  In 
an  English  case,  where  the  words  "  with  lawful  interest,"  were 
written  in  the  corner  of  a  note  after  its  execution,,  and  with- 
out the  maker's  consent,  Lord  Campbell,  C.  J.,  said  :  "  This 
forms  part  of  the  contract.  It  would  clearly  have  been  so  if 
it  had  been  written  in  the  body  of  the  note,  and  we  think  a 
memorandum  of  this  kind  written  in  the  corner  of  the  note 
is  equally  part  of  the  contract,  because  the  contract  must  be 
collected  from  the  four  corners  of  the  document,  and  no  part 
of  what  appears  there  is  to  be  excluded."  ^  And  this  rule 
has  been  applied  in  numerous  English  and  American  cases. 
Such  memoranda,  if  made  by  agreement  of  the  parties  before 
signing,  will  bind  all  the  parties  to  the  instrument,  and  all 
who  have  or  are  legally  presumed  to  have  notice  thereof,  and 
may  be  pleaded  by  either  plaintiff  or  defendant..^  How  far, 
and  under  what  circumstances  a  bona  fide  transferee  of  the 
paper  is  aifected  by  the  addition,  erasure,  or  obliteration  of 
such  memoranda,  is  elsewhere  considered.^ 

'  Wairington  v.  Early,  2  Ellis  &  Bl.  763  (75  E.  C.  L.  R.);  see  also  Benedict  v. 
Cowden,  49  N.  Y.  403 ;  Dewey  v.  Reed,  40  Barb.  21 ;  Wait  v.  Pomeroy,  20  Mich. 
427. 

'  2  Parsons  N.  &  B.  539;  Byles  on  Bills  (Sharswood's  ed.)  [*94J,  193. 

°  See  Chapter  XLIII,  on  Alterations. 
Vol.  I.— 9 


130  MEMORANDA  UPON  BILLS  AND  NOTES. 

§  150.  The  principle  above  stated  has  been  applied,  in 
the  United  States,  and  construed  as  part  of  the  instrument, 
where  the  memorandum  was  written  at  the  bottom  of  the 
note,  "  one-half  payable  in  twelve  months,  the  balance  in 
twenty-four  months;"^  where  on  tlie  margin  was  wiitten, 
"  payaMe  in  fulled  cloth  one  year  from  the  month  of  October 
next ;  "  -  where  on  the  back  of  the  note  was  written  a  con- 
dition making  it  payable  in  five  years,  in  a  certain  contin- 
gency f  where  the  word  "  facilities,"  signifying  certain  bank 
notes,  was  written  on  a  note  under  the  name  of  the  subscrib- 
ing wtnesses ;  "*  where  the  words  "  [foreign  bills] "  were 
written  in  brackets  under  the  note,  its  negotiability  being 
thereby  destroyed;^  where,  under  the  maker's  signature  was 
written,  "  If  the  machine  should  not  be  delivered,  this  note 
not  to  be  paid  ;  "  "  where  there  was  indorsed  on  a  note  pay- 
able on  its  face  on  demand,  a  condition  that  it  was  not  to  be 
payable  until  the  ha])pening  of  a  certain  event ;  "^  where 
there  was  written  under  the  maker's  signature  a  memorandum 
that  it  was  not  to  be  collected  until  a  certain  event  transpired.® 

§  151.  Me7noranda  on  lach. — It  seems  that  the  purport 
of  the  instrument  is  not  only  to  be  collected  from  "  the  four 
corners/'  but  from  "  the  eight  corners,"  a  memorandum  on 
the  l)ack,  affecting  its  operation,  being  regarded  the  same  as 
if  written  on  its  face.  This  view  has  been  applied  where  a 
note  payable  absolutely  on  its  face,  bore  an  indorsement  that 
payment  was  not  to  be  compelled,  l)ut  to  be  received  wlien 
convenient  to  the  maker  to  make  payment;'*  where  a  note 
absolute  on  its  face,  bore  on  the  back  .  "  This  note  is  given 
on  condition  that  if  any  dispute  shall  arise  between  Lady 
Wray  and  I).  Hartley  respecting  the  sale  of  the  \vithin  men- 

'  Ileywoocl  v.  Perrin,  10  Pick.  238.  ''  Fletcher  v.  Blodgett,  16  Vt.  26. 

=  lleni  y  v.  Colman,  5  Vt.  403.       "  Springfield  Bank  v.  Merrick,  14  Mass.  322. 
'  Jones  V.  Fales,  4  Mass.  254. 

^  Wait  V.  Pomeroy,  20  Mich.  425.     Sec  also  The  State  v.  Stratton,  27  Iowa, 
424. 

'  Ertinger  v.  Richards,  35  Miss.  540.         *  Johnson  v.  Heagan,  28  Me.  329. 
'  Bariiard  v.  Gushing,  4  Mete.  231. 


MEMORANDA  UPON  BILLS   AND   NOTES.  131 

tioned  fir,  then  the  note  to  be  void  ;"  ^  where  there  was  in- 
dorsed on  the  back  of  the  note  that  it  was  "  to  be  taken  for 
security  of  all  such  balances  as  J.  M.  may  happen  to  owe  to  T. 
L.  &  Co.,  not  extendiuo-  farther  than  the  within  named  sum  of 
£200,  but  this  note  to  be  in  force  for  six  months,  and  no 
money  to  be  called  for  sooner  in  any  case ; "  ^  where,  on  the 
back  of  a  note  was  indorsed,  "  tlie  within  note  is  given  for 
secui-iiifr  certain  floating:  advances;"^  so  where  it  was  in- 
dorsed  on  the  back  of  a  note  that  payment  was  not  to  be 
expected  until  a  mill  was  sold,*  so  where  condition  w\as  writ- 
ten on  the  back  of  the  note  providing  for  deductions  on  cer- 
tain contingencies.^ 

§  152.  The  New  York  cases  do  not  seem  to  be  uniform 
and  consistent  on  this  subject.  In  one  case  it  was  held 
that  a  memorandum  on  the  back  of  the  note  that  it  was 
to  be  delivered  as  consideration  for  a  judgment  to  S.  & 
O.,  "  was  no  part  of  the  note,  and  the  effect  of  it  was  only 
to  show  the  consideration  and  operate  as  a  notice  to  any 
person  who  might  purchase  the  note."  ^  And  in  another, 
that  an  indorsement  on  the  back  of  a  note  of  a  condition 


•  Hartley  v.  Wilkinson,  4  Camp.  137  (1814). 

'  Leeds  v.  Lancashire,  2  Camp.  205  (1809),  Lord  EUeuborough  said:  "In  the 
hands  of  a  honajide  holder  who  received  it  as  a  promissory  note,  it  might  possi- 
bly be  considered  as  such,  but  the  present  plaintiffs  (the  payees)  can  only  treat  it 
as  a  guaranty  for  Marriott  to  the  amount  of  £200.  As  to  them  the  indorsement 
must  be  incorporated  with  the  body  of  the  note."  But  when  the  case  came  be- 
fore the  King's  Bench,  as  reported  in  5  Maule  &  Selwyn,  25  (1815),  the  above 
obiter  dictum  as  to  a  lona  fide  holder  was  not  repeated,  and  Lord  EUcnborough, 
C.  J.,  said:  "How  can  it  be  said  that  this  note  is  a  negotiable  instrument  for 
the  payment  of  money  absolutely,  when  it  is  apparent  that  the  party  taking  it 
must  inquire  into  an  extrinsic  fact,  in  order  to  ascertain  if  it  be  payable  ?  By 
the  indorsement  the  party  takes  nothing  but  a  contingent  benefit,  dependent 
upon  the  happening  or  not  of  a  particular  dispute  about  the  property."  Bayley, 
J.,  said:  "This  note  cannot  be  said  to  be  payable  at  all  events."  And  Dampier, 
J.,  said :  "  The  argument  is,  that  a  promissory  note  to  pay,  '  unless  a  dispute 
shall  arise  between  A.  &  B.,'  imports  an  unconditional  promise  to  pay." 

'  Cholmelcy  v.  Da-Icy,  14  Mees.  &  W.  "44. 

•  Blake  v.  Coleman,  23  Wis.  416. 
"  Henry  v.  Colman,  5  Vt.  403. 

•  Sanders  v.  Bacon,  8  Johns.  485  (1811);  see  Edwards  on  Bills,  147,  281. 


132  MEMORANDA   UPON  BILLS  AND  NOTES. 

til  at  it  was  to  be  delivered  to  the  payees  as  security  for 
a  certain  acceptance,  and  was  to  be  void  in  a  certain  event, 
did  not  affect  its  negotiability,  and  was  not  a  part  of  it.^ 
But  it  has  been  there  held  that  a  memorandum  on  tbe 
margin  of  a  note  specifying  no  place  of  payment,  running 
"  payable  at  the  Bank  of  America,"  entered  into  its  terms, 
and,  being  made  without  the  maker's  consent,  materially 
altered  and  avoided  it.^  The  like  view  prevailed  as  to  a 
memorandum  added  on  the  face  of  a  note,  "  interest  to  be 
paid  semi-annually,"  ^  and  as  to  a  memorandum  under  the 
maker's  signature,  "  the  above  note  to  be  paid  from  the 
profits  of  machines  when  sold."  ^  And  in  the  last  quoted 
case  it  w^as  doubted  whether  the  earlier  cases  could  be 
regarded  "as  the  deliberate  adjudications  of  the  Supreme 
Court  of  this  State." ' 

§  153.  If  the  memorandum  be  intended  merely  to  identify 
and  earmark  the  instrument  it  will  not  affect  its  operation  ;  ^ 
and  it  has  been  regarded  of  this  character  where  it  was 
indorsed  upon  a  note  by  the  payee  that  he  desired  his 
executors  not  to  call  in  the  money  until  three  years  after  his 
death.*^ 

§  154.  Parol  evidence  as  to  Memoranda. — It  is  competent 
for  either  party  to  show  by  parol  testimony  the  time  when, 
the  person  by  whom,  and  the  cii'cumstances  under  which  a 
memorandum  iipon  a  bill  or  note  was  made.  If  made — and 
it  will  be  i:)resumed  that  it  was  made — contemporaneously 
with  the  execution  of  the  instrument,  and  as  a  constituent 


•  Tappan  v.  Ely,  15  Wencl.  363  (1836). 

"  AVoodworth  v.  Bank  of  America,  19  Johns.  391  (1821),  overruling  same  case 
in  18  Jolms.  316  (1820). 

'  Dewey  t.  Reed,  40  Barb.  17  (18C3). 

*  Benedict  v.  Cowden,  49  X.  Y.  396  (1872). 

5  Benedict  v.  Cowden,  49  N.  Y.  405,  Allen,  J. 

"Benedict  v.  Cowden,  49  N.  Y.  403;  Brill  v.  Crick,  1  Moes.  &  W.  232; 
Fitcli  V.  Jones,  5  Ellis  &  B.  238  (85  E.  C.  L.  R.);  Bylcs  on  Bills  (Sharswood's 
ed.)  [*94J,  193. 

'  Stone  V.  Metcalf,  4  Camp.  217. 


MEMORANDA  UPON  BILLS  AND   NOTES.  133 

part  thereof/  it  will  be  given  full  effect  as  above  stated ;  if 
made  after  its  executiou,  and  with  the  consent  of  all  parties, 
it  will  modify  and  control  its  operation  ;  and  if  made  by  a 
stranger  without  the  consent  of  any  party,  it  will  be  a  spolia- 
tion, and  be  disregarded  ;  while  if  made  by  the  holder  with- 
out consent  of  the  parties,  it  will  vitiate  and  avoid  it,  being 
a  material  alteration.^  And  when  any  of  these  questions  of 
fact  are  raised,  they  are  to  be  put  in  issue  and  tried  by  a 
jury.^  But  when  the  memorandum  is  a  part  of  the  instru- 
ment, parol  testimony  is  inadmissible  to  alter  or  vary  its 
terms,  as  it  is  part  of  a  written  contract.'^ 

§  155.  Although  an  agreement  be  written  upon  the  same 
paper  that  the  note  is  written  on,  and  yet  if  it  be  evident 
that  it  was  not  intended  to  incorporate  the  terms  of  the 
agreement  in  the  instrument  itself,  tlie  transferability  and 
negotiability  of  the  instrument  will  not   be  affected  by  it. 

'  Fletcher  v.  Blodgett,  16  Vt.  2G.  In  this  case,  memorandum  on  margin  of 
note  was  payable  in  merchantable  fulled  cloth  one  month  from  the  month  of 
October  next.  The  note  was  for  $41  50,  payable  one  day  after  date,  with  in- 
terest annually.  Held,  the  memorandum  was  part  of  the  note,  and  was  to  he 
presumed  to  have  been  made  at  time  of  signing.  Henry  v.  Colman,  5  Vt.  402. 
Condition  written  on  back  of  note  created  as  part  of  it.  Jones  v.  Fales,  4  Mass. 
253.  In  this  case  the  words  [foreign  bills]  were  written  on  the  margin  of  the 
note.  Parsons,  C,  J.,  said  :  ''  It  is  a  reasonable  conclusion  that  these  words  must 
all  be  taken  to  be  the  words  of  the  maker  of  the  note,  written  before  it  was  de- 
livered to  the  promisee."  Tuckerman  v.  Hartwell,  3  Greenl.  147.  In  Harvey 
V.  Effinger,  35  Miss.  553,  a  written  agreement  was  appended  to  or  indorsed  on 
the  note  that  it  was  not  to  be  payable  until  the  happening  of  a  certain  event. 
Smith,  C.  J.,  said:  "According  to  the  well-settled  rule  on  the  subject,  the  note, 
and  the  agreement,  constituted  one  instrument."  See  also  Leeds  v.  Lancashire, 
5  Maule  &  Sel.  25  ante,  §  151,  note.  Prof.  Parsons  does  not  seem  to  concur  with 
the  text.  He  says  in  2  vol.  N.  &  B.,  p.  544  :  "  It  has  been  hdd  that  words  writ- 
ten on  the  back  of  a  note  are  no  part  of  the  body  thereof,  prima  facie,  but  arc 
presumed  to  be  done  after  the  note  is  completed."  This  view  is  tak<.n  in  Buy  v. 
Sprader,  50  Miss.  330,  where  Simrall,  J.,  says:  "If  such  memoranda  are  at  the 
foot  or  on  the  back  of  the  note  or  other  instrument  when  executed,  they  consti- 
tute a  jjart  of  the  contract.  But  being  disconnected  from  the  body  of  the  in- 
strument to  which  the  maker's  name  is  signed,  it  forms  no  original  part  of  it, 
until  shown  to  have  been  up(m  it  when  executed." 

'  lb.;  Dewey  v.  Reed.  40  Barb.  IG;  Brill  v.  Crick,  1  Mees  &.  W.  231. 

'  Makepeace  v.  Harvard  College,  10  Pick.  303. 

*  Hcywood  V.  Perrin,  10  Pick.  228. 


134  MEM0RA2?DA   UPON   BILLS  AND  NOTES. 

Thus,  where  the  payee  of  a  uote,  at  tlie  time  of  taking  it, 
wrote  underneath  it  an  agreement  to  take  the  above  note  in 
certain  labor  if  clone  in  six  mouths,  there  being  no  evidence 
that  the  promisor  had  ever  performed  or  offered  to  perform 
the  labor,  and  the  six  months  having  expired,  it  was  beld 
that  the  two  instruments  were  not  to  be  construed  together 
as  parts  of  the  same  contract,  and  that  an  indorsee  might  re- 
cover on  it  in  his  own  name.^ 


sectio:n'  II. 

COLLATERAL    AGREEMENTS. 

§  150.  When  there  is  a  contemporaneous  written  contract 
affecting  the  terms  of  the  bill  or  uote,  it  is  to  be  construed 
together  with  the  bill  or  note,  in  so  far  as  each  may  be  given 
effect,  and  there  is  no  repugnancy  between  them.  Thus, 
where  a  note  is  payable  in  five  years,  with  interest  at  ten 
per  cent.,  and  at  the  time  of  its  execution  a  mortgage  is  given 
to  secure  its  payment,  in  which  it  is  stipulated  that  inteiest 
shall  be  payable  annually,  the  mortgage  as  between  the  par- 
ties ^vill  control  the  payment  of  interest.^  So,  if  there  be  a 
contemporaneous  written  contract  recognizing  the  note,  and 
promising  to  pay  an  additional  sum  on  a  contingency,  for 
the  same  consideration,  it  is  a  good  bargain,  and  merges  all 
prior  stipulations.^ 

8  157.  After  a  bill  or  note  has  been  executed  and  deliv- 
ered,  it  is  a  subject  of  contract  like  any  other  property  or 
chose  in  action  ;  and  evidence,  therefore,  will  be  admitted  to 
show  a  subsequent  bargain  upon  a  good  consideration  to  ex- 
tend the  time  of  payment,**  or  an  agreement  that  payment 


'  Odiorne  v.  Sargent,  G  N.  H.  401.     See  ante,  §  61,  62. 

=  Muzzy  V.  Knight,  8  Kan.   456.     See  also  Meyer  v.  Graeber,   19  Kan.  165; 
Dobbins  v.  Parker,  46  Iowa,  358,  post,  §  835. 
'  Cuthbert  v.  Bowie,  10  Ala.  163. 
*  Solomons  v.  Jones,  3  Brev.  54. 


COLLATERAL  AGREEMENTS.  135 

might  bo  made  to  a  third  person/  or  that  the  contract  for 
which  the  paper  was  giv^en  has  been  rescinded,  and  thus  the 
consideration  failed.^ 

§  158.  Where  there  is  an  agreement  subsequent  to  the 
execution  of  the  instiument,  upon  a  valid  consideration,  to 
do  or  receive  something  else  for  and  instead  of  the  note,  and 
such  agreement  has  been  actually  carried  out,  it  operates  as 
a  discharge  of  the  instrument,  and  there  can  be  no  recovery 
upon  it.'^  But  if  the  agreement  be  still  executory,  it  has 
been  held  that  it  must  be  enforced  in  another  suit.  Thus,  a 
defense  to  a  note  payable  in  one  year,  that  an  oral  collateral 
agreement  provided  that  payment  should  not  be  demanded 
until  the  expiration  of  five  years,  is  no  bar  to  a  suit  brought 
before  the  lapse  of  five  years.*  So,  where  the  payee  of  a  note, 
who  had  sold  a  certain  article,  w^arranted  it,  and  promised,  if 
bad,  to  furnish  a  duplicate  before  the  note  should  be  paid,  it 
was  held  no  defense  to  the  note.^  Peculiar  statutes  may,  in 
some  States,  change  these  common  law  princij^les. 

§  159.  An  agreement  to  renew  a  bill  or  note  would  be 
binding,®  but  unless  it  otherwise  expressed  the  number  of  times 
of  renewal,  it  would  be  construed  as  an  agreement  to  renew 
once  only.'^  If  contemporaneous  with  the  execution  of  the 
instrument,  such  ao-reement  would  not  be  bindins;  unless  in 
writing,  for  the  reason  that  it  would  contradict  the  terms  of 
a  written  contract,and  parol  evidence  for  that  purpose  is  in- 
admissible. But  if,  after  the  note  is  made,  such  agreement, 
though  oral,  would  be  binding  if  for  a  consideration.^  In  an 
action  on  a  note  payable  in  ninety  days  from  date,  but  con- 

*  Low  V.  Treadwell,  13  Me.  441. 

'  Allen  V.  Furbish,  4  Gray,  504;  Newton  v.  Jackson,  23  Ala.  335. 

*  Grossman  v.  Fuller,  17  Pick.  171. 

*  Dow  V.  Tuttle,  4  Mass.  414;   2  Parsons  N.   &  B.  530,  531;  contra,  Grafton 
Bank  v.  Woodward,  5  N.  H.  99;  Erwin  v.  Saunders,  1  Cow.  249. 

'  Kelso  V.  Frye,  4  Bibb,  493. 

*  Innes  v.  Munro.  1  Exch.  473.  '  Id, 

*  Grafton  Bank  v.  Woodward,  5  N.  H.  99-  Fleming  v.  Gilbert,  3  Johns.  528; 
Hoare  v.  Graham,  3  Camp.  57  ;  Gibbon  v.  Scott,  2  Stark  286. 


13G  MEMORANDA  UPON  BILLS  AND  NOTES. 

taiuing  on  its  face  a  provision  that  if  the  maker  pay  one-half 
the  note,  and  the  interest  on  the  other  half,  in  advance,  for 
ninety  days  the  payment  of  that  half  should  be  extended 
for  that  further  length  of  time — it  should  be  described  ac- 
cording to  its  terms  in  a  declaration,  and  a  description  of  it 
as  payable  in  ninety  days  from  date  would  be  a  variance.^ 
But  if  the  ao-reeraeut  for  extension  or  renewal  were  on  a 
separate  paper,  it  sliould  not  be  noticed  in  the  declaration.'* 
In  Eno'land  it  has  been  held  that  when  there  has  been  a 
valid  sul)sequent  agreement  for  renewal,  the  defendant  must 
show  tliat  he  applied  for  a  I'enewal,  or  the  plaintiff  will 
prevail;"'  Any  agreement  between  the  payee  and  the  maker 
of  a  note  not  written  on  its  face  could  not  effect  a  hona  fide 
indorsee  for  value,  and  without  notice ;  and  the  payee,  after 
indorsing  it,  would  be  estopped  to  assert  a  restriction  upon 
its  negotiability.* 

>  Woodstock  Bank  v.  Downer,   27  Vt.  482 ;  Barnard  v.   Gushing,  4  Mete. 

280. 

'  Smalley  v.  Bristol,  1  Mich.  153.  '  Gibbon  v.  Scott,  2  Stark.  286. 

*  Hodges  V.  Shuler,  24  Barb.  68. 


CHAPTER  YII. 

CONSroERATION   OF   NEGOTIABLE   INSTRUMENTS. 

§  160.  By  consideration,  is  meant  a  benefit  or  gain  ot 
some  kind  to  tbe  party  making  the  promise,  or  a  loss  or  in- 
jury of  some  kind  to  the  paity  to  whom  it  is  made.  By  the 
common  law  a  promise  made  without  consideration  was  in- 
valid, and  in  order  to  enforce  any  contract  it  was  necessary 
to  aver  and  prove  a  consideration. 

The  most  ancient  exception  to  this  rule  was  made  in  ref- 
erence to  promises  under  seal,  the  solemn  act  of  the  party  in 
attaching  a  seal  to  the  evidence  of  his  contract  being  re- 
garded as  importing  a  consideration  and  estopping  him  from 
denying  it.  The  necessities  of  trade  soon  produced  another 
relaxation  of  the  rule ;  and  by  the  usage  and  custom  of  mer- 
chants, bills  of  exchange  and  promissory  notes  came  to  be  re- 
garded as  prima  facie  evidences  of  consideration  ;  and  pecu- 
liar qualities  were  accorded  to  them  which  were  possessed  by 
no  other  securities  for  debt.  These  qualities,  so  far  as  they 
relate  to  the  consideration  of  such  instruments,  we  propose 
now  to  discuss. 


SECTION  I. 

WHAT   INSTRUMENTS   IMPORT   A   CONSIDERATION. 

§  161.  There  is  no  doubt  that  if  the  instruments  sued  on 
be  a  bill  of  exchange — although  it  lacks  the  words  "  payable 
to  order,"  or  "  bearer,"  which  are  essential  to  its  negotiabil- 
ity— it  is  unnecessary  to  aver  or  prove  a  consideration,  for  it 
imports  a  consideration  in  itself  by  the  very  fact  that  it  is  a 


13 S  C05JSIDERATT0N  OF  NEGOTIABLE  INSTRUMENTS. 

bill  of  exchange.^  But  if  it  is  sboi-u  of  its  character  as  a  l^ill 
of  exchange  l>y  bfiiig  made  payable  out  of  a  particular  fund, 
or  upon  a  condition,  or  in  a  different  medium  than  money,  it 
does  not,  j[>6/' S(?,  import  a  consideration.  And  consideration 
must  be  averi-ed  and  proved;^  unless  it  be  stated  on  its  face 
that  it  was  given  for  "value  received,"  or  some  equivalent, 
or  there  are  expressions  in  it  inconsistent  with  any  other 
theory  than  tliat  it  was  upon  a  consideration,  in  wliich  cases 
it  would  be  'prima  facie  evidence  of  cousidei'ation.^  If  its 
terms  are  just  as  consistent  with  that  of  its  existence — as 
of  consideration  as-  they  are  with  the  theory  or  a  total  want 
for  instance,  a  draft  addressed  to  "the  trustee  of  N.  and  A,," 
directing  the  payment  of  a  sum  "out  of  any  money  in  his 
hands  belonging  to  me," — it  would  not  afford  such  a  legal  pre- 
sumption of  consideration  as  to  dispense  \\\\\\  proof  it.* 
If  an  oi'der  be  so  (h'awn  as  to  imply  that  the  drawee  has 
funds  in  his  hands  to  meet  it,  acceptance  of  it  is  an  admission 
of  the  funds  in  hand  and  their  sufficiency.'^ 

§  102.  At  common  law  an  action  of  debt  cannot  be  sus- 
tained upon  a  promissory  note,  as  of  itself  importing  a  debt; 
but  the  plaintiff  must  declare  upon  the  contract  as  in  as^um/p- 
sit,  and  must  both  aver  and  })rove  a  valuable  consideration. 

'  Averott's  Ad m  v.  Booker,  15  Grat.  169  (ISIO);  Jnsceline  v.  Lassere,  10 
Mod.  294,  317  (1714)  ;  Haydock,  v.  Lynch,  2  Ld.  R;iym.  1503. 

^  Averctt's  Adm.  v.  Booker,  supra;  Atkinson  v.  Mauks.  1  Cow.  151;  De 
Forest  V.  Frary,  G  Cow.  151;  Belderback  v.  Burlingaa:e,  27  111.  311,  order 
payaMe  "in  lumber;"  Josct'line  v.  Lissere,  10  Mod.  2U4,  317  (1714);  Hay- 
dock  V.  Lynch,  2  Ld.  Raym.  (15G3);  1  Robinson's  Pr  (new  cd.)  143. 

'  Averett's  Adni.  v.  Booker,  swpra  ;  1  Parsons  N.  &  B.  226,  228,  note;  see 
JolifiFe  V.  Ilipgiiis,  6  Munf.  3. 

*  Averett's  Adm.  v.  Booker,  15  Grat.  170;  Lee,  J.  saying:  "Taking  all  the 
terms  rf  the  paper  together  they  a'c  at  least  consistent  with  the  theory  of  the 
absence  of  all  considera'ions,  as  they  are  with  that  of  any  value  received.  The 
terms  of  the  order  would  admit  equally  well  of  several  different  consiructions. 
The  drawer  might  have  known  that  he  had  just  such  a  sum  in  the  h m  Is  of  the 
drawee,  and  intended  merely  to  give  authority  to  the  latter  to  deliver  the  same 
to  the  pisyce  lor  him;  or  witliout  knowing  whether  the  trustee  had  received 
funds  for  him  or  not,  might  have  merely  given  the  order,  if  he  had,  to  authorize 
the  payee  to  receive  them  for  him  as  agent." 

'  Varner  v.  Nobleborough,  2  Greenl.  123;  Maber  v.  Massias,  2  Bl.  Rep.  1072. 


WHAT   INSTRUMENTS   IMPORT   A   CONSIDERATION.  139 

And  the  note,  though  it  couLl  not  ba  declared  on,  mi^ht  be 
given  in  evidence  in  support  of  the  contract  stated,  as,  for  in- 
stance, on  account  for  money  lent.^  One  effect  of  the  Eno-- 
lish  statute  of  Anne,  which  has  been  quoted^  was,  that 
an  action  of  debt  miglit  be  maintained  on  a  promissory 
note  without  alleging  a  considei-ation,  and,  of  consequence, 
without  proving  any.^  And  such  is  the  effect  of  all 
statutes  which  make  promissory  notes  negotiable,  or  which 
authorize  actions  of  debt  upon  them  thouirh  non-negotiable. 
But  such  notes  as  are  not  negotiable  by  statute,  or  upon 
which  no  action  of  debt  is  authorized  by  statute  remain  as 
at  common  law ;  and  not  importing  a  consideration,  it  must 
be  alleged  and  proved.* 

§  16H.  These  general  principles  are  affected  more  or  less 
by  statutes  in  the  United  States,  and  it  has  been  said  by  a 
learned  author  that  the  only  conclusion  to  which  he  is  led 
by  the  authorities  respecting  non-negotiable  notes,  is  that  in 
some  of  the  States  the  "presumption  of  consideration  would 
be  denied,  and  in  others,  perhaps,  admitted."  ^  It  is  quite 
certain,  however,  that  the  transferee  of  a  non-negotiable  in- 
strument can  stand  on  no  better  footing  respecting  the  orig- 
inal parties  than  his  transferer,  and  that  the  consideration 
may  be  inquired  into,  though  ''  value  received"  is  expressed.^ 
Whenever  a  note  is  expressed  to  be  "for  value  received,"  or 
states  a  consideration,  it  h  prima  facie  evidence  of  considera- 

'  Peasley  v.  Boatwright,  2  Leigh,  198  (1830);  Jackson  v.  Jackson,  10  Leigh, 
452  (1839);  Bourne  v.  Ward,  5!  Me  191;  Bristol  v.  Warner,  19  Conn.  7;  Bircle- 
back  V.  Wilkins,  22  Penn.  St.  2(5;  Clarke  v.  Martin,  2  Ld.  Raym.  757  ;  Story  v. 
Atkins,  Id.  1430;  Trier  v.  Bridgn)an,  2  Eist,  359. 

^  Ante,  §  5,  noe  5.  ^  Peasley  v.  Boatwright,  supra. 

*  Peasley  v.  Boatwright,  supra;  Averett's  Adm.  v.  Booker,  15  Grat.  165; 
Courtney  v.  Doyle,  10  Allen,  123.  In  this  case  the  note  ran  "I  promise  to  pay 
A.  B.  three  hundred  dollars  with  interest  from  date  (signed)  C.  D."  Held,  that 
consideration  must  be  averred  and  ])roved. 

"  1  Parsons  N.  &  B.  237.  In  Kimball  v.  Huntington,  10  Wend.  675.  a  note 
running  "Due  A.  B.  $325  payable  on  demand,"  was  held  to  import  considera- 
tion. 

"  Chamberlain  v.  Gorbam,  20  Johns,  144;  1  Parsons  N.  &  B.  228;  Edwards 
on  Bills,  217. 


140  CONSIDERATTOX  OF  NEGOTIABLE  INSTRUMENTS. 

tion,  though  it  may  not  be  negotiable,  and  whether  it  be 
payable  in  money  or  specific  articles.*  The  transferee  of  a 
non-negotiable  note  must  aver  and  prove  consideration  for 
the  transfer.^ 

§  164.  While  a  bill  or  negotiable  note  imports  in  itself  a 
consideration,  yet  when  evidence  has  been  introduced  to  re- 
but the  presumption  which  it  raises,  the  burden  is  upon  the 
plaintifi"  to  satisfy  the  jury  u[)on  all  the  evidence,  and  by  the 
preponderance  of  evidence  that  there  was  a  consideration; 
and  the  mere  production  of  the  instrument  does  not  shift 
upon  the  defendant  the  burden  of  proving  that  there  was  no 
consideration.^  The  production  of  the  note  as  has  been  said, 
is  2i 2»'ima  facie  evidence  of  a  consideration,  sufficient,  if  not 
rebutted,  to  maintain  the  i)laintiff 's  case.  But  to  hold  that 
such  an  admission  in  the  note  of  a  consideration  therefor 
(as  the  words  "  value  received")  changes  the  burden  of  proof, 
and  compels  the  defendant  to  assume  it,  would  be  to  hold 
that  such  an  admission  when  made  orally,  and  when  not  con- 
tained in  the  instrument  would  have  the  same  efi^ect."*  And 
again  :  "As  the  burden  is  on  the  plaintiff  to  prove  a  good 
consideration  (for  the  note),  if  the  whole  evidence  offered  on 
both  sides,  leaves  it  in  doubt  whether  there  was  a  good  con- 
sideration or  not,  the  plaintiff  fails  of  making  out  his  case, 
and  the  defendant  will  be  entitled  to  a  verdict."  ^ 

§  1G5.  Proof  of  consideration  ivhen  hill  or  note  is  in 
hands  of  third  ixirties. — When  the  bill  or  note  has  passed 
into  the  hands  of  a  third  party,  we  have  already  seen  that 
the  defendant,  if  he  be  not  the  immediate  indorser  of  the  in 

"  Walrarl  v.  Petrie,  4  Wend.  575;  Bourne  v.  Ward,  51  Me.  191;  Edwards  on 
Bills,  210 ;  1  Parsons  N.  &  B.  226. 

'  Barrick  v.  Austin,  21  Barb.  241. 

'  Blaik  River  Savings  Bank  v.  Edwards,  10  Gray,  387;  Delano  v.  Bartlet,  6 
Cush.  304;  Small  v.  Clcwley,  63  Me.  155;  Burnham  v.  Allen,  1  Gray,  501; 
Crowninshield  v.  Crowninshield,  3  Gray,  529;  Slate  v.  Flye,  26  Me.  312. 

*  Commonwealth  v.  McKie,  1  Bennett  &  Heard's  Leading  Criminal  Cases, 
Note  16,  Am.  Rep.  412;  Small  v.  Clewley,  62  Me.  155. 

■*  Burnham  v.  Allen,  1  Gray,  501 ;  Small  and  Clewley,  62  Me.  155. 


WHAT  INSTRUMENTS  IMPORT  A  CONSIDERATION.  141 

dorsee,  lias  a  double  burden  imposed  upon  liim.  He  must 
show  in  such  cases  not  only  the  want  or  failure  of  the  orig- 
inal consideration,  but  he  must  go  farther  and  show  want  or 
failure  of  the  consideration  between  the  plaintiff  and  his  im- 
mediate iiidorser.  It  is  important  to  observe,  however,  that 
the  rules  of  evidence  conform  themselves,  in  some  respects,  to 
suit  the  circumstances  under  which  the  parties  are  presumed 
to  be  placed ;  and  there  are  two  leading  principles  which  are 
well  settled. 

The  first  is  that  proof  of  a  total  want  of  consideration,  as 
that  the  bill  or  note  was  executed  for  accommodation,  or  was 
intended  as  a  gift,  or  was  given  for  a  balance  erroneously 
supposed  to  be  due,  will  not  shift  it  upon  the  plaintiff  to 
show  that  he  acquired  it  upon  a  sufficient  consideration,^  and 
subsequent  failure  of  consideration  stands  on  the  same  footing.^ 
Respecting  accommodation  bills,  it  was  said  by  the  Court  of 
Exchequer,  Lord  Abinger  delivering  the  opinion  :  ^  "  If  a  man 
comes  into  court  without  any  suspicion  of  fraud,  but  only  as 
the  holder  of  an  accommodation  bill,  it  may  fairly  be  pre- 
sumed that  he  is  a  holder  for  value.  The  proof  of  its  being 
an  accommodation  bill  is  no  evidence  of  the  want  of  con- 
sideration in  the  holder.  If  the  defendant  says,  I  lent  my 
name  to  the  drawer  for  the  purpose  of  his  raising  money 
upon  the  bill,  the  probability  is  that  money  was  obtained 
upon  the  bill.  Unless,  therefore,  the  bill  be  connected  with 
some  fraud,  and  a  suspicion  of  a  fraud  be  raised  from  its  be- 
ing shown  that  something  has  been  done  with  it  of  an  illegal 
nature — as  that  is  has  been  clandestinely  taken  away  or  has 
been  lost  or  stolen,  in  which  case  the  holder  must  show  that 


'  See  Chapter  XXrV  on  Bona  Fide  Holder,  §§  777,  810;  Sees.  II  and  VII. 
This  rule  was  first  laid  down  by  Parke,  J.,  in  Heath  v.  Sansom,  2  B.  «&  Ad.  291, 
dissenting  from  the  opinion  of  the  court ;  but  it  is  now  well  settled  in  Eng- 
land as  well  as  in  the  United  States.  Whitaker  v.  Edmunds,  1  Moody  &  R.  366; 
Mills  V.  Barker,  1  Mees.  &  W.  42.'5 ;  Percival  v,  Frampton,  2  Cromp.  M.  & 
R.  180;  EUicott  v.  Martin,  6  Md.  509;  Ross  v.  Bedell,  5  Duer,  465;  Ilarger 
V.  Worrall,  69  N.  Y.  370. 

«  Wilson  V.  Lazier,  11  Grat.  477;   Knight  v.  Fugh,  4  Watts  &  S.  445. 

''  Mills  V,  Barber,  1  .>,ees.  &  W.  425. 


142  CONSIDERATION  OF  NEGOTIABLE  INSTRUMENTS. 

lie  gave  value  for  it — tbe  onus  prohandi  is  cast  upon  the  de- 
fendant." 

§  16G.  But  if  the  d^.-fendant  show  that  there  was  fraud 
or  illegality  in  the  origin  of  the  bill  or  note,  a  new  coloring 
is  imparted  to  the  transaction.  The  plaintiff,  if  he  has  be- 
come innocently  the  holder  of  the  paper,  is  not  permitted  to 
suffer;  but  as  the  knowledge  of  the  manner  in  which  it  came 
into  his  hands  must  rest  in  his  bosom,  and  the  means  of 
showing  it  must  be  much  easier  to  him  than  to  the  defend- 
ant, he  is  required  to  give  proof  that  he  became  possessed 
of  it  for  a  sufficient  consideration.^ 

If  he  is  innocent,  the  burden  must  generally  be  a  light 
one;  and  if  guilty,  it  is  but  a  proper  shield  to  one  who 
would  be,  but  for  its  protection,  his  victim. 

§  107.  It  was  formerly  considered  necessary,  in  order  to 
enable  the  defendant  to  put  the  plaintiff  on  proof  of  con- 
sideration, that  defendant  should  have  given  the  plaintiff  no- 
tice to  prove  consideration;^  but  it  is  well  settled  now  that 
no  such  notice  is  necessary,  and  it  is  seldom  given.'^  It  was, 
also,  formerly  held  that  where  the  consideration  given  by  the 
plaintiff  was  disputed,  and  a  notice  to  that  eff'ect  had  been 
given,  the  plaintiff'  must  go  into  his  whole  case  in  the  first 
instance,  and  could  not  reserve  proof  of  consideration  as  an 
answer  to  the  defendant.'*  But  now  the  plaintiff  is  only  re- 
quired to  give  affirmative  proof  of  consideration  after  the 
defendant  has  given  evidence  tending  to  rebut  the  prima 
facie  case  which  the  production  of  the  instrument  makes  out.* 


'  Vatbir  y.  Zane,  3  Grat.  246.  In  Harvey  v.  Towers,  6  Exch.  656,  Pollock, 
C.  B.,  said:  ''It  is  now  well  settled  that  if  a  bill  be  founded  in  illegality  or 
fraud,  or  has  been  the  subject  of  felony  or  fraud,  upon  that  being  proved,  the 
holder  is  compelled  to  show  that  he  gave  value  for  it."  Smith  v.  Braine, 
16  Q  B.  244,  overruling  Brown  v.  Phillpot,  3  M.  &  R.  285;  Bailey  v.  Bid- 
well,  13  Mees.  &  W.  73.     Sperry  v.  Spaulding.  45  Cal   544. 

^  Paterson  v.  Hardacre,  4  Taunt.  Ill;  L5yles  on  Bills  (Sharswood's  ed.)  [*115, 
116],  221,  note  d. 

=  Mann  v.  Lent,  1  M.  &  M.  240;  10  B.  &  C.  877  (31  E.  C.  L.  R.) ;  Bailey  v- 
Bidwell,  13  Mees  &  W.  75. 

*  Delaney  v.  Mitchell,  1  Stark.  439  (3  E.  C.  L.  R). 

'  Byles  (Sharswood's  cd.)  [*116].  231,  note  d. 


BY  WHAT   LAWS  CONSIDERATION  DETERMINED.  143 


SECTION  II. 

BY    WHAT    LAWS    THE    LEr>ALITY    OF    CONSroERATION    IS    DETERMINED. — 
CONFEDERATE   OBLIGATIONS. 

S  168.  The  laws  in  force  at  the  time  a  note  is  criven  de- 

o  o 

terraine  its  legality;  and  where  a  law  prohibiting  the  sale  of 
spirituous  liquors  has  been  repealed,  it  does  not  thereby 
validate  a  note  given  in  violation  of  the  statute  when  it  was 
in  force ;  and  a  renewal  of  the  note  will  be  tainted  with  the 
original  illegality.^ 

§  169.  The  legality  of  the  consideration  of  a  contract  is 
to  be  determined  by  the  laws  of  the  State  or  country  where 
the  contract  is  made,  and  not  by  those  of  the  State  or  country 
where  the  suit  is  brought.  The  rules  of  every  nation  from 
comity  admit  that  the  laws  of  every  other  nation  in  force 
within  its  own  limits  ought  to  have  the  same  force  every- 
where, so  far  as  they  do  not  prejudice  the  rights  of  other 
governments  or  their  citizens.-^  The  rule  is  founded  not 
merely  on  the  convenience,  but  on  the  necessity  of  nations; 
for  otherwise  it  would  be  impracticable  for  them  to  carry  on 
an  extensive  intercourse  or  commerce  with  each  other.^ 


'  Holden  v.  Cosgrove,  12  Gray,  216. 

"  See  Chapter  XXVII,  on  Conflict  of  Laws;  Thorington  v.  Smith,  8  Wall.  11. 
Chief  Justice  Chase,  after  speaking  of  the  supremacy  of  the  Confederate  Gov- 
ernment in  the  seceded  States,  says:  "It  must  follow  as  a  necessary  consequence 
from  this  actual  supremacy  of  the  insurgent  government,  as  a  belligerent  within 
the  territory  where  it  circulated,  and  from  the  unity  of  civil  obedience  on  the 
part  of  all  who  remained  in  it,  that  this  currency  must  be  considered  in  courts 
of  law  in  the  same  light  as  if  it  had  been  issued  by  a  foreign  government  tem- 
porarily occupying  a  part  of  the  territory  of  the  United  States.  Contracts  stipu- 
lating for  payments  in  this  currency  cannot  be  void  for  that  reason  only,  as  made 
in  aid  of  the  foreign  invasion  in  the  one  case,  or  of  domestic  insurrection  in  the 
other.  They  have  no  necessary  relations  to  the  government,  whether  invading 
or  insurgent.  They  are  transactions  in  the  ordinary  course  of  civil  society,  and, 
though  they  may  indirectly  and  remotely  serve  the  ends  of  the  unlawful  govern- 
ment, are  without  blame,  except  when  they  have  been  entered  into  with  actual 
intent  to  further  invasion  or  insurrection.  We  cannot  doubt  that  such  contracts 
should  be  enforced  in  the  courts  of  the  United  States,  after  tlie  restoration  of 
peace,  to  the  extent  of  their  just  obligation." 

'  Boyce  v.  Tabb,  18  Wall.  548. 


144  CONSIDERATION  OF  NEGOTIABLE  INSTRUMENTS. 

§  1 70.  These  principles  have  been  applied  by  the  courts 
of  the  United  States,  since  the  close  of  the  war  against  the 
Confederate  States,  to  instruments  executed  during  the  war 
for  the  loan  of  Confederate  States  treasury  notes,  or  which 
were  payable  in  that  mediun — it  having  been  the  only  cur- 
rency in  general  circulation  within  the  Confederate  lines ;  and 
also  to  those  executed  in  payment  of  hires  or  purchase  money 
of  slaves  after  slavery  had  been  abolished. 

The  United  States  Supreme  Court  has  held  unanimously 
that  a  promissory  note  payable  in  Confederate  States  treasury 
notes,  made  between  parties  within  the  lines  of  the  Confed- 
erate States  during  the  war,  was  not  executed  upon  an  illegal 
consideration,  unless  it  was  executed  with  the  intent  to  aid 
the  Confederate  cause ;  ^  and  the  courts  of  some  of  the  recon- 
stnicted  Southern  States  and  of  other  States  have  adopted 
similar  views.^  Confederate  currency  having  been  the  only 
medium  of  exchano-e  in  the  Confederate  lines  for  the  better 
part  of  the  war,  any  other  view  would  seem  peculiarly  rigor- 
ous and  cruel,  and  utterly  opposed  to  that  spirit  of  comity 
and  humanity  which  should  ameliorate  as  far  as  possible  the 
disadvantages  and  hardships  of  conflicts  between  nations. 
But  partisan  judges  have  not  been  lacking  in  the  conquered 
States,  and  their  extreme  arid  violent  notions  have  found  ex- 
pression in  decisions  which  will  remain  as  an  enduring  stain 
upon  the  records  of  tbe  American  judiciary.^ 

§  171.  Bonds  issued  by  the  convention  of  a  secession 
State  to  raise  revenues  to  carry  on  war  against  the  United 

•  Osborn  v.  Nicholson,  IS  Wall.  656. 

"Rodes  V.  Patillo,  5  Busli  (Ky.)  271;  Rivers  v.  Moss,  6  Bush  (Ky.)  600; 
Bearing  v.  Rucker,  18  Grat.  426;  Boulware  v.  Newton,  Id.  708;  Lohman  v. 
Crouch,  19  Grat.  331;  Magill  v.  Manson,  20  Grat.  527;  Green  v.  Sizer,  40  Miss. 
530;  Murrell  v,  Jones,  Id.  565. 

"  Note  for  loan  of  Confederate  States  treasury  notes  void :  Lawson  v.  Miller, 
44  Ala.  610;  Calfee  v.  Burgess,  3  W.  Va.  274;  Prigeon  v.  Smith,  31  Texas,  171; 
Reavis  v.  Blackshear,  30  Texas,  753.  Contracts  solvable  in  Confederate  money 
held  void.  Biossat  v,  Sullivan,  21  La.  Ann.  565 ;  Latham  v.  Clark,  25  Ark.  574. 
And  this  has  been  held  to  apply,  although  the  paper,  on  its  face,  was  payable 
simply  in  dollars.    Donley  v.  Tindall,  32  Tex.  43. 


EY  WHAT  LAWS  CONSIDERATION  DETERMINED.  145 

States  have  been  liekl  hy  the  United  States  Supreme  Court 
to  be  upon  an  illegal  consideration.^ 

§  172.  In  resjiect  to  promissory  notes  given  for  slaves, 
before  President  Lincoln's  emancipation  proclamation  was 
issued,  the  Supreme  Court  of  the  United  States  has  set  the 
question  of  their  validity  at  rest.  It  has  been  decided  by  that 
tribunal  that  a  note  dated  March  26th,  1861,  and  given  for  a 
slave,  could  be  recovered  upon,  notwithstanding  that  slavery 
was  abolished  on  the  first  of  January,  1862,  and  the  contract 
of  sale  contained  the  warranty,  "  the  said  negro  to  be  a  slave 
for  life,"  ^  and  also  notwithstanding  the  thirteenth  amend- 
ment to  the  Constitution,  made  in  1865,  by  which  it  is  or- 
dained that  "  neither  slavery  nor  involuntary  servitude  shall 
exist  in  the  United  States  nor  in  any  place  subject  to  their 
jurisdiction." 

In  the  State  tribunals  of  the  Southern  States,  wdiere  this 
question  has  been  of  much  consequence,  conflicting  views 
have  been  taken,  but  many  of  the  cases  concur  in  judo-raent 
wdth  the  Supreme  Court  of  the  United  States,^  and  in  other 
States  of  the  Union,  both  before  and  since  the  war,  the  prin- 
ciples of  these  decisions  have  been  asserted.* 

§  173.  A  recovery  upon  instruments  executed  for  slaves, 
or  for  Confederate  money,  has  been  sought  to  be  prevented 
by  articles  in  the  new  Constitutions  of  some  of  the  States, 
denying  jurisdiction  to  the  courts  to  enforce  them ;   or  in 

'  Hanauer  v.  Woodruff,  15  Wall.  439. 

'  Osborn  v.  Nicholson,  13  Wall.  655;  Boyce  v.  Tabb,  18  Wall.  548.  In  Fitz- 
patrick  v.  Ilearne,  44  Ala.  171,  it  was  held  that  a  warranty  on  the  sale  of  slaves 
"  that  the  title  of  said  slaves  was  warranted  for  the  life  of  said  negro  slaves,"  was 
not  broken  by  the  subsequent  emancipation  of  the  slaves.  To  same  effect, 
Hand  v.  Armstrong,  34  Ga.  233 ;  Wilkinson  v.  Cook,  44  Miss.  367 ;  McNealy  v. 
Gregory,  13  Fla.  417. 

'  McEIvain  v.  Mudd,  44  Ala.  48  ;  Thompson  v.  Warren.  5  Cold.  044 ;  Dowdy 
V.  McClellan,  52  Ga.  408;  Calhoun  v.  Calhoun,  2  S.  C.  283;  contra,  Laprice  v. 
Bowman,  20  La.  Ann.  234;  Lytle  v.  Wheeler,  21  lb.  193. 

^  Roundtree  V,  Baker,  53  111.  241,  in  which  case  it  was  held  that  an  obligation 
for  the  purchase  of  a  slave  in  Kentucky,  wlien  slavery  was  legal,  might  be  sued 
upon  in  Illinois,  and  the  subsequent  abolition  of  slavery  did  not  affect  the  note 
Vol.  I.— 10 


146  CONSIDERATION  OF   NEGOTIABLE  INSTRUMENTS. 

some  such  language  declaring  that  they  shall  be  deemed 
void.  But  such  declarations,  whether  of  a  State  Constitu- 
tion or  of  a  legislative  enactment,  evidently  violate  the  pro- 
vision of  the  national  Constitution  prohibiting  the  passage 
of  any  law  impairing  the  obligation  of  a  contract.  The 
United  States  Supreme  Court  has  so  held,^  and  the  decision 
is  obviously  just ;  but  some  of  the  Southern  tribunals  have 
held  otherwise.^ 

In  some  of  the  States  it  has  been  held  that  notes  for  slaves 
sold  after  Lincoln's  emancipation  proclamation  were  as  valid 
as  those  for  slaves  sold  before,^  and  according  to  the  princi- 
ples of  the  text,  which  the  authorities  amply  sustain,  there 
can  be  substantially  no  difference  in  the  cases,  the  Confederate 
Government  being  in  power  and  protecting  slavery  within 
its  lines  as  a  legal  institution.  But  the  Supreme  Court  of  the 
United  States,  in  the  case  above  quoted,  especially  withheld 
any  opinion  as  to  cases  arising  after  emancipation. 

SECTION  III. 

BETWEEN   WHAT   PARTIES   THE   CONSIDERATION    IS   OPEN    TO   INQUIRY. 

§  174.  The  same  rule  which  admits  inquiry  into  the  con- 
sideration of  negotiable  paper  between  the  original  payor  and 
payee  extends  to  admit  such  inquiry  in  any  suit  between 
parties  between  whom  there  is  a  privity.  That  is  to  say,  be- 
tween the  immediate  parties  to  any  contract  evidenced  by  the 
drawing,  accepting,  making  or  indorsing  a  bill  or  note,  it 
may  be  shown  that  there  was  no  consideration  (as,  that  it 
was  for  accommodation) ;  *  or  that  the  consideration  has 
failed,  or  a  set-off  may  be  pleaded ;    but  as  between  other 

'  White  V.  Hart,  13  Wall.  646;  Boyce  v.  Tabb,  18  Wall.  548;  McElvain  v. 
Mudd,  44  Ala,  48;  McNealy  v.  Gregory,  13  Fla.  417. 

="  Graham  v.  Maguire,  39  Ga.  531 ;  Green  v.  Clark,  21  La.  Ann.  567;  Lawson, 
V.  Miller,  44  Ala.  616;  Barrow  v.  Pike,  21  La.  Ann.  14. 

'  McElvain  v.  Mudd,  44  Ala.  48;  Hall  v.  Keese,  31  Tex.  504. 

*  Murphy  v.  Keyes,  39  N.  Y.  Sup.  Ct.  18. 


CONSIDERATION   OrEN   TO  INQUIRY.  147 

parties  remote  to  each  other,  none  of  these  defenses  are  ad- 
missible. It  becomes  important  then  to  determine  who  are 
to  be  regarded  as  the  immediate  parties,  or  parties  between 
whom  there  is  a  privity,  to  a  negotiable  instrument,  and  who 
are  remote.  Among  the  former  may  be  classed  :  (1)  The 
drawer  and  acceptor  of  a  bill,^  or  (2)  The  drawer  and 
payee  ^  of  a  bill  as  a  general  rule ;  (3)  The  maker  and  payee 
of  a  note ;  ^  and  (4)  The  indorser  and  immediate  indorsee  of 
a  bill  or  note.^ 

But  the  want  of  consideration,  or  the  failure  thereof,  can- 
not be  pleaded  in  a  suit  brought :  (1)  By  an  indorsee  against 
the  maker  of  a  note  ;  (2)  By  an  indorsee  against  a  prior  but 
not  his  immediate  indorser ;  ^  nor  (3)  by  the  payee  against 
the  acceptor  of  a  bill,  as  a  general  rule.''  They  are  regarded 
as  remote  parties  to  each  other,  and  between  such  parties 
two  distinct  considerations  must  be  inquired  into  in  order  to 
perfect  a  defense  against  the  holder :  (1)  The  consideration 
which  the  defendant  received  for  his  liability;  and  (2)  That 
which  the  plaintitf  gave  for  his  title.'^     And  if  any  inter- 


'  Thomas  v.  Thomas,  8  Wise.  476.  Where  it  was  held  that  acceptors  could 
show  as  against  drawers  that  they  accepted  for  too  much.  Spurgin  v.  McPhee- 
ters,  42  Ind.  527. 

»  McCulloch  V.  Hoffman,  17  N.  Y.  S.  C.  (10  Hun),  133;  Spurgin  v.  McPhee- 
ters,  42  Ind.  527. 

'  Puget  de  Bras  v.  Forbes,  1  Esp.  117;  Jefifries  v.  Austin,  2  Stra.  674. 

*  Easton  v.  Pratchett,  1  Cromp.  M.  &  R.  798  ;  2  Cromp.  M.  &  R.  542 ;  Holi- 
day V.  Atkinson,  5  B.  &  C.  501 ;  Abljott  v.  Hendricks,  1  Man.  &  G.  791 ;  Klein 
V.  Keyes,  17  Mo.  326;  Barnet  v.  Offerman,  7  Watts,  130  ;  Clement  v.  Reppard, 
15  Penn.  St.  Ill;  Spurgin  v.  ^McPheeters,  42  Ind.  527. 

'  1  Parsons  N.  &  B.  176. 

'  Hoffman  &  Co.  v.  Bank  of  Milwaukee,  12  Wall.  181.  In  this  case  a  consignor 
who  had  been  in  the  habit  of  drawing  bills  of  exchange  on  his  consignee,  with 
bills  of  lading  attached  to  the  drafts  drawn,  drew  bills  on  him  with  forged  bills 
of  lading  attached  to  the  drafts,  and  had  the  drafts,  with  the  forged  bills  of  lad- 
ing so  attached,  discounted  in  the  ordinary  course  of  business  by  a  bank  ignorant 
of  the  fraud,  and  the  consignee,  not  knowing  of  the  forgery,  paid  the  drafts.  It 
was  held  that  there  was  no  recourse  by  the  consignee  against  the  bank.  See  the 
opinion  of  the  court,  p.  190.  In  Marsh  v.  Low,  55  Ind.  271,  breach  of  warranty 
on  sale  of  personal  property  by  the  drawee  to  drawer  was  held  no  defense  to  ac- 
ceptor. 

'  Hoffman  &  Co.  v.  Bank  of  Milwaukee,  12  Wall.  181 ;    Craig  v.  Sibbett,  15 


148  CONSIDERATION   OF   NEGOTIABLE  INSTRUMENTS. 

mediate  bolder  gave  value  for  tlie  instrument,  that  interven- 
ing consideration  will  sustain  the  plaintiffs  title.^ 

§  175.  Who  are  the  immediate  parties  to  a  bill  or  note 
however  does  not  always  appear  on  its  face.  The  name  of 
the  payee  is  often  left  blank,  or  there  is  an  indorsement  in 
blank  u2:>on  the  instrument,  and  in  such  cases  when  the  blank 
is  filled  up  with  the  holder's  name  he  would  appear  to  be 
the  original  payee  or  indorsee.^  In  such  cases  the  holder 
may  show  that  his  ostensible  is  not  his  real  relation  to  the 
paper;  and  the  want  or  failure  of  consideration  cannot  be 
pleaded  against  him  if  he  show  that  it  has  passed  through 
intermediate  hands,  and  that  he  is  not  the  immediate  prom- 
isee of  the  party  attempting  the  defense.'^  If  the  note  were 
made  to  the  payee  for  his  accommodation,  and  indorsed  by 
him  to  a  holder  who  parts  with  nothing  on  the  faith  of  its 
transfer,  and  had  notice  of  its  accommodation  character,  upon 
these  facts  appearing,  the  holder  could  not  recover.* 

§  176.  So,  also,  it  may  be  that  the  drawer  is  the  pri- 
mary debtoi",  and  bound  to  the  acceptor,  although  as 
to  third  parties  the  acceptor  would  be  the  principal. 
As,  for  instance  wdiere  the  acceptance  has  been  upon  letters 
of  credit^  or  for  the  drawer's  accommodation.^  So,  if  A.  for 
a  good  consideration,  moving  from  B.  to  him,  should  procure 


Penn.  240;  U.  S.  v.  Bank  of  Metropolis,  15  Peters,  393;  Swift  v.  Tyson,  16 
Peters,  1 ;  Robinson  v.  Reynolds,  3  Q.  B.  196  (42  E.  C.  L.  R.) ;  Thiedemann  v. 
Goldsmith,  1  De  Gex  F.  &  J.  4;  Hunter  v.  Wilson,  19  L.  J.  Exch.  8;  4  Exch. 
489 ;  Spurgin  v.  McPheeters,  42  lud.  527. 

'  Byles  on  Bills  (Sliarswood's  ed.)  230;  1  Parsons  N.  &  B.  192;  Hunter  v. 
Wilson,  4  Exch.  489;  Boyd  v.  McCann,  10  Md.  118;  Howell  v.  Crane,  12  La. 
Ann.  12G  ;  Watson  v.  Flanagan,  14  Tex.  354  ;  Roscoe  on  Bills,  111  ;  Kydon  Bills, 
277;  Story  on  Bills,  §  188;  Johnson  on  Bills,  80;  see  Chapter  XXIV,  on  rights  of 
bona  fide  holder  or  purchaser. 

"  Brummel  v.  Enders,  18  Grai  873;  Hoifman  v.  Bank  of  Milwaukee,  12  Wall. 
193. 

'  Ibid. ;  Munroe  v.  Bordier,  8  C.  B.  862;  Arbouin  v.  Anderson,  1  Q.  B.  498; 
Glasscock  v.  Rand.  14  Mo.  550;  Horn  v.  Fuller,  6  N.  H.  511. 

'  Powers  V.  French,  8  N.  Y.  S.  C.  (1  Hun),  582. 

'  Tui-ner  v.  Browdcn,  5  Bush  (Ky.)  216.  °  Id. 


CONSIDERATION   OPEN   TO   INQUIRY.  149 

C.  to  make  his  note  iu  favor  of  B.,  it  would  seem  that  it 
would  be  no  sufficient  answer  in  an  action  by  B.  against  C. 
that  the  latter  received  no  consideration  from  A./  or  that  it 
had  failed.^  But  if  it  were  shown  that  there  was  no  con- 
sideration between  A.  and  C.  the  maker,  or  that  such  con- 
sideration had  failed,  it  would  then  be  necessary  for  the  payee 
B.  to  show  a  consideration  movinof  from  him  to  A;' 

And  if  the  consideration  between  the  party  requesting 
the  execution  of  the  note  and  the  maker  were  ille2:aL  the 
note  would  not  be  valid,  notwithstanding  the  consideration 
between  such  party  and  the  payee  were  good,  if  the  payee 
knew  the  consideration  movins^  the  maker  were  illeiral.  To 
hold  otherwise  would  furnish  an  easy  subterfuge  to  escape 
the  consequences  of  illegal  dealings.     Thus,  where  A.  was 

'  Id. ;  Railroad  v.  Chamberlin,  44  N.  H.  497. 

"South  Boston  Iron  Co.  v.  Brown,  63  Me.  139.  Barrows,  J.:  "Where,  at 
the  request  of  the  party  with  whom  he  deals,  one  makes  his  promissory  note, 
which  is  to  be  a  partial  payment,  for  a  piece  of  work  to  be  done  for  him,  payable 
to  a  third  party,  who  is  a  creditor  of  the  party  with  wliom  he  contracts  for  the 
work,  and  it  is  credited  by  the  payer  to  such  party  in  good  faith,  the  maker 
cannot  set  up  the  defense  of  failure  of  consideration  as  between  himself  and  the 
party  with  whom  he  deals  in  defense  of  a  suit  upon  such  note  in  the  name  of  the 
payee." 

'  Aldrich  v.  Stockwell,  9  Allen,  45.  The  defendant  offered  to  show  that  the 
note  was  for  a  water-wheel  sold  by  Thompson  to  him  with  warranty,  which  had 
failed,  the  wheel  being  worthless,  and  had  been  made  payable  to  plaintiff  at 
Thompson's  request.  The  court  below  ruled  that  these  facts  constituted  no  de- 
fense, but  the  Supreme  Court  held  otherwise,  and  Gray,  J.,  said:  "If  such  were 
the  facts,  the  defendant  was  entitled  to  treat  the  sale  as  a  nullity ;  and  the 
proof  of  entire  failure  of  consideration  would  have  rebutted  the  presumption  of 
consideration  arising  from  the  admission  of  the  making  of  the  note,  and  would 
have  established  a  complete  defense  as  between  the  original  parties  to  the  note. 
One  consideration  of  the  note  having  been  proved,  there  could  be  no  presump- 
tion, in  the  absence  of  evidence,  that  there  was  any  other,  and  the  defendant 
was  not,  therefore,  obliged  to  prove  that  there  was  no  other  consideration  for 
the  note.  If  there  was  any  other  consideration,  it  was  for  the  plaintiff  to  show 
it.  As  the  case  stood,  the  plaintiff  might  have  held  the  note  in  trust,  or  as 
agent  for  Thompson.  Tiie  presiding  judge,  by  ruling  that  the  facts  offered  to 
be  proved  by  the  defendant  would  constitute  no  defense,  left  nothing  upon 
which  he  could  go  to  the  jury.  The  verdict  to  which  he  submitted  under  this 
ruling  must,  therefore,  be  set  aside.  Upon  a  new  trial,  it  will  be  open  to  the 
plaintiff  to  show,  if  he  can,  that  the  consideration  which  failed  was  not  the  only 
'  consideration  for  the  note,  but  tliere  was  another  valuable  consideration  for  it 
moving  from  the  plaintiff  to  Thompson." 


J  50  CONSIDERATION   OF   NEGOTIABLE  INSTRUMENTS. 

indebted  to  B.  for  intoxicating  liquors  sold  in  violation  of 
law,  and  B.  was  indebted  to  C.  for  a  legal  consideration,  and 
A.,  at  B.'s  request,  executed  a  note  with  mortgage  to  C,  wlio 
knew  the  illegality  of  the  debt  to  B.,  it  was  held  that  such 
note  and  mortsraofe  was  invalid.^ 

So,  if  A.,  for  a  good  consideration  moving  fromB.  to  him, 
authorizes  him  to  draw  a  bill  on  C.  to  a  certain  amount  on 
his  (A.'s)  account,  and  B.  draws  accordingly,  and  C.  accepts, 
C.  will  be  absolutely  bound  to  B.,  the  drawer,  as  to  any  sub- 
sequent bona  fide  holder  for  value.^  But  the  consideration 
of  the  acceptance  failing,  we  should  think  the  consideration 
for  the  authority  from  A.  to  B.  would  have  to  be  proven.^ 

If  the  original  consideration  were  tainted  with  fraud 
or  illegality,  or  has  failed  in  whole  or  in  part,  and  the  bill  or 
note  has  passed  into  the  hands  of  a  hona  fide  holder  for  value 
without  notice,  yet  if  it  be  returned  for  a  valuable  consider- 
ation to  the  payee  who  is  a  privy  to  the  original  considera- 
tion, he  could  stand  upon  no  better  footing  than  if  the  in- 
strument had  remanied  in  his  hands.* 

§  177.  That  the  bill  or  note  has  been  lost  or  stolen,^  or 
was  executed  under  duress,*^  or  under  fraudulent  misrepre- 
sentations,'^ or  for  fraudulent  consideration,^  or  for  illegal 
consideration,^  or  has  been  fraudulently  obtained  from  an 
intermediate  holder,^*^  or  been  in  any  way  the  subject  of  fraud 
or  felony,^^  or  has  been  misapj^ropriated  and  diverted,^^  is  a 
good  defense  as  between  the  parties  privy  to  it.     And  the 

'  Baker  v.  Collins,  9  Allen,  253. 

'  Pillans  V.  Van  Mierop,  3  Burr.  1663;  1  Parsons  K  &  B.  183. 

'  Aldrich  v.  Stockwell,  9  Allen,  45.  "  Sawyer  v.  Wisewell,  9  Allen,  43; 

Kost  V.  Bender,  25  Mich.  516  (see  post,  §  805). 

'  Mills  V.  Barber,  1  M.  &  W.  425.  "  Clark  v.  Peace,  41  N.  Hamp. 

'  Vathir  v.  Zane,  6  Grat.  240;  nutchin:?on  v.  Bogg,  28  Penn.  St.  294. 

"  Morton  v.  Rogers,  13  Wend.  484.     See  rights  of  hona  fide  holder. 

•Edmonds  v.  Groves,  2  M.  &  W.  642;  Bingham  v.  Stanley,  2  Q.  B.  117; 
Shirley  v.  Howard,  53  111.  455;  Holden  v,  Cosgrove,  12  Gray,  316. 

'"  1  Parsons  N.  «fe  B.  188. 

"  Iloldeii  V,  Cosgrove,  12  Gray,  216;  Western  Bank  v.  Mills,  7  Cush.  546. 

"  Merchants'  Nat.  Bank  v.  Comstock,  55  N.  Y.  24. 


CONSIDERATION  OPEN  TO  INQUIRY.  151 

same  defense  which  the  defendant  might  make  to  an  action 
ty  an  indorsee  of  the  note  given  by  him,  and  the  same  re- 
quirement of  proof  may  be  made  by  liim  in  an  action  on  a 
renewal  of  a  former  note,  both  notes  being  regarded  as  given 
upon  the  same  consideration.^ 

§  178.  Consideration  of  hills  "purchased  for  remission  of 
mnoney. — The  writers  upon  foreign  bills  contemplate  four  par- 
ties to  the  transaction.  1.  The  giver  of  value  or  purchaser 
of  the  bill  which  is  drawn  for  remittance — such  purchaser 
desiring  the  draft  for  money  on  a  foreign  place  being  called 
the  remitter.  2.  The  drawer  of  the  bill.  3.  The  drawee 
abroad.  4.  The  payee.  The  ordinary  course  of  dealing  with 
reference  to  such  foreign  bills  begins  by  the  sale  of  the  bill 
by  the  drawer  to  some  person  other  than  the  payee ;  and  it 
does  not  contemplate,  therefore,  that  the  consideration  for 
the  bill  should  necessarily  move  from  the  payee  to  the 
drawer,  or  that  no  person  but  the  drawer  should  have  a 
right  to  confer  a  title  to  the  bill  upon  the  payee.^     In  such 

'  See^ws^,  §§  179,  205. 

'  Munroe  v.  Bordier,  8  C.  B.  863  (65  E.  C.  L.  R.)  In  this  case  it  was 
held,  that  where  the  purchaser  or  remitter  in  London  of  a  foreign  bill  gets  from 
the  drawer,  according  to  the  usage  in  London,  credit  until  the  next  foreign  post- 
day  for  the  amount,  and  delivers  the  bill  to  the  payee,  who  receives  it  'bona  fide 
and  for  value,  the  drawer  is  liable  for  the  amount  to  the  payee,  although,  in 
consequence  of  the  purchaser's  or  remitter's  failure  before  the  next  foreign  post- 
day,  the  drawer  never  receives  value  for  it.  The  declaration  stated  that  A.  (the 
defendant)  made  a  bill  of  exchange,  and  directed  it  to  B.,  a  merchant  in  France, 
requiring  him  to  pay  the  amount  to  the  order  of  C,  (the  plaintiff) ;  that  A.  deliv- 
ered the  bill  to  D.,  who  delivered  it  to  C;  and  that  B.  refused  payment,  &c. 
A.  pleaded  that  he  made  and  delivered  the  bill  to  D.  for  the  use  of  C,  on  the 
faith  and  terms  of  being  paid  the  price  and  value  thereof  according  to  the  usage 
of  merchants  in  that  behalf,  that  is  to  say,  on  the  next  foreign  post-day ;  that 
neither  C.  nor  any  other  person,  then  or  at  any  time  before  or  since,  paid  him 
the  said  price  or  value  of  the  bill,  or  any  part  thereof;  that  he  never  had  any 
value  or  consideration  for  the  making  or  delivery  of  the  bill ;  and  that  C.  always 
held  and  still  held  the  same  without  any  value  or  consideration  whatever  to  him 
(A.)  for  the  same.  Replication,  that,  after  the  making  of  the  bill  and  before  it 
became  due,  D.,  who  appeared  to  be,  and  whom  C.  believed  to  be,  the  lawful 
holder,  delivered  the  bill  to  him  for  a  good  and  valuable  consideration,  and 
without  notice  of  the  premises  in  the  plea  mentioned.  Held^  that  the  plea  was 
no  answer  to  the  action;  and  that,  even  if  it  were  sufficient  to  call  upon  C.  to 


152  CONSIDERATION   OF   NEGOTIABLE  INSTRUMENTS. 

case,  there  would  be  no  privity  between  tlie  drawer  and 
payee,  and  the  former  could  not  plead  against  the  latter  for 
the  want  or  failure  of  consideration. 

If  the  bill  be  delivered  by  the  drawer  to  the  remitter 
upon  a  promise  to  pay  the  price  next  day,  and  the  remitter, 
without  paying,  transmit  the  l)ill  to  the  payee,  the  drawer 
might  plead  no  consideration  to  the  suit  of  the  latter,  pro- 
vided the  remitter  were  his  agent.^  But  if  the  remitter 
purchase  the  bill  on  credit  for  himself,  and  sell  it  in  good 
faith  to  the  payee,  the  drawer  could  not  resist  the  payee's 
Buit  for  want  of  consideration  if  the  remitter  failed  to  pay 
the  purchase  money.^  Thus,  if  Duncan,  Sherman  &  Co.,  of 
New  York,  being  indebted  to  Gilliatt  &,  Sons,  of  London, 
procure  Fisk  &  Hatch,  New  York,  to  draw  a  bill  on  Loudon 
in  favor  of  Gilliatt  &  Sons,  and  remit  it  to  the  latter  in  pay- 
ment of  the  debt,  the  liability  of  Fisk  &  Hatch  to  Gilliatt 
&  Sons  will  be  absolute,  whether  any  consideratiou  for  tbe 
drawing  of  the  bill  has  been  paid  by  Dancan,  Sherman  & 
Co.  or  not.     But  if  Duncan,  Sherman  &  Co.  were  agents  of 


show  hona  fides,  he  did  so  by  his  replication.  In  Kyd  on  Bills,  it  is  said  the 
parties  to  bills  of  exchange  are  generally  four,  two  at  the  place  where  the  bill  is 
drawn,  and  two  at  the  place  of  payment;  as  where  A.,  a  merchant  at  A.msterdam, 
owes  money  to  B.,a  merchant  in  London,  instead  of 'sending  the  money  in  specie 
to  B.,  he  applies  to  C,  another  merchant  in  Amsterdam,  to  whom  D.,  a  fourth 
person  residing  in  London,  is  indebted  to  an  equal  amount.  A.  i^ays  to  0.  the 
money  in  question,  and  receives  from  him  a  bill  directed  to  D.  to  pay  the  amount 
to  B.,  or  to  any  one  appointed  by  him,  who  sends  it  to  his  correspondent  B., 
with  an  order  that  the  money  be  paid  to  him  by  D.     Kyd  on  Bills,  3. 

'  Puget  de  Bras  v.  Forbes,  1  Esp.  117.  The  plaintift"  resided  in  Holland,  and, 
having  money  in  England,  employed  Agassiz,  Rengement  &  Co.,  as  his  agents, 
to  sell  it  out,  and  to  remit  it  to  him  in  bills  on  Holland.  The  agents  bought  of 
the  defendants  bills  on  Holland  in  favor  of  the  plaintitf ;  and  it  was  proved  to 
be  the  custom  of  London,  for  persons  in  the  habit  of  remitting  foreign  bills,  to 
give  the  bills  on  one  day,  but  not  to  receive  the  money  for  them  until  the  next 
post-day.  The  bills  were  bought  on  February  17,  and  the  next  post-day  was 
Tuesday,  February  21.  On  Monday,  the  20th,  Agassiz,  Rengement  &  Co.  stopped 
payment,  so  that  the  defendants,  in  fact,  never  received  any  value  for  the  bills 
which  they  had  so  drawn  on  Holland  in  favor  of  the  plaintiff;  and  they  having 
ordered  their  correspondent  abroad  not  to  pay  the  bills,  an  action  was  brought 
against  them  by  the  plaintiffs,  as  drawers.  It  was  held  that  they  were  not 
bound. 

"  Munroe  v.  Bordier,  8  C.  B.  873  (65  E.  C.  L.  R.) ;  2  Rob.  Prac.  (new  ed.)  145. 


i 


WHAT  ARE   SUFFICIENT  AND  LEGAL  CONSIDERATIONS.   153 

Gilliatt  <fc  Sons  in  purchasini^  tlie  bill,  tliere  would  tlien  be  a 
privity  between  Gilliatt  &  Sons  and  Fisk  &  Hatch,  and  want 
of  consideration  could  be  pleaded. 


SECTION  IV. 

"WHAT   ARE   SUFFICIENT   AND    LEGAL   CONSIDERATIONS. 

§  179.  When  it  has  been  determined  that  the  relations 
of  the  parties  are  such  as  to  admit  an  inquiry  into  the  con- 
sideration, it  becomes  then  important  to  ascertain  what  is 
such  a  consideration  as  will  support  an  action  upon  a  nego- 
tiable instrument.  A  valuable  consideration  is  necessary  to 
support  any  contract,  and  the  rule  makes  no  exception  as  to 
the  character  of  the  consideration  respecting  negotiable  in- 
struments w^heu  tlie  consideration  is  open  to  inquiry.  There- 
fore, a  consideration  founded  on  mere  love  and  affection,  or 
gratitude,  is  not  sufficient  to  sustain  a  suit  on  a  bill  or  note ; 
as,  for  instance,  when  a  bill  or  note  is  accepted  or  made  by  a 
parent  in  favor  of  a  child,  or  vice  versa,  it  could  not  be  en- 
forced between  the  original  parties,  the  engagement  being 
gratuitous  upon  what  is  called  a  good,  in  contradistinction  to 
a  valuable  consideration.^ 

And  if  a  note  is  executed  and  delivered  with  the  inten- 
tion of  presenting  it  as  a  gift,  and  is  afterward  taken  up  and 
a  new  note  given  in  its  stead,  the  renewed  note  is  without 
valuable  consideration.^  And,  of  course,  a  note  given  by  a 
parent  to  his  child  during  his  lifetime  could  not  be  enforced 
after  his  deatli  against  his  estate.^ 


'  Parker  v.  Carter,  4  Munf.  273 ;  Hill  v.  Buckminster,  5  Pick.  391 ;  overruling 
Bowers  v.  Hurd,  10  Mass.  427  ;  Fink  v.  Cox,  18  Johns.  145  ;  Pearson  v.  Pearson, 
7  Johns.  26;  Pennington  v.  Gittings,  2  Gill  &  J.  208;  Smith  v.  Kittridge,  21 
Vt.  238  ;  Holliday  v.  Atkinson,  5  B.  &  C.  501 ;  Easton  v.  Prachett,  1  Cromp.  M. 
&  R.  798;  2  Cromp.  M.  &  R.  542;  Story  on  Bills  (Bennett's  ed.),  181;  1  Parsons 
N.  &  B.  178;  Chitty  on  Bills  (13th  Am.  ed.),  89. 

'  Copp  V.  Sawyer,  6  N.  H.  38G ;  Hill  v.  Buckminster,  5  Pick.  391.     See  §  203. 

'  Phelps  V.  Phelps,  28  Barb.  121. 


154  CONSIDERATION  OF   NEGOTIABLE  INSTRUMENTS. 

§  180.  It  seems  now  to  be  settled,  that  a  bill,  note  or  check, 
delivered  by  the  maker  or  drawer  to  the  payee  as  a  gift,  and 
without  any  adequate  consideration,  but  intended  by  him  to 
be  paid,  cannot  be  enforced  as  against  the  donor  or  his  per- 
sonal representative.'  But  a  note  given  "  for  value  received 
and  his  kindness  to  me,"  would  be  good,  the  first  part  of  the 
sentence  denoting  an  adequate  consideration.^  But  the  in- 
dorsee could  not  enforce  against  his  indorser  a  note  indorsed 
to  him  as  a  gift.^ 

Where  a  note  without  consideration  was  delivered  to  the 
payee  in  a  sealed  envelope,  on  the  condition  that  tlie  seal 
should  not  be  broken  in  the  maker's  lifetime,  and  the  maker 
dying,  the  envelo2:)e  was  opened,  it  was  held  that  the  payee 
could  recover,  althoucch  he  did  not  know  the  contents  of  the 
envelope  until  it  was  opened.^ 

A  request  written  by  the  maker  below  a  promissory  note 
that  the  payee  will  accept  the  note  from  his  true  friend  the 
writer,  is  not  conclusive  as  matter  of  law  that  the  note  was 
without  consideration,  although  the  note  was  delivered  in  a 
sealed  envelope,  whereon  was  indorsed  a  request  not  to  open 
it  till  after  the  writer's  death.^ 

Evidence  of  a  party's  pecuniary  circumstances  is  not  com- 
petent to  show  want  of  consideration.^  In  general  the  mere 
inadequacy  of  consideration,  except  as  a  circumstance  bearing 
upon  the  question  of  fraud  or  undue  influence,  is  not  a  de- 
fense to  a  promissory  note.  If  no  part  of  the  consideration 
was  wanting  at  the  time,  and  no  part  of  it  subsequently 
failed,  although  inadequate  in  amount,  the  note  is  a  valid 
obligation,  while  a  want  or  failure  of  consideration,  in  whole 
or  in  part,  is  a  good  defense  to  the  whole  note,  or  to  the  ex- 
tent of  such  failure.^ 

§  181.  A  gift  of  a  negotiable  instrument  of  a  third  party 


'  HoUiday  v.  Atkinson,  5  B.  &  C.  501;   8  Dow  &  R.  163.     See  ante,  Chap.  I, 
§25. 

'  Woodbridge  v.  Spooner,  3  B.  »fc  Aid.  235. 

'  Easton  v.  Pratcliett,  1  C.  M.  &  R.  798.  *  Worth  v.  Case,  42  N.  T.  363. 

'  Dean  v.  Carruth,  108  Mass.  242.         °  Hartman  v.  Shaffer,  71  Penn.  St.  313. 
'  Earl  V.  Peck,  64  N.  Y.  598 ;  Worth  v.  Case,  42  N.  Y.  362. 


WHAT   ARE   SUFFICIENT   AND   LEGAL   CONSIDERATIONS.    155 

is  not  siicli  a  negotiation  of  it  in  the  usual  course  of  business 
as  to  give  the  donee  the  full  protection  which  is  extended  a 
bona  fide  holder  for  value.  And  if  the  donee  afterward 
transfer  it  for  less  than  its  value,  or  for  a  wholly  inadequate 
consideration,  his  indorsee  can  recover  from  a  prior  party 
having  a  defense  against  the  donor  only  what  he  himself 
paid  for  it.^  But  as  to  all  prior  parties  having  no  defense 
against  the  donor,  the  donee  can  himself  recover  the  whole 
amount,^  and  a  fortiori^  an  indorsee  who  has  paid  only  a 
partial  consideration  may  recover  the  whole  amount  against 
all  prior  parties  who  have  no  defense  against  his  immediate 
indorser.^ 

§182.  A  mere  moral  obligation  not  sufficient. — A  mere 
moral  obligation,  although  coupled  with  an  express  promise, 
will  not  constitute  a  valuable  consideration,  and  it  is  only 
where  there  is  a  precedent  duty  which  would  create  a  suf- 
ficient legal  or  equitable  right  if  there  had  been  an  express 
promise  at  the  time,  or  where  there  is  a  precedent  consider- 
ation, that  an  express  promise  will  create  or  revive  a  cause  of 
action. 

Thus,  a  promissory  note  made  after  full  age  for  neces- 
saries furnished  to  the  promissor  during  infancy  ;■*  or  a  note 
executed  for  the  23ayment  of  a  debt  discharged  in  bankruptcy, 
or  barred  by  the  statute  of  limitations,^  or  voluntarily  re- 
leased,® or  for  the  reimbursement  of  a  person  who  has  volun- 


'  Byles  on  Bills  (Sharswood's  ed.),  237  ;  Nash  v.  Brown,  Chitty  on  Bills  (13 
Am.  ed),  89;  Brown  v.  Mott,  7  Johns.  361;  Holeraan  v.  Hobson,  8  Humph. 
127;  Bethvme  v.  McCrary,  8  Georgia,  114;  Chicopee  Bank  v.  Chapin,  8  Met.  40; 
Youngs  V.  Lee,  18  Barb.  1S7.     See  ante,  Chap.  I,  §  24. 

"  j\Iilnes  V.  Dawson,  5  Exch,  948. 

'  Moore  v.  Candell,  11  Mo.  614;  Turner  v.  Brown,  3  Smedes  &  M.  425;  Far- 
bell  V.  Sturtevant,  28  Vt.  513 ;  Reid  v.  Furnival,  5  C.  «fc  P.  499. 

*  Hawkes  v.  Saunders,  Cowp.  R.  289  ;  Eastwood  v.  Kenyon,  11  Ad.  &  El.  438 
(39  E.  C.  L.  R.);  Chitty  on  Bills  (13  Am.  ed.)  87. 

*  Eastwood  V.  Kenyon,  11  Ad.  &  El.  438  (39  E.  C.  L.  R,) ;  Trueman  v.  Fenton, 
Cowp.  544. 

'  Stafford  v.  Bacon,  25  Wend.  384;  Valentine  v.  Foster,  1  Mete.  520;  Snevely 
V.  Read,  9  Watts,  396. 


156  CONSIDERATION  OF  NEGOTIABLE  INSTRUMENTS. 

tarily  paid  a  debt  of  the  promissor/  would  be  valid,  as  upon 
any  other  valuable  consideration.  And  in  any  case  where 
the  contract  was  merely  voidable,  but  otherwise  founded  on 
a  valuable  consideration,  a  bill  or  note  given  to  discharge  it 
will  be  valid — but  otherwise  if  the  contract  were  void.^ 

But  it  has  been  held  in  England  by  the  Court  of  Ex- 
chequer, that  a  bill  given  since  the  repeal  of  the  usury  laws 
to  pay  a  debt  with  usurious  interest,  contracted  during  the 
existence  of  the  usury  laws,  was  binding.'^  And  a  note  given 
by  the  purchaser  of  an  estate  to  the  vendor  for  the  purchase 
money,  is  made  on  sufficient  consideration  though  the  con- 
tract be  void  by  the  statute  of  frauds.^  The  indorsement  of 
a  note  of  a  bankrupt  by  the  payee  gives  it  no  effect  as  to  the 
bankrupt;  and  it  has  been  held  that  a  new  promise  by  the 
bankrupt  after  his  discharge  in  bankruptcy,  and  after  the  in- 
dorsement, does  not  revive  his  liability ;  ^  but  it  has  been 
held  in  Massachusetts  that  a  promise  by  the  maker  of  a  note 
after  his  discharge  in  bankruptcy  to  pay  it  is  a  contract  to 
pay  it  according  to  its  tenor,®  and  we  cannot  see  that  there  is 
any  just  reason  to  the  contrary.  If  the  bankrupt  could  bind 
himself  by  a  renewal,  why  insist  on  that  form  of  obligation 
when  the  same  result  is  attainable  by  his  recognition  of  his 
old  one  ?  It  is,  in  effect,  a  renewal  of  its  vitality  without  the 
circumvention  of  requiring  a  new  execution  of  it. 

§  183.  Not  only  will  money  paid,  or  advances  made,  or 
credit  given,  or  work  and  labor  done,  constitute  a  sufficient 
consideration  for  a  bill  or  note — but  receiving  a  bill  or  note 
as  security  for  a  debt  or  forbearance  to  sue  upon  a  present 
claim  or  debt,  or  becoming  a  surety,  or  doing  any  other  act 

'  Hayes  v.  Warren,  2  Str.  933 ;  Stokes  v.  Lewis,  1  Term  R.  20. 
'  Eastwood  V.  Kenyon,  11  Ad.  &  El.  438  (39  E.  0.  L.  R.);  Littlefield  v.  Shee, 
2  Barn.  &  Adol.  811. 

=  Flight  V.  Reed,  22  L.  J.  Exch.  265 ;  1  H.  &  C.  708  (S.  S.). 

'  Jones  V.  Jones,  6  M.  &  W.  84. 

'  Walbridge  v.  Harron,  18  Vt.  448;  White  v.  Wardwell,  31  Me.  558. 

•  Way  v.  Sperry,  6  Cush.  238. 


WHAT  ARE   SUFFICIENT  AND  LEGAL  CONSIDERATIONS.    157 

at  the  request  of  the  drawer,  indorser,  or  acceptor,  will  be 
equally  sufficient  to  enforce  his  engagement.^  A  note  on  con- 
dition that  the  j^ayee  al^stain  for  a  certain  time  from  intoxi- 
cating drink  would  be  valid.'^ 

§  183a.  Bankers  receiving  the  bills  or  notes  of  their  cus- 
tomers for  collection  are  considered  holders  for  sufficient  con- 
sideration, not  only  to  the  extent  of  advances  already  made  by 
them  either  specifically  or  upon  account,  but  also  for  future  re- 
sponsibilities incurred  upon  the  faith  of  thera.^  (^The  balances 
upon  an  account  are  a  shifting  consideration  for  bills  and  notes 
deposited  as  security  with  the  banker.*)  Thus,  where  one 
bank,  which  we  may  call  A.,  sent  an  accommodation  bill 
accepted  by  C,  to  another  bank,  which  we  may  call  B.,  to 
secure  an  indebtedness  upon  account ;  and  when  the  bill 
became  due,  the  latter  bank  had  become  indebted  to  the 
former,  but  the  bill  was  not  withdrawn,  and  subsequently 
the  indebtedness  shifted  back,  and  the  original  debtor,  bank 
A.,  became  bankrupt,  owing  to  the  correspondent  B.  a  sum 
upon  account,  it  w\as  held  that  the  latter  could  recover 
against  C.  upon  the  accommodation  bill  accepted  by  him.^ 
Where  a  bank  discounts  a  bill  before  maturity,  paying  part 
of  the  proceeds  in  money,  and  applies  the  residue  in  payment 
of  a  past  due  note  of  the  payee  which  is  surrendered,  it  is  a 
holder  for  valuable  consideration.''  Where  a  note  was  deliv- 
■ered  by  the  maker  to  the  payee  to  be  discounted  for  the 
maker's  benefit,  and  the  payee  left  it  at  the  bank  with  the 

'  Bayley  on  Bills,  ch.  12;  Chitty  on  Bills  (13  Am.  ed.)  86 ;  Roscoe  on  Bills, 
386;  Foster  v.  Wise,  27  La.  Ann.  538.  A  promise  by  A.  to  indemnify  B.  for  be- 
coming guarantor  for  C.  i-i  not  within  the  statute  of  frauds,  and  need  not  be  in 
writing.     Chapin  v.  Merritt,  4  Wend.  6o7. 

'  Lindcll  V.  Rokes,  GO  Mo.  249. 

'Byles  on  Bills  (Sharswood's  ed.)  230;  Bosanquet  v.  Dudman,  1  Stark,  1 ; 
Percival  y.  Frampton,  2  Cromp.  M.  &  R.  ISO. 

*  Bank  of  Metropolis  v.  New  England  Bank,  1  How.  239  ;  s.  c.  17  Peters,  174  ; 
Swift  V.  Tyson,  16  Peters,  21. 

"  Attwood  V.  Crowdie,  1  Stark.  483  (2  E.  C.  L.  R.) 

'  Mechanics',  &c.  Bank  v.  Crow,  60  N.  Y.  85;  Brown  v.  Leavitt,  31  N.  Y. 
113;  Pratt  v.  Coman,  37  Id.  440. 


158  CONSIDERATIOX  OF  NEGOTIABLE  INSTRUMENTS. 

understanding  that  lie,  the  payee,  might  draw  against  it,  it 
was  held  in  a  suit  against  the  maker,  of  whose  interest  in  the 
note  the  bank  had  no  notice,  that  the  maker  was  liable  for 
the  sums  drawn  against  the  note  by  the  payee,  the  payment 
of  which  sums  was  in  effect  a  discount  of  the  note  to  the 
amount  so  paid  ;  also  that  the  result  would  be  the  same  if  it 
should  be  considered  that  the  note  was  simply  pledged  for 
the  sums  paid  upon  the  draft.^ 

§  184.  As  to  pre-existing  debts. — There  is  no  doubt  that 
a  pre-existing  debt  of  the  drawer,  maker,  or  acceptor  is  a 
valid  consideration  for  his  drawing  or  acce23ting  a  bill  or  exe- 
cuting a  note,  and  indeed  is  as  frequently  the  consideration 
of  negotiable  paper  as  a  debt  contracted  at  the  time,^  and 
it  is  ecpially  as  valid  and  suflScient  consideration  for  the  in- 
dorsement and  transfer  to  the  creditor  of  the  bill  or  note  of 
a  third  party  which  is  in  his  hands.  And  the  best  con- 
sidered, as  well  as  the  most  numerous  authorities,  regard  the 
creditor  who  receives  the  bill  or  note  of  a  third  party  from 
his  debtor  either  in  payment  of,^  or  as  collateral  security  for, 
his  debt,  as  entitled  to  the  full  protection  of  a  hona  fide 
holder  for  value,  free  from  all  equities  which  might  have 
been  pleaded  between  the  original  parties.^ 


"  Piatt  V.  Beebe,  57  N.  Y.  339. 

^  Swift  V.  Tyson,  16  Peters,  1 ;  Townsley  v.  Sumrall,  2  Peters,  170. 

'  See  Chapter  XXIV,  on  lonafide  holder;  Byles  [*121],  229;  Swift  v.  Tyson, 
16  Peters,  1 ;  Bank  of  St.  Albans  v.  Gilliland,  23  Wend.  31 ;  Bank  of  Sandusky 
V.  Scoville,  24  Wend.  115;  Youngs  y.  Lee,  18  Barb.  187;  Bertrand  v.  Barkman, 
8  English,  150;  Henry  v.  Ritenour,  31  Ind.  136;  Robinson  v.  Lair,  31  Iowa, 
9;  Smith  v.  Isaacs,  23  La.  Ann.  454  ;  Schepp  v.  Carpenter,  51  N.  Y.  602 
(1873).  In  this  case,  Carpenter  made  his  note  to  and  for  accommodation  of 
Church,  without  restriction,  and  Church,  being  indebted  to  plaintiff  in  a  larger 
sura,  transferred  the  note  to  him  on  account  thereof,  and  was  credited  with  the 
amount,  Johnson,  C,  said:  "The  existence  of  the  debt  from  Church  to  the 
plaintiff  was  a  sufficient  consideration  between  them  to  sustain  a  promise  to  pay 
it,  or  a  transfer  of  property  to  secure  its  payment,  and  according  to  the  doctrine 
which  has  prevailed  in  this  State  ior  many  years,  to  sustain  the  transfer  of  a  note 
made  for  the  debtor's  accommodation  and  general  benefit." 

*  See  Chapter  XXV,  Section  1,  §  832. 


WHAT   ARE   SUFFICIENT  AND  LEGAL   CONSIDERATIONS.    159 

§  185.  As  to  debts  of  third  persons. — There  is  no  doubt 
that  a  debt  due  from  a  tliird  person,  as  from  A.  to  B.,  is  a 
good  consideration  for  a  note  as  from  D.  to  B.,  provided 
there  were  an  express  agreement  for  delay/  or  an  implied 
agreement  whicli  would  arise  if  the  debt  were  then  due,  and 
the  note  were  made  payable  at  a  future  day.^  So  the  sur- 
render up  of  an  obligation  of  a  third  person  is  a  sufficient 
consideration.^  If  the  original  debt  from  the  third  person 
were  payable  simultaneously  with  the  note,  there  might  be 
a  want  of  consideration  unless  credit  for  the  original  debt 
had  been  given  upon  a  promise  of  the  note,  which  would  be 
sufficient.*  A  note  given  for  the  payee's  assumption  of  the 
debt  of  the  maker  evidenced  by  another  note  is  upon  suffi- 
cient consideration.^  So  a  note  given  by  a  father  for  the 
benefit  of  his  son  to  be  applied  by  the  latter  in  part  pay- 
ment of  a  defalcation."  So  any  other  thing  done  at  his  re- 
quest by  the  promisee  for  a  third  person  will,  in  general,  be 
a  sufficient  consideration — such  as  forbearing  to  sue  on  a 
debt  due  by  such  person,  or  guaranteeing  his  debt,  or  becom- 
ing liable  for  his  acts  or  defaults.'^ 

§  186.  While  as  a  general  rule,  the  discharge  of  a  debt  of  a 
third  person  will  be  a  valid  consideration  for  a  bill  or  note,^ 
in  Massachusetts  it  has  been  held  that  a  promissory  note 
given  by  a  widow  to  a  creditor  of  her  deceased  husband  is 
void  for  want  of  consideration  if  the  husband  has  left  no 
estate  or  assets  ;  and  although  the  creditor  gives  the  widow 
at  the  same  time  a  receipted  bill  acknowledging  payment 
from  her  husband's  estate  by  the    note,  the   circumstances 

>  Mansfield  v.  Corbin,  3  Cush.  151 ;  Guy  v.  Bibend,  41  Cal.  334. 
"  Parsons  N.  &  B.  195 ;  Balfour  v.  Sea,' Fire,  &  Life  Ins.  Co.  3  C.  B.  N.  S.  300 
(91  E.  C.  L.  R.)  ;  Tliompsou  v. Gray,  03  Maine,  238;  York  v. Pearson,  63  Maine,  587. 
'  Henry  v.  Ritenour,  31  Ind.  136. 

*  Crofts  V.  Beale,  11  C.  B.  173  (73  E.  C.  L.  R.) :  1  Parsons  N.  &.  B.  195. 

^  Turner  v.  Rogers,  131  Mass.  13.     But  see  StuJeumirc  v.  Ware,  48  Ala.  589. 

•  Papple  V.  Day,  123  Mass.  531. 
'  Story  on  Bills,  §  183. 

«  Brainard  v.  Capella,  31  Mo.  438;  Arnold  v.  Sprague,  34  Vt.  402;  Thatcher 
V.  Dinsmore,  5  Mass.  299;  Byles  on  Bills  (Sharswood's  ed.)  [*123],  233;  Pople- 
well  V.  Wilson,  1  Stra.  264;  Railroad  v.  Chamberlain,  44  N.  H.  497 ;  ante,  §  184. 


IGO  CONSIDERATION   OF   NEGOTIABLE  INSTRUMENTS. 

being  such  that  no  good  could  be  derived  by  the  widow,  or 
injury  done  the  creditor  by  the  transaction.^  In  Alabama, 
where  tlie  husband  had  assets,  tlie  widow,  who  gave  a  note 
for  his  debt,  was  held  not  bound,  the  payee  having  repre- 
sented to  her  that  she  was  liable  to  pay  the  debt,  the  court 
resting  its  decision  partly  on  the  view  that  there  was  no 
consideration,  and  partly  on  the  view  that  the  representation 
was  fraudulent.^  And  in  Maryland  it  was  held  a  note  given  by 
a  vestryman  of  a  church  to  pay  a  debt  of  the  church  was  with- 
out consideration,  and  void  ;  and  the  fact  that  it  was  payable 
at  a  future  day  to  raise  no  presumjijtion  of  forbearance  to  sue, 
it  appearing  that  it  was  made  for  the  purpose  of  closing  an 
account,^  A  promissory  note  given  by  the  heir,  in  renewal 
of  one  made  by  his  ancestor,  which  was  barred  by  limitation, 
at  the  time  of  the  latter's  death,  has  been  held  void  for  want 
of  consideration.^ 

§  187.  Cross  notes  and  acceptances  and  other  instances. — 
If  one  gives  his  acceptance  to  another,  that  w^ill  be  a  good 
consideration  for  another  bill  or  acceptance,  although  such 
first  acceptance  be  unpaid.^  "  By  the  exchange  of  the  obliga- 
tion of  one  for  that  of  another,  a  good  consideration  is  raised 
for  the  undertaking  of  each."  "^     A  note  given  by  a  borrower 

'  Williams  v.  Nicliols,  10  Gray,  83,  Dewey,  J.,  saying:  "The  widow  would 
derive  no  benefit  from  the  discharge  of  a  debt  due  by  her  deceased  husband. 
Nor  do  we  perceive  how  any  possible  damage  to  such  creditor  could  arise  from 
having  given  a  receipt  to  the  widow  purporting  to  discharge  such  demand." 
Contra,  York  v.  Pearson,  63  Maine,  587.  It  is  said  in  England  that  it  is  a  suffi- 
cient consideration  for  a  note  that  it  be  given  by  a  widow  out  of  respect  to  the 
memory  of  her  husband.  Chitty  on  Bills  (13  Am.  ed.)  82.  No  such  decision 
would,  we  think,  be  now  rendered.  ' 

"  Maull  V.  Vaughn,  45  Ala.  141.  See  also  Watson  v.  Reynolds,  54  Ala.  193, 
where  it  is  held  that  a  widow's  note  for  debt  of  deceased  husband,  not  taken  in 
payment,  and  where  there  was  no  suspension  of  the  remedy,  or  receipted  account, 
is  without  consideration.  In  California,  where  widow  was  executor  and  the 
estate  community  property,  so  that  she  had  an  interest  in  it,  her  note  to  a  creditor 
of  her  husband  was  enforced,  though  the  debt  was  outlawed  and  she  thought 
otherwise.     Mull  v.  Van  Trees,  50  Cal.  547. 

'  Rogers  v.  Waters,  2  Gill  &  J.  84.  ■"  Didlake  v.  Robb,  1  Woods,  680. 

■*  Rose  V.  Sims,  1  B.  &  Ad.  521  (20  E.  C.  L.  R.) 

*  Newman  v.  Frost,  52  N.  Y.  424,  Folgc,  J. 


WHAT  ABE  SUFFICIENT  AND  LEGAL  CONSIDERATIONS.    IGL 

for  the  amount  of  cash  loaned,  and  including  also  a  note 
given  for  the  balance  of  the  loan,  is  upon  good  consideration 
to  the  whole  amount.^  And  cross  acceptances,  or  cross  notes, 
bills  or  checks  for  the  mutual  accommodation  of  the  parties, 
are  respectively  considerations  for  each  other.^  And  a  con- 
tract between  two  accommodation  indorsers  that  they  will 
share  any  loss  ecpially  between  them,  is  upon  sufficient  con- 
sideration;^ 

Where  one  has  given  his  own  note  in  purchase  of  the 
note  of  another  from  the  payee,  notice  to  him  by  the  maker 
not  to  pay  his  note  given  in  purchase,  and  that  the  bought 
note  originated  in  fraud,  does  not  deprive  him  of  the  charac- 
ter of  a  bona  fide  holder  for  value,  and  he  need  pay  no  atten- 
tion to  such  notice/  Where  a  note  is  given  for  a  draft  as- 
signed by  the  payee  to  the  maker,  and  an  agreement  is  made 
at  the  same  time  that  in  the  event  the  maker  of  the  note 
could  not  collect  or  realize  on  the  draft,  he  was  to  be  released 
from  payment  of  the  note,  no  recovery  can  be  had  on  the 
note,  if  the  maker  has  been  unable  to  realize  on  the  draft.^ 

Delay  in  fulfilling  a  promise  to  marry  and  services  ren- 
dered during:  the  eno-as-ement,  constitute  a  srood  considera- 
tion  for  a  note ;  ^  and  in  Scotland  it  has  been  held  that  a  bill 
granted  to  a  woman  as  a  security  for  a  promised  marriage  is 
valid,  and  may  be  enforced  against  the  man  if  he  break  his 
promise."^     The  meritorious  consideration  arising  out  of  the 

'  Backus  V.  Spaulding,  116  Mass.  418. 

"^  Newman  v.  Frost,  50  N.  Y.  427;  Wooster  v.  Jenkins,  3  Denio,  187;  Mickles 
V.  Colvin,  4  Barb.  304;  Adams  v.  Soule,  33  Vt.  539;  Stickncy  v.  Mohler,  19  i\Id. 
490;  Whittier  V.  Eager,  1  Allen,  449;  Shannon  v.  Langhorne,  9  La.  Ann.  520; 
Eaton  V.  Carey,  10  Pick.  211;  Bacon  v.  IloUoway,  2  E.  D.  Smith,  159;  Dowe  v. 
Schutt,  2  Denio,  621;  Rankin  v.  Knight,  1  Cincinnati,  515;  Crescent  Bank  v. 
Hernandez,  25  La.  Ann.  43. 

''  Phillips  V.  Preston,  2  How.  278.  "  Adams  v.  Soule,  33  Vt.  53S. 

"  Hall  V.  Henderson,  84  111.  611. 

•  Prescott  V.  Ward,  10  Allen,  203. 

'  Thomson  on  Bills  (Wilson's  ed.),  72;  citing  Calder  v.  Provan  (Scotch  case). 
In  Lew  V.  Peers,  4  Burr,  2225,  judgment  was  arrested  on  a  bond  which  defend- 
ant had  agreed  to  pay  plaintiff  if  he  married  any  one  else  but  her.  This  case  is 
clearly  distinguishable  from  the  principle  of  the  text  of  Thomson,  though  he 
seems  to  thiuk  it  in  conliict. 
Vol.  L— 11 


1G2  CONSIDERATION  OF   NEGOTIABLE  INSTRUMENTS. 

duty  of  a  husbaud  to  support  bis  wife,  is  uot  sufficient  in 
equity  to  sustain  a  note,  given  by  the  husband  to  the  wife, 
as  against  the  husband's  collateral  heirs.^ 

§  188.  Professional  services,  whether  of  a  physician,  at- 
torney, or  other  person,  in  the  learned  or  skilled  professions, 
constitute,  in  general,  a  sufficient  consideration  for  a  bill  or 
note ;  and  consideration  that  the  plaintiff,  an  attorney,  should 
prevent  the  approval  of  the  commanding  general  to  the  sen- 
tence of  a  military  court  condemning  a  guerilla  to  death,  is 
valid.^  Services  rendered  in  procuring  a  pardon  for  an 
offense  have  also  been  respected;^  though  it  has  been  said 
by  some  of  the  authorities  that  this  would  contravene  public 
policy  unless  done  by  leave  of  the  court.*  This  is,  w^e  think, 
too  severe.  Services  exerted  in  procuring  the  passage  of  an 
act  through  a  legislative  body  are  not  recognized  as  the 
legitimate  exercise  of  the  legal  profession  ;  and  compensation 
for  them  cannot  be  recovered.^  If  contingent  upon  the 
passage  of  a  bill,  it  would  be  obvious  that  they  were  illegiti- 
mate.'' 

A  note  to  a  railroad  corporation,  to  be  paid  when  the 
road  is  constructed,  is  upon  sufficient  consideration.'^ 

§  189.  Accommodation  hills  and  notes. — The  mercan- 
tile credit  of  parties  is  frequently  loaned  to  others  by  the 
signature  of  their  names  as  drawer,  acceptor,  maker  or  in- 
dorser  of  a  bill  or  note,  used  to  raise  money  upon,  or  other- 
wise for  their  benefit.  Such  instruments  are  termed  accom- 
modation paper.  An  accommodation  bill  or  note,  then,  is 
one  to  which  the  accommodating  party  has  put  his  name, 

'  Whitaker  v.  Whitaker,  52  N.  Y.  368. 

'  Tbompson  v.  Wharton,  7  Bush  (Ky.)  5G3. 

'  Meadow  v.  Bird,  23  Ga.  246, 

*  Chitty  on  Bills  (13th  Am.  ed.)  100;  Thomson  on  Bil's  (Wilson's  ed.)  70; 
citing  Stewart  v.  Earl  of  Galloway  (Scotch  case) ;  Norman  v.  Cole,  3  Esp.  253. 

"  Marshall  v.  Bait.  &  0.  R.  R.  Co.  16  How.  334;  Clippinger  v.  Hepbaugh,  5 
Watts  &  Scrg.  315.     See  Sharswood's  Legal  Ethics  (2d  ed.)  99. 

"  Mills  V.  Mills,  40  N.  Y.  543. 

'  Rose  V.  San  Antonio  R.  R.  Co.  31  Tex.  49. 


WHAT  AKE   SUFFIOEENT  AND  LEGAL   CONSIDERATIONS.    103 

without  consideration,  for  the  purpose  of  accommodating 
some  other  party  who  is  to  use  it  and  is  expected  to  pay  it.^ 
Between  the  accommodating  and  accommodated  parties  the 
consideration  may  be  shown  to  be  wanting,  but  when  the 
instrument  has  passed  into  the  hands  of  a  third  party  for 
value,  and  in  the  usual  course  of  business,  it  cannot  be  ;  ^  for 
as  between  remote  parties,  as  we  hav^e  already  seen,  the  con- 
sideration which  the  plaintiff  gave  for  his  title,  as  well  as  that 
for  which  the  defendant  contracted  the  liability,  must  be  im- 
peached in  order  to  defeat  a  recovery.'^  And  the  circum- 
stance that  the  accommodation  maker  was  assured  that  the 
payee  would  protest  it  being  known  to  the  holder,  does  not 
weaken  in  any  degree  his  title  to  recover.* 

§  190.  An  accommodation  indorser,  who  has  paid  the 
amount  of  the  note  to  a  subsequent  indorser,  may  recover  of 
the  maker  without  offset,  although  he  knew  when  he  in- 
dorsed it  that  the  maker  was  a  creditor  of  the  payee  for  an 
amount  greater  than  the  amount  of  the  note.^  And  the  payee 
may  recover  against  the  acceptor,  although  he  knew  when  he 
took  the  bill  that  the  acceptance  was  for  accommodation  of 
another  party.®  And  it  has  been  held  that  the  accommoda- 
tion payee  and  indorser  may  recover  the  full  amount  of  the 
note,  although  he  took  it  up  by  paying  only  a  part.'^  But 
this  is,  we  think,  erroneous. 

_  If  one  member  of  a  firm  obtains  an  accommodation  note 
payable  to  himself,  and  afterwards  indorses  it  to  a  third  per- 
son, who  re-indorses  it  to  the  same  firm,  before  maturity, 
and  for  good  consideration,  such  firm  cannot  recover  against 

'  Byles  on  Bills  (Sharswood's  ed.)  [*12r)],  237;  Fant  v.  Miller,  17  Grat.  47; 
Robertson  v.  Williams,  5  Munf.  531. 

^  Violett  V.  Patton,  5  Cranch  (S.  C),  143;  Yeaton  v.  Bank  of  Alexandria,  Id. 
49;  French  v.  Bank  of  Columbia,  4  Cranch  (S.  C),  59;  Fant  v.  Miller,  17  Grat. 
47;  Robertson  v.  Williams,  5  Mmif.  331. 

'  Ante,  Chapter  VII,  sec.  3. 

*  Thatcher  v.  West  River  National  Bank,  19  ^[ich.  196. 

'  Barker  v.  Barker,  10  Gray,  330.  "  Spurgeon  v.  McPheeters,  42  Tnd.  527. 

'  See  Chapter  XLI  on  Principal  and  Surety,  §  1353,  note. 


164  CONSIDERATION  OF   NEGOTIABLE  INSTRUMENTS, 

the  maker,  both  parties  being  affected  with  the  notice  of  a 
want  of  consideration.^ 

§  101.  An  accommodation  bill  or  note  is  not  considered 
a  real  security,  but  a  mere  blank,  until  it  has  been  negoti- 
ated, and  it  then  becomes  binding  upon  all  the  parties,  in 
like  manner  and  to  the  like  effect  as  if  they  were  successive 
indorsers;^  but  until  it  has  been  negotiated  any  party  may 
withdraw  his  indorsement,  acceptance  or  other  liability  upon 
it,  and  rescind  his  engagement ;  and  that  I'ight  is  not  im- 
paired by  the  circumstance  that  he  may  be  indemnified  by 
an  assignment  or  other  security.*^ 

§  192.  A  person  who  indorses  a  note  as  an  accommoda- 
tion indorser  for  the  payee,  such  note  having  been  made  by 
an  accommodation  maker,  is  subject  to  all  the  obligations  and 
acquires  all  the  rights  of  a  party  to  negotiable  paper. 

If  obliged  to  take  up  such  note,  the  accommodation  maker 
cannot  set  up  fraud  on  the  part  of  the  payee  in  the  inception 
of  the  note,  as  a  defense  to  his  suit."* 

§  193.  Fraudulent  cormderatioiu. — "  Fraud  cuts  down 
everything,"  is  the  sharp  phrase  of  the  Lord  Chief  Baron 
Pollock  in  an  English  case.^  And  between  immediate  par- 
ties it  at  once  destroys  the  validity  of  a  bill  or  note  into  the 
consideration  of  which  it  enters.  We  have  seen  that  if  a 
horse  or  other  personal  chattel  is  warranted,  and  a  bill,  note 
or  check  given  for  the  price,  the  breach  of  the  warranty  is 
no  defense  to  the  action  on  the  bill,  note  or  check  (unless, 
authorized  by  statute)  ;  but  if  it  appear  that  the  seller  knew 
that  there  was  unsoundness  in  the  horse  or  other  chattel,  the 
element  of  fraud  enters  into  the  transaction.  There  was  in 
fact,  no  contract,  and  proof  of  the  fraud  at  once  defeats  the 

'  Qiiinn  v.  Tuller,  7  Cusb.  244. 

"  Whitworth  v.  Adams,  5  Rand.  342;    Taylor  v.  Bruce,  Gilmer,  42  ;   May  v. 
Boisseau,  8  Leigh,  164;  Downes  v.  Richardson,  5  Barn.  &  Aid.  674. 

'  May  V,  Boissean,  8  Lcigb,  164.  "  Laubacb  v.  Pursell,  35  N.  J.  L.  R.  134. 

*  Rogers  v.  Hadley,  32  L.  J.  Excb.  N.  S.  248  (1863). 


WHAT  ARE   SUFFICIENT  AND  LEGAL  CONSIDERATIONS.    165 

action  on  the  bill,  note  or  clieck.^  While  inadequacy  of  con- 
sideration in  the  origin,  or  transfer  of  a  negotiable  instru- 
ment, is  not  in  itself,  a  defense  to  a  suit  upon  it,  yet  it  is 
oftentimes  a  circumstance  strongly  tending-  to  show  a  fraud 
in  the  contract  in  which  it  was  given  or  transferred.  Evi- 
dence, therefore,  in  a  suit  on  a  note  for  certain  pictures,  is 
not  admissible  for  the  purpose  of  reducing  the  damages  by 
proving  that  they  were  of  inferior  value ;  but  it  would  be 
good  to  show  that  they  were  fraudulently  j)almed  off  on  the 
defendant.^  A  note  is  not  vitiated  by  re2")resentations  of 
■what  others  say  as  to  the  value  of  property  sold,  unless  the 
payee  making  them  knew  they  were  false.^ 

If  the  defendant  repudiate  the  contract  on  the  ground  of 
fraud,  he  must  return  the  consideration — otherwise  the 
plaintiff  may  recover  on  the  bill  or  note.* 

§  194.  Fraud  on  third  persons  vitiates  consideration. — 
Fraud  upon  third  persons  vitiates  a  bill  or  note  given  in 
furtherance  of  it  as  between  the  parties ;  and  the  most  frequent 
instance  in  which  fraud  of  this  kind  appears  is  in  undue  ad- 
vantage claimed  by  one  or  more  creditors  when  the  debtor 
enters  into  a  composition  in  which  all  appear  to  stand  on  the 
same  footing.  If  the  creditor  refuses  to  enter  into  the  agree- 
ment of  composition  until  he  receives  a  note  for  the  residue 
of  his  debt,^  or  receives  a  note  as  inducement  to  his  consent,' 
such  note  will  be  fraudulent  and  void ;  and  the  transaction 
is  none  the  less  fraudulent,  and  the  note  none  the  less  void, 
because  it  is  given  after  the  composition  was  entered  into, 

'  Lewis  V.  Cosgrove,  2  Taunt.  2. 

'  Solomon  v.  Turner,  1  Stark,  51  (3  E.  C.  L.  R.) ;  see,  also,  Rudderow  v. 
Huntington,  3  Sandf.  252,  where  goods  were  sold  by  an  auctioneer  with  warranty 
or  misrepresentation,  and  turned  out  to  be  spurious.  Held,  no  defense,  it  not 
appearing  that  the  auctioneer  knew  the  fact. 

'  Davidson  v.  Jordan,  47  Cal.  351. 

*  Archer  V.  Bamford,  2  Stark.  175;  Macaltimcr  v.  Croasdale,  3  Houst.  365; 
Sternbury  v.  Bowman,  103  Mass.  326;  Heaton  v.  Knowlton,  53  Ind.  357. 

'  Cockshott  V.  Bennett,  2  T.  R.  763;  Knight  v.  Hunt,  5  Bing.  432  (15  E.  C. 
L.  R.) ;  Rice  v.  Maxwell,  13  S.  &  M.  289. 

'  Winn  V.  Thomas,  55  N.  U.  294. 


ICG  C0:^S1DEEATI0N   OF  NEGOTIABLE   INSTRUMENTS. 

having  been  agreed  on  before,^  and  the  fraud  extends  to  the 
composition  notes  given  to  such  creditor,  and  vitiates  them 
also.^  If  the  note  for  the  residue  be  given  by  a  third  person 
who  is  indemnified  by  the  debtor,  it  will  be  void.^  In  these 
cases  the  creditor  and  insolvent  are  ^^ particeps  criminis^''  but 
not  "  in  pari  delictoP  It  can  never  be  pa?^  delictum  when 
one  holds  the  rod  and  the  other  bows  to  it.*  So  if  a  third 
person  pay  money  for  the  debtor,  iu  fraud  of  the  composition, 
the  debtor's  note  to  such  person  for  the  amount  is  void.^ 

Where  a  statute  provides  that  fraudulent  convey  an  ces^ 
bonds,  notes,  &c.,  shall  be  void  "  as  against  the  parties  whose 
right  or  debt  is  attempted  to  be  avoided,"  it  has  been  held  a 
note  given  with  such  fraudulent  intent  will  be  valid  as  be- 
tween maker  and  payee.®  But  it  has  been  held  that  the 
maker  of  such  notes,  the  contract  being  unexecuted,  may 
make  the  defense  that  they  were  given  in  fraud  of  others, 
though  the  rule  would  not  extend  so  as  to  admit  of  his  plead- 
ing against  executed  contracts.'^ 


SECTION  V. 

WHAT   AKE   ILLEGAL   CONSIDEEATIONS. 

§  195.  (1)  As  to  illegal  considerations  hy  the  commo7i  law. — 
A  bill  or  note  which  is  founded  upon  an  illegal  consideration 
is  void  ;  for  the  law  will  not  aid  one  who  seeks  or  has  con- 
sented to  its  violation.  Sometimes  the  consideration  is  illegal, 
because  opposed  to  the  general  principles  of  the  common 
law ;  and  sometimes  because  it  is  specially  interdicted  by 
statute.    The  considerations  which  are  illegal  at  common  law 

'  Howe  V.  Litchfield,  3  Allen,  444 ;  Took  v.  Tuck,  4  Bing.  224 ;  Fay  v.  Fay, 
121  Mass.  561. 

'  Dougherty  v.  Savage,  28  Conn.  248. 

'  Bryant  v.  Christie,  1  Stark.  329.  *  Smith  v.  Cuff,  G  M.  &  S.  160. 

"  Bryant  v.  Christie,  1  Stark.  329.  '  Carpenter  v.  McClure,  39  Vt.  13. 

'  Hamilton  v.  Scull's  Admr.  25  Mo.  166;  Brown  v.  Finley,  18  Mo.  375.  See 
McCausland  v.  Rulston,  12  Nev.  195. 


WHAT  ARE   ILLEGAL   CONSIDERATIONS.  1G7 

are  :  1 .  Sucli  as  violate  the  rules  of  religion,  moral  or  puLlic 
decency  ;  and,  2.  Such  as  contravene  public  policy. 

A  bond  given  in  consideration  of  future  illicit  cohabita- 
tion would  be  void ;  but  not  so  if  given  for  past  cohabita- 
tion ;  ^  but  a  bill  or  note  as  between  immediate  parties  would 
not  be  enforced  if  given  for  i)ast  cohabitation,  because  not 
founded  upon  a  consideration.'-^ 

As  a  general  rule,  wagers  are  not  illegal  by  the  common 
law.^  But  wagers  upon  the  sex  of  a  person  ;  ^  that  an  un- 
married female  would  bear  a  child ;  ^  upon  the  result  of  a 
prize  fight ;°  or  the  result  of  a  criminal  trial  ;'^  or  upon  the 
question  of  war  or  peace  ^ — would  be  illegal,  as  opposing 
public  policy  and  sound  morals.  And,  as  a  general  rule,  in 
the  United  States  all  manner  of  •svao-ers  are  declared  illegal 
by  statutory  enactments.  In  Massachusetts  one  who  pays  a 
gambling  debt  for  another  cannot  recover  the  amount.^ 

§  196.  As  to  considerations  lohich  oppose  jpuhlic  pol- 
icy.— Considerations  which  oppose  public  policy  are  never 
respected  by  the  law;  and  contracts  founded  upon  them 
are  universally  condemned.  Contracts  in  general  restraint 
of  trade ;  ^^  or  restraining  or  preventing  marriage  even  for  a 
time;"  or  to  assist  another  in  furthering  a  marriage  where 
the  promisor  has  no  right  to  interfere ;  ^'^  to  procure  or  sell  a 
public  office  ^^  or  votes ;  to  suppress  evidence  or  interfere 
with  the  course  of  justice  by  dropping  a  criminal  prosecu- 
tion ;  ^^  and  contracts  to  indemnify  a  person  in  doing  an  act 

'  Beaumont  v.  Reeve,  8  Q.  B.  483;  Friend  v.  Ilarrison,  2  C.  &  P.  58i. 
""  1  Parsons  N.  &  B.  214;  Byles  (Sharswood's  ed.)  [*132],  246. 
'  Good  V.  Elliott,  3  T.  R.  693.  '  Da  Costa  v.  Jones,  Co^t).  729. 

'  Ditchbum  v.  Goldsmith,  4  Camp.  152. 

•  Hunt  V.  Bell,  1  Bing.  1 ;  7  Moore,  212. 

'  Allen  V.  Hearn,  1  T.  R.  57;  Rust  v.  Gott,  9  Cow.  169. 

*  Id.  »  Scolluns  V.  Flyn,  120  Mass.  271. 
'"  Chitty  on  Bills  (13  Am.  ed.)  [*83],  99. 

"  Hartley  v.  Rice,  10  East  22;  Lowe  v.  Peers,  4  Burr.  2225. 
'*  Roberts  v.  Roberts,  3  P.  Wms.  66 ;  1  Parsons  on  Contracts,  555,  556. 
"Richardson  v.  Mellish,  2  Bing.  229  (9  E.  C.  L.  R.);  Martin  v.  Wade,   37 
Cal.  168. 

'*  Edgecombe  v.  Rodd,  5  East,  294;  Fallows  v.  Taylor,  7  T.  R.  475;  Porter 


168  CONSIDERATION    OF   NEGOTIABLE   INSTRUMENTS. 

of  known  illegality,  as  inducement  thereto;^  or  to  do  any- 
thing reprehensible  for  its  injurious  effects  upon  the  feelings 
of  third  persons ;  or  in  fraud  of  the  rights  and  interests  of 
third  persons  ~ — are  instances  of  the  kind  of  contracts  which 
the  law  will  not  recognize. 

Of  the  like  kind  are  contracts  founded  on  consideration 
to  resign  a  public  office;^  to  induce  the  withdrawal  of  a  bid 
for  a  government  contract ;  *  to  withdraw  the  papers  in  de- 
fense in  a  divorce  suit ;  ^  to  get  possession  of  goods  wrong- 
fully held ;  ^  for  the  sale  of  libelous  or  immoral  works ;  ^  or 
for  the  supply  of  drinks  to  influence  v^otes  for  a  public 
office/  or  to  influence  a  public  officer  in  the  discharge  of  his 
duty;^  or  to  procure  the  appointment  of  a  party  as  adminis- 
trator of  an  estate.^'^ 

Abandonment  of  the  prosecution  of  an  offiiuse  against 
the  public,  of  which  the  law  requires  prosecution,  is,  as  we 
have  seen,  not  a  good  consideration.  It  is  a  high  require- 
ment of  public  policy  that  felonies  should  be  investigated 
and  punished,  and  compounding  a  felony,  as  such  a  compro- 
mise is  called,  is  frowned  upon  by  the  courts,  and  is  never 
permitted  to  be  enforced.^^  It  is  not  necessary  to  stamp  the 
transaction  with  illegality  that  a  felony  should  have  been 
committed.     It  is  sufficient  if  it  be  charged,  for  the  investi- 


V.  Havers,  37  Barb.  353:  Gardner  v.  Maxcy,  9  B.  Mon.  90;  Commonwealth  v. 
Johnson,  3  Gush.  454;  Soule  v.  Bonney,  37  Me.  128;  Clark  y.  Ricker,  14  N.  H. 
44 ;  Ilinesburgh  v.  Sumner,  9  Vt.  23. 

'  Chitty  on  Bills  (13  Am.  ed.)  [*85],  102;  Edwards  on  Bills,  340;  Goodale  v. 
Iloldridge,  2  Johns.  193. 

"  Id.  '  Meachum  v.  Dow,  32  Vt.  721. 

*  Kennedy  v.  Murdick,  5  liar.  458. 

'  Stontenburg  v.  Lybrand,  13  Ohio,  N.  S.  228. 

*  White  V.  Ileylman,  10  Casey,  142. 

'  Fores  v.  Johncs,  4  Esp.  97;  Turk  v.  Richmond,  13  Barb.  533. 

"  Jackson  v.  Walker,  5  Hill,  27,  s.  c.  7  Hill,  387. 

'  Cook  V.  Shipman,  51  111.  316.  '"  Porter  v.  Jones,  52  Mo.  399. 

"Henderson  v.  Palmer,  71  111.  579;  Commonwealth  v.  Pease,  16  Mass.  91; 
Wallace  v.  Hardacre,  1  Camp.  45;  Collins  v.  Blantern,  2  Wils.  347.  See  Sumner 
T.  Summers,  54  Mo.  340,  where  it  is  held  that  a  note  given  under  an  agreement 
to  secure  dismissal  of  a  prosecution  for  felony  is  void. 


WHAT  ARE   ILLEGAL  CONSIDERATIONS.  100 

gation  of  tlie  charge  is  the  policy  of  law,  which  is  sought  to 
be  protected.^ 

But  compounding  a  private  misdemeanor,  such  as  a  suit 
for  slander,-  or  bastardy  proceedings,'^  or  other  civil  action,  is 
a  good  consideration  for  a  note;  and  a  good  }>ill  substituted 
for  a  forged  one  without  any  agreement  to  stifle  the  prosecu- 
tion, is  valld.^  So  is  a  note  given  to  the  prosecutor  after  the 
trial  and  conviction  for  expenses  of  the  prosecution.^  It  has 
been  held  in  Alabama  that  a  note  given  for  embezzled  funds 
would  not  be  invalidated  by  an  accompanying  agreement  not 
to  prosecute  for  a  felony.*^  The  true  question,  however,  in 
such  a  case  seems  to  be,  was  the  note  given  for  the  money, 
or  to  settle  the  prosecution;  and  in  the  first  event  it  would 
be  valid,  in  the  latter  illegal  and  void.' 

Forbearance  to  prosecute  a  claim,  or  the  compromise  of  a 
doubtful  one,  is  a  good  consideration  for  a  note  or  bill ;  ^  but 
the  compromise  of  one  clearly  illegal  is  not.^  So,  resignation 
of  an  office  in  a  corporation  is  a  good  consideration  ;  ^^  and  all 
contracts  in  partial  restraint  of  trade  on  fair  and  beneficial 
terms,  are  supported.^^  Consideration  that  the  payee  would 
not  drink  intoxicating  liquors  for  a  certain  time,  has  been 
held  sufficient.^'* 

§  197.  (2)  As  to  considerations  illegal  hy  statute. — The 
hona  fide  holder  for  value  who  has  received  the  paper  in  the 

'  Chandler  v.  Johnson,  39  Ga,  83, 

'  Wallridge  v.  Arnold,  21  Conn.  424;  Clark  v.  Reker,  14  K  H.  44;  Drage  v. 
rbberson,  2  Esp.  643 ;  Gardner  v.  Maxcy,  9  B.  Mon.  90. 

'  Merrill  v.  Fleming,  42  Ala.  234.  ■*  Wallace  v.  Ilardacre,  1  Camp.  45. 

'  Kirk  V.  Strickwood,  4  B.  «&  Ad.  421  (24  E.  C.  L.  R.) 

"  Bibbs  V.  Hitchcock,  49  Ala.  468.  '  Godwin  v.  Crowell,  56  Ga.  566. 

"  Keefe  v.  Vogle,  36  Iowa,  87 ;  Muirhead  v.  Kirkpatrick,  21  Penn.  St.  237 ; 
Stewart  \.  Ahrcnfcldt,  4  Denio,  189;  Phelps  v.  Younger,  4  Ind.  450;  Austell  v. 
Rice,  Ga.  472;  Stephens  v.  Spiers,  25  Mo.  386;  Wyatt  v.  Evius,  52  Ala,  285; 
Bozeman  v.  Rushing,  51  Ala.  529, 

°  Sullivan  v.  Collins,  18  Iowa,  228.     See  Tucker  v.  Ronk,  43  Iowa.  80. 

•"  Peck  V.  Regua,  13  Gray,  407. 

"  Bunn  V.  Gray,  4  East,  190;  Jenkins  v.  Temples,  39  Ga.  655.  when  the  con- 
tract was  not  to  trade  in  the  same  place.  Nobles  v.  Bates,  7  Cow,  307 ;  Perkins 
V.  Lyman,  9  ^Mass.  523. 

"  Lindell  v.  Rokes,  60  Mo.  249. 


170  CONSIDERATION   OF   NEGOTIABLE  INSTRUMENTS. 

usual  course  of  business  is  unaffected  by  the  fact  that  it  orig- 
inated in  an  illegal  consideration,  without  any  distinction  be- 
tween cases  of  illegality  founded  in  moral  crime  oi*  turpitude, 
which  are  termed  mala  in  se^  and  those  founded  in  positive 
statutory  prohibition  which  are  termed  mala  lyroliihita.  The 
law  extends  this  peculiar  protection  to  negotiable  instruments, 
because  it  would  seriously  embarrass  mercantile  transactions 
to  expose  the  trader  to  the  consequences  of  having  the  bill 
or  note  passed  to  him  impeached  for  some  covert  defect.* 
There  is,  however,  one  exception  to  this  rule;  that  when  a 
statute,  expressly  or  by  necessary  implication,  declares  the  in- 
strument absolutely  void,  it  gathers  no  vitality  by  its  circu- 
lation in  respect  to  the  parties  executing  it ;  '■^  though  even 
upon  such  instruments  an  indorser  may,  as  we  shall  hereafter 
see,  be  held  liable.^ 

There  are  very  few  cases  in  which  the  statute  renders 
such  instruments  absolutely  void ;  and  the  most  important, 
if  not  the  only  instances  now  to  be  met  with,  are  the  statutes 
against  usury  and  gaming.^ 

In  England,  the  policy  of  declaring  the  instrument  a  nul- 
lity in  the  hands  of  a  hoiia  fide  holder  no  longer  prevails,  the 
statute  of  8  cfe  9  Victoria,  ch,  109,  having  relaxed  the  ancient 
rule  on  the  subject;^  and  in  some  of  the  States  similar  stat- 
utes have  been  enacted.^  But  the  change  has  not  become 
general,  and  in  the  States  where  contracts  founded  on  gam- 


'  Thomson  on  Bills  (Wilson's  ed.)  68;  Grimes  v.  Hillenbrand,  11  N.  T.  8.  C. 
(4  Hun),  354 ;  Town  of  Eagle  v.  Kohn,  84  111.  293. 

"  See  also  Chapter  XXIV,  on  Bona  Fide  Holder,  §  807,  et  seq.  Bayley  v.  Taber. 
5  Mass.  286;  Vallett  v.  Parker,  6  Wend.  615,  Savage,  C.  J.,  said:  "Wherever 
the  statutes  declare  notes  void,  they  are  and  must  be  so  in  the  hands  of  every 
holder;  but  where  they  are  adjudged  by  the  court  to  be  so,  for  failure  of  or  the 
illegality  of  the  consideration,  they  are  void  only  in  the  hands  of  the  original 
parties,  or  those  who  are  chargeable  with,  or  have  had  notice  of  the  considera- 
tion." Glenn  v.  Farmer's  Bank,  70  N.  C.  191 ;  Town  of  Eagle  v.  Kohn,  84  111.  292  ; 
Hatch  V.  Burroughs,  1  Woods,  439. 

^  See  Chapter  XXI,  sec.  1. 

'  3  Kent  Com.  44;  Story  on  Bills  (Bonnet's  ed.)  §  189. 

"  See  Parsons  v.  Alexander,  5  El.  &  Bl.  263,  s.  c.  30  Eng.  L.  &  Eq.  299. 

•  Vallett  V.  Parker,  6  Wend.  015;  Kendall  v.  Robertson,  12  Cush.  156. 


WHAT   ARE   ILLEGAL   COJSSIDERATIONS.  171 

ing  or  usurious  considerations  are  declared  void,  bills  and 
notes  given  to  secure  them  are  lield  void  in  the  hands  of 
every  holder. 

§  198.  When  the  statute  merely  declares  expressly  or  by 
implication  that  the  considerations  shall  be  deemed  illeo"aL 
the  bill  or  note  founded  upon  such  consideration  will  be  valid 
in  the  hands  of  a  hona  fide  holder  without  notice;^  but  the 
burden  of  proof  will  be  upon  the  plaintiff,  when  the  illegal 
consideration  appears,  to  show  that  he  is  a  hona  fide  holder 
without  notice.^  And  if  the  statute  in  terms  only  forbids 
suit  to  be  brought  upon  bills  and  notes  founded  on  certain 
considerations,  "  except  by  a  hona  fide  holder  who  has  re- 
ceived the  same  upon  a  valuable  and  fair  consideration,  with- 
out notice  or  knowledge,  tfec,"  they  will  be  good  in  the  hands 
of  such  a  holder,  but  the  burden  of  proof  will  be  devolved 
upon  him  in  like  manner,  if  it  appear  that  the  instrument 
originated  in  such  a  consideration.^  But  want  or  failure  of 
consideration  do  not  require  such  proof  of  the  holder.* 

Where  a  statute  provided  that  wherever,  in  an  action 
brought  on  a  contract  for  the  payment  of  money,  it  shall  ap- 
pear that  unlawful  interest  has  been  taken,  the  plaintiff  shall 
forfeit  threefold  the  amount  of  the  unlawful  interest  so  taken, 
tfec,  it  was  held  to  apply  to  the  innocent  indorsee  of  a  note 
who  received  it  in  due  course  of  trade.^ 

■  Paton  V.  Coit.  5  Mich.  505 ;  Sistermans  v.  Field,  9  Gray,  331 ;  Wyatt  v.  Bul- 
mer,  2  Esp.  538.    See  Chai)tcr  XXIV,  on  Rights  of  a  lonajide  Holder  or  Purchaser. 

"Id. 

'  Paton  V.  Coit,  5  Mich.  505;  Johnson  v.  Meeker,  1  Wis.  416;  Doe  v.  Burn- 
ham,  11  Post.  426;  Story  on  Bills,  §  193;  Bottomley  v.  Goldsmith,  36  Mich.  29. 

*  Ross  V.  Bedell,  5  Duer,  4G2  ;  Wilson  v.  Lazier,  11  Grat.  478. 

'  Kendall  v.  Robertson,  13  Cush.  150.  Shaw,  C.  J.,  said:  "The  former  law- 
extended  the  entire  forfeiture  to  any  holder  of  the  note,  though  an  innocent  in- 
dorsee; the  natural  conclusion  is,  in  the  absence  of  express  words  changing  the 
operation  of  the  law,  that  it  was  the  intention  of  the  legislature  to  extend  such 
partial  forfeiture  in  like  manner,  and  attach  it  as  before  to  the  note,  although 
held  by  an  innocent  indorsee  without  notice.  In  both  cases  the  intention  of  the 
legislature  appears  to  have  been  the  same,  to  suppress  a  mode  of  lending  re- 
garded as  dangerous  and  injurious  to  society,  by  attainting  the  contract,  and 
attaching  the  penal  consequences  to  the  contract  itself,  whenever  set  up  as  a 
proof  of  a  debt." 


172  CONSIDEEATION    UF   NEGOTIABLE  INSTRUMENTS. 

§  199.  Where  a  statute  declared  that  all  payments  made 
for  spirituous  liquors  sold  contrary  to  law  "  should  be  held 
and  considered  to  have  been  received  in  violation  of  law, 
without  consideration,  and  against  law,  equity  and  good  con- 
science," it  was  held  that  a  bill  given  for  liquors  so  sold  was 
valid  in  the  hands  of  a  bona  fide  holder  without  notice.^  A 
bill  accepted  to  secure  payment  of  money  taken  in  at  an  un- 
licensed theater  is  void  in  the  hands  of  all  knowins;  the  con- 
sideration  for  which  it  was  giv^en.^ 

If  the  paper  be  susceptible  of  a  legal  and  an  illegal  con- 
struction, the  courts  will  enforce  it  accordino-  to  the  most 
favorable  construction,  ut  res  magis  valeat  qucwi  pereat.  Thus, 
where  a  due  bill  was  made  payable  in  Confederate  bonds,  or 
Tennessee  money,  the  first  named  medium  was  deemed  illegal, 
but  payment  in  Tennessee  money  was  enforced.^ 

The  statement  of  consideration  in  a  bill  or  note  may  be 
■explained  or  contradicted  in  any  case  in  which  the  considera- 
tion may  be  disputed  between  the  parties ;  and  it  may  be 
shown  either  that  the  consideration  was  diiferent  from  that 
stated  or  that  there  was  none  at  all/  In  some  of  the  States 
notes  given  in  purchase  of  patent  rights  are  required  to  have 
the  fact  written  or  printed  on  the  face,  under  heavy  penalties, 
the  frauds  arising  out  of  such  transactions  being  very  fre- 
quent, and  the  legislatures  seeking  to  suppress  them,  and 
such  notes  are  open  to  the  same  defenses  in  the  hands  of  a 
bona  fide  holder  as  when  held  by  the  payee.^  But  under 
such  a  statute,  if  the  patent  right  consideration  were  not 
impressed  in  the  note,  a  bona  fide  holder  would  be  protected 
according  to  the  general  principles  of  the  law  merchant.^ 


'  Cazet  V.  Field,  9  Gray,  329. 

»  DeBignis  v.  Armistead,  10  Bing.  107  (25  E.  C.  L.  R.) 

'  Hanauer  v.  Gray,  25  Ark.  350. 

*  Abbott  V.  Hendricks,  1  Man.  &  G.  791  ;  Foster  v.  Jolly,  1  Cromp.  M.  &  R. 
703;  Smith  v.  Brooks,  18  Ga.  440;  Litchfield  v.  Falconer,  2  Ala.  280;  Matlock  v. 
Livingstone,  9  Smedes  &  M.  489  ;  Barker  v.  Prentiss,  6  Mass.  430. 

*  Pennsylvania. 

«  Palmer  v.  Minar,  15  N.  Y.  S.  C.  342  (1876). 


WHAT  ARE   ILLEGAL   CONSIDERATIONS.  173 

§  200.  Ejfect  of  hnowledge  of  illegal  use  of  article  sold. 
— It  is  stated  as  a  general  principle,  by  some  of  the  text 
writers,  that  if  goods  be  sold  by  a  trader  witli  mere  knowl- 
edge that  the  purchaser  intends  an  illegal  use  of  them,  ])ufc 
Avithout  lending  any  aid  to  his  unlawful  purpose,  lie  may 
sustain  an  action  on  the  contract;^  and  a  number  of  cases 
would  seem  to  support  such  a  declaration. 

But  the  proposition  is  certainly  of  limited  application, 
and  the  courts  are  careful  not  to  extend  it.  If  the  articles 
be  sold  wdth  distinct  knowledge  that  they  are  to  be  used  for 
any  illegal  purpose,  it  is  doubtful  if  the  courts  should  allow 
a  recovery  of  the  purchase  money ;  for  public  morality  and 
good  government  must  condemn  the  furnishing  of  means  to 
violate  the  law ;  and  when  the  use  contemplated  involves  a 
heinous  crime,  as  when  one  sells  arsenic  with  knowledge  that 
the  purchaser  intends  to  poison  his  wife  with  it,^  or  sells 
noxious  druo;s,  knowing:  that  the  brewer  who  buys  them  in- 
tends  to  use  them  in  his  manufacture,^  it  is  clear  that  the 
recovery  should  not  be  allowed.  And  it  has  been  held,  both 
in  England  and  in  this  country,  that  money  lent  to  a  man  to 
enable  him  to  settle  his  losses  on  an  illegal  stock-jobbing 
transaction  cannot  be  recovered  back."*  "  No  man  ou2rht  to 
furnish  another  with  the  means  of  transo:ressinir  the  law, 
knowing  that  he  intended  that  use  of  them."  ^ 

Following  the  principle  of  the  text  (but  applying  it  to  a 
case  which  the  author  by  no  means  intends  to  approve),  the 
United  States  Supreme  Court  has  held  that  a  due  bill  for 
goods,  sold  to  be  used  by  the  Confederate  States  in  prose- 

'  Byles  on  Bills  (Sharswood's  ed.)  [*132],  247;  1  Parsons  N.  &  B.  215;  Gard- 
ner V.  Maxey,  0  B.  Mon.  90;  Clark  v.  Recker,  14  N.  II.  44;  McGavock  v.  Puryear, 
G  Cold.  34;  Puryear  v.  McGavock,  9  Heiskell,  461 ;  Coppock  v.  Bower,  4  M.  & 
W.  361. 

-  Lightfoot  V.  Tenant,  1  Bos.  &  Pul.  551. 

'  Langton  v.  Hughes,  1  Maule  &  Sel.  593. 

*  Canaan  v.  Bryce,  3  Barn.  &  Aid.  179,  Abbott,  C.  J.,  saying:  "  If  it  be  un- 
lawful in  one  man  to  pay,  bow  can  it  be  lawful  for  another  man  to  furnish  him 
the  means  of  payment." 

'  De  Groot  v.  Van  Duzer,  20  Wend.  390. 


174  CONSIDERxVTION  OF   NEGOTIABLE   INSTRUMENTS. 

cuting  tbe  war  against  the  Uuited  States,  was  void  as  upon 
an  illesfal  consideration,  and  that  an  action  could  not  be 
maintained  by  the  seller  or  by  any  holder  of  the  bill  who 
was  cognizant  of  the  j^urpose  for  which  the  goods  were  pur- 
chased.^ And  in  Massachusetts  it  has  been  held  that  there 
can  be  no  recovery  upon  a  note  by  the  plaintiff  against  a  de- 
fendant who  executed  it  to  him  for  liquors,  the  defendant 
well  knowing  that  they  were  to  be  resold  in  violation  of  law 
and  co-operating  to  that  end.^  And  in  Arkansas,  where  the 
payee  sold  guns  to  be  used  in  the  war  against  the  United 
States,  he  was  not  permitted  to  recover.^  Like  decisions 
have  been  rendered  where  the  party  selling  a  horse  knew  he 
was  to  be  used  in  the  Confederate  States  cavalry  service ;  * 
and  where  tlie  lender  of  money  knew  that  iron  was  to  be 
bought  with  it  for  military  uses  against  the  United  States,^ 

Money  lent  for  the  purpose  of  being  used  in  gaming  can- 
not be  recov^ered  back  by  the  lender;  and  a  bill  or  note 
given  for  such  purj^ose  is,  as  between  the  parties,  void.*  It 
is  fully  settled  that  the  repayment  of  money  lent  for  the  ex- 
press purpose  of  accomplishing  an  illegal  object  cannot  be 
enforced.'^    But  knowledge  that  the  money  was  to  be  so  used 

'  Hunauer  v.  Doane,  12  Wall.  342,  Bradley,  J.  :  "  With  whatever  impunity  a 
man  may  lend  money  or  sell  goods  to  another  who  he  knows  intends  to  devote  them 
to  a  use  that  is  only  malum  prohibitum,  or  of  inferior  criminality,  he  cannot  do 
it  without  turpitude  when  he  knows,  or  has  every  reason  to  believe  that  such 
money  or  goods  are  to  be  used  for  the  perpetration  of  a  heinous  crime,  and  that 
they  were  procured  for  that  purpose.         *  =i=         *         There  are  cases  to  the 

contrary;  but  tliey  are  either  cases  where  tlie  unlawful  act  contemplated  to  be 
done  was  merely  malum  prohibitum,  or  of  inferior  criminality;  or  cases  in  which 
the  unlawful  act  was  ah-eady  committed,  and  the  loan  was  an  independent  con- 
tract, made  not  to  enable  the  borrower  to  commit  the  act,  but  to  pay  obligations 
which  he  had  already  incurred  in  committing  it." 

»  Ilubbell  V.  Flint,  13  Gray,  277. 

'  Tatuin  V.  Kelly,  25  Ark.  209.  See  also  Oxford  Iron  Co.  v.  Spradley,  51 
Ala.  171. 

*  Booker  v.  Bobbins,  2G  Ark.  G60.  Contra,  Thetford  v.  McClintock,  47  Ala. 
650;  though  otherwise  if  he  intended  such  use. 

'  0.xford  Iron  Co.  v.  Spradley,  46  Ala.  98;  Logan  v.  P'.ummer,  70  N.  C.  388. 

•  M'Kinnel  v.  Robinson,  3  M.  &  W.  434;  Cutler  v.  Welsh,  43  N.  H.  497; 
Mordecai  v.  Dawkins,  9  Rich.  202. 

'  M'Kinnell  v.  Robinson,  3  M.  &  W.  434. 


PARTIAL  WANT   OF   CONSIDERATION.  175 

must  be  distinctly  proved ;  and  the  mere  fact  that  tlie  bor- 
rower was  a  gambler,  and  that  any  one  might  expect  him 
to  game  with  the  money,  would  not  suffice,  of  course,  to 
show  it.^ 

SECTION  YI. 

PARTIAL    AVANT,  FAILUEE    ANT)   ILLEGALITY   OF   CONSIDEEATION. 

§  201.  (1)  As  to  partial  want  of  consideration. — When- 
ever the  defendant  is  entitled  to  go  into  the  question  of  con- 
sideration, he  may  set  uj:)  the  partial  as  well  as  the  total 
want  of  consideration.^  Thus,  where  the  drawer  of  a  bill 
for  £19  5s.,  payable  to  his  own  order,  sued  the  acceptor,  and 
it  appeared  that  the  bill  was  accepted  for  value  as  to  £10, 
and  as  an  accommodation  to  the  plaintiff  as  to  the  residue, 
it  was  held,  that  although  with  respect  to  third  persons  the 
amount  of  the  bill  might  be  £19  5s.,  yet  as  between  these 
parties  it  was  an  acceptance  to  the  amount  of  £10  only.^ 
So  where  a  note  was  given  by  A.  to  B.,  for  the  sum  of 
£32  6s.  lOd.,  upon  B.'s  representation  and  assurance  that  that 
amount  was  due,  whereas  A.  owed  B.  £10  14s.  lid.,  and  no 
more,  the  note  was  held  good  only  for  the  amount  that  was 
actually  due.'*  So,  where  a  father  gives  his  son  a  note 
partly  for  services,  and  partly  as  a  gratuity,  the  partial  want 
of  consideration  might  be  pleaded  as  to  such  portion  of  the 
amount  as  was  gratuitous;  and  it  would  be  no  objection 
that  no  distinct  amount  was  fixed  upon  as  compensation  for 
the  services,  but  it  w^ould  be  for  the  jury  to  settle  what 
amount  was  founded  on  the  one  consideration,  and  what  on 
the  other.^ 

'  1  Parsons  N.  &  B.  214. 

'  Thomson  on  Bills  (^Vilson's  ed.)  G4;  Byles  on  Bills  (Sharswood's  ed.)  239. 

'  Darnell  V.  "Williams,  2  Stark.  166  (3  E.  C.  L.  R.);  Barber  v.  Backhouse, 
Peake,  61 ;  Clarke  v.  Lazarus,  2  M.  &  G.  167. 

*  Forman  v.  AVright,  11  C,  B.  481.  The  words  of  the  plea,  "fraudulently  and 
deceitfully,"  Tvere  rejected  as  surplusage. 

'  Parish  \.  Stone,  14  Pick.  198;  see  Guild  v.  Belcher,  119  Mass.  257. 


17G  CONSIDERATION   OF   NEGOTIABLE  INSTRUMENTS. 

It  was  said  in  a  recent  edition  of  Story  on  Bills,^  as  it 
is  said  in  a  number  of  English  cases,'  that  a  partial  failure 
of  consideration  is  no  defense ;  but  it  is  conceived  that  the 
distinction  already  taken  is  the  correct  one,  and  the  cases  in 
which  the  contrary  dictum  occurs  are  those  in  which  the 
sum  was  unascertainable  by  mere  computation,  and  was 
matter  of  unliquidated  damages.^ 

§  202.  Where  an  article  sold  is  received  upon  delivery, 
but  does  not  answer  the  description  given  of  its  quality  or 
value,  the  party  who  has  given  his  bill  or  note  in  pa}Tnent, 
cannot  make  the  breach  of  warranty  a  defense  in  England 
and  in  many  of  the  States — it  being  necessary  that  he  should 
resort  to  his  cross-action  for  damages  for  breach  of  contract,* 
unless  indeed  the  article  be  of  no  value,  in  which  case  the 
consideration  will  be  regarded  as  having  entirely  failed.^ 
There  should  be  an  offer  in  such  a  case  to  return  the  property 
and  rescind  the  contract,  according  to  some  cases,^  but  accord- 
ing to  others  this  is  unnecessary/ 

If  the  article  be  of  any  value  at  all,  although  entirely 
speculative,  the  contract  will  be  enforced.^ 

§  203.  (2)  As  to  total  and  palatial  failure  of  considera- 
tion.— The  total  failure  of  consideration  is  as  good  a  defense 
to  a  suit  upon  a  bill  or  note  as  the  original  want  of  it,  and 
is  confined  to  the  like  parties.  If  the  contract  is  rescinded, 
the   consideration    of    the   bill    or   note    totally   fails,    and 

'  story  on  Bills  (Bennet's  ed.)  §  184. 

'  Morgan  v.  Richardson,  1  Camp.  40 ;  Obburd  v.  Bctham,  Moody  &  M.  483 ; 
Tye  V.  Gwynne,  3  Camp.  34G. 

'  Chitty  on  Bills  (13th  Am.  ed.)  [*76],  91;  Roscoe  on  Bills,  105;  Bayley  on 
Bills,  344;  1  Parsons  N.  &  B.  207;  Day  v.  Nix,  9  J.  B.  Moore,  159;  Edwards  on 
Bills,  335  ;  Story  on  Notes,  §  187.  In  an  early  case  Lord  Kenyon  left  it  to  the 
jury  to  consider  what  damages  had  been  suffered  by  the  defendant  in  a  suit  on  a 
note,  in  the  transaction  in  which  it  was  given  ;  but  the  case  has  not  been  fol- 
lowed as  a  precedent.     Ledger  v.  Ewer,  Peake,  216. 

*  Washburn  v.  Picot,  3  Dev.  390;  Warwick  v.  Nairn,  10  Exch.  762;  Elminger 
V.  Drew,  4  McLean,  388.  But  see  Peden  v.  Moore,  1  Stew.  «S5  P.  71 ;  Spalding  v. 
Vandercook,  2  Wend.  431 ;  Harrington  v.  Stratton,  22  Pick.  510. 

"  Shepherd  v.  Temple,  3  N.  H.  455.  "  Thornton  v.  Wynn,  12  Wheat.  183. 

'  Shepherd  v.  Temple,  3  N.  H.  455.  "  Johnson  v.  Titus,  2  Hill,  60i5. 


J 


TAKTIAL   WANT   OF   CONSIDERATION.  L77 

])aymenfc  of  it  cannot  be  enforced.^  Thus,  if  the  vendee 
give  his  bill  or  note  for  goods  of  a  certain  manufacture, 
growth,  or  description,  and  the  payee  fails  to  deliver  goods 
of  the  character  contracted  for,  the  former  may  rescind  the 
contract,  and  refuse  to  pay  his  bill  or  note,  there  being  a 
total  failure  of  consideration.^  So,  where  a  purchaser  of  a 
patent  gave  his  note  for  it,  and  the  patent  proved  void,  it 
was  held  that  the  consideration  had  totally  failed.^  But 
proof  that  another  patent  had  been  issued  for  the  same  in- 
vention to  another  person  would  not  show  that  the  first  was 
void.^ 

And  a  partial  fiiilure  of  the  consideration  is  a  good  de- 
fense jiro  tanto?  But  such  part  as  is  alleged  to  have  failed 
must  be  distinct  and  definite,  for  only  a  total  failure,  or  the 
failure  of  a  specific  and  ascertained  part,  can  be  availed  of  by 
way  of  defense ;  and  if  it  be  an  unliquidated  claim  the  de- 
fendant must  resort  to  his  cross  action.^  Thus,  where  bills 
have  been  accepted  in  consideration  of  the  payee  giving  the 
acceptor  the  lease  of  a  house,  and  he  let  him  into  possession 
but  gave  no  lease,  it  was  held  no  defense  to  an  action  on  the 
bill,  but  that  there  was  merely  a  counter-claim  for  damages.' 
So  where  the  bill  was  given  for  work  to  be  done,  and  the 
^vork  when  done  was  bungled  in  part,  and  not  worth  the 
amount  of  the  bill.^ 

§  20-1.  (3)  As  to  ])artial  illecjality  of  consideration. — 
When  the  defense  is  founded  on  illegality  of  consideration  it 
is  to  be  distinguished  from  a  defense  on  the  ground  of  a  want 
or  failure  in  the  consideration  by  this  peculiarity — that  apar- 

'  Thomson  on  Bills  (Wilson's  eel.)  GG. 

"  Wells  V.  Hopkins,  6  M.  &  W.  7.  =  Dickinson  v.  Hall,  U  Pick.  31 7. 

"  Crow  V.  Eichinger,  34  Ind.  65  (1870). 

'  Story  on  Bills,  §  184;  Story  on  Notes,  §  187;  Drew  v.  Towle,  7  Fost.  412  ; 
1  Parsons  N.  &,  B.  207 ;  Thomson  on  Bills  (Wilson's  ed.)  64. 

'Pulsifer  v.  Hotchkiss,  12  Conn.  234;  Elminger  v.  Drew,  4  McLean,  388; 
Drew  y.  Towle,  7  Fost.  412;  Stone  v.  Peake,  IG  Vt.  213;  Ferguson  v.  Oliver,  8 
Smedes  &  M.  332 ;  Kernodle  v.  Hunt,  4  Black,  57. 

^  Moggridge  v.  Jones,  14  East,  485  ;   3  Camp.  38. 

'  Trickey  v.  Larne,  6  M.  &  W.  278. 
Vol.  1.-12 


178  CONSIDERATION   OF   NEGOTLVBLE  INSTRUMENTS. 

tial  illefjfality  vitiates  the  bill  or  note  ■'  in  iotoj'^  while  tlie  par- 
tial want  or  failure  of  consideration  only  vitiates  it  '■'■  pro 
tantoy  ^  And  a  morto^age  to  secure  a  bill  or  note  of  which 
the  consideration  is  in  part  illegal,  is  also  wholly  void.'-  The 
reason  of  the  distinction  is  based  mainly  upon  the  ground  of 
public  policy,  the  court  not  undertaking  to  unravel  a  web 
of  fraud  for  the  benefit  of  the  party  who  has  woven  it.^  If, 
however,  the  legal  portion  of  the  consideration  were  dis- 
tinctly severable,  the  party  could  still  recover  by  the  proper 
action  to  its  proportionate  extent,*  though  not  upon  the  bill 
or  note.""^     Tliere  is  authority,   however,  to  the  effect  tliat 


'  Scott  V.  Gillmore,  3  Taunt.  226;  Robinson  v.  Bland,  2  Burr.  1077;  Hay  v. 
Ayling,  3  Eng.  Law  &  Eq.  416;  Hanauer  v.  Doane,  12  Wall.  342;  Carlton  v. 
Bailey,  7  Fost.  230;  Brigham  v.  Potter,. 14  Gray,  522;  Deering  v.  Chapman,  22 
Me.  488;  Woodruff  v.  Ileniman,  11  Vt.  592;  Clark  v.  Ricker,  14  N.  H.  197; 
Hyslop  V.  Clarke,  14  Johns.  4G5;  Chandler  v.  Johnson,  39  Ga.  85;  Wynne  v. 
Whescnant,  37  Ala.  46;  Kidder  v.  Blake,  45  N.  H.  530;  Widoe  v.  Webb,  20 
Ohio,  N.  S.  637 ;  Snyder  v.  Willey,  33  Mich.  483. 

■  Brigham  v.  Potter,  14  Gray,  522;  Denny  v.  Dana,  2  Cush.  160. 

'  Byles  on  Bills  (Sharswood's  ed.)  [*140],  250. 

*  Carlton  v.  Woods,  8  Foster,  290,  where  it  is  held  that  if  entire  stock  of 
goods  be  sold  at  one  and  the  same  time,  l>ut  each  article  for  a  separate  and  agreed 
value,  the  contract  of  sale  is  divisible;  and  if  the  sale  of  some  article  be  prohib- 
ited by  law,  the  sale  of  the  others  will  nevertheless  be  enforced  as  legal,  in  an 
action  for  goods  sold  and  delivered.  Robinson  v.  Bland,  2  Burr.  1077;  Widoe 
V.  Webb,  20  Ohio  St.  431,  637  ;  Hoyt  v.  Macon,  2  Col.  508. 

"Robinson  v.  Bland,  2  Burr.  1077;  Ilanauer  v.  Doane,  12  Wall.  342.  In 
Widoe  V.  AVebb,  20  Ohio  St.  431,  there  was  action  on  a  note  given  in  settlement 
of  an  account  of  which  some  of  the  items  were  for  intoxicating  liquors  sold  in 
violation  of  law.  Scott,  C.  J.,  said  :  "  With  respect  to  the  items  of  the  plaintiffs 
account  which  were  unconnected  with  the  illegal  sales,  he  might  well  have  main- 
tained an  action  on  the  oiiginal  contracts  of  sale,  even  after  the  giving  of  this 
note.  For  being  utterly  void  it  discharged  none  of  the  just  indebtedness  of  the 
defendant.  But  he  chose  to  sue  upon  the  note,  which  was  frima  facie  evidence 
of  indebtedness  to  the  extent  of  the  whole  sum  promised  to  be  paid,  and  thus 
attempted  to  throw  upon  the  defendant  the  burden  of  showing  how  much  of  it 
was  given  upon  an  illegal  consideration,  and  upon  the  court  the  task  of  separat- 
ing the  sound  from  the  unsound.  If  this  eflbrt  should  result  iij  his  losing  what 
was  justly  due  him,  we  can  but  repeat  what  was  said  iu  a  similar  case:  '  It  is  but 
a  reasonable  punishment  for  his  including  with  his  just  due  that  which  he  had 
no  right  to  take.'  "  Brigham  v.  Potter,  14  Gray,  522;  Perkins  v.  C'ummings,  2 
Gray,  258;  flark  v,  Ricker,  14  N.  H.  44;  Carlton  v.  Bailey,  7  Foster,  234;  Carl- 
ton V.  Woods,  8  Foster,  290. 


RENEWAL   BILLS  AND   NOTES.  179 

there  may  be  recovery  on  the  bill  or  note  to  the  extent  of  the 
distinctly  severable  and  valid  consideration.*  Where  the 
legal  part  of  the  consideration  exceeds  the  amount  of  the 
note,  though  another  part  of  the  consideration  be  illegal,  the 
note  will  be  valid,^  And  it  has  been  held  that  where  a  bill 
is  given  in  renewal  of  other  bills,  one  of  which  was  upon  an 
illegal  consideration,  it  would  be  valid  as  to  the  amount 
which  the  legal  bills  evidenced,  and  void  as  to  the  rest  for 
want  of  consideration." 


SECTION  YII. 

KENEWAL    BILLS    AXD   NOTES.       HOW   ILLEGALITY    MAT   BE    PURGED. 

§  205.  As  to  bills  and  notes  given  in  renewal. — If  the 
consideration  of  the  original  bill  or  note  be  illegal,  a  renewal 
of  it  will  be  open  to  the  same  objection  and  defense;*  and  if 
the  original  instrument  was  obtained  by  fraud,  a  renewal  of 
it  by  the  original  parties  without  knowledge  of  the  fraud, 
would  stand  upon  the  same  footing.^  But  if  at  the  time  the 
renewal  was  executed  the  parties  signing  knew  of  the  fraud 
in  the  original,  they  will  be  regarded  as  purging  the  contract 
of  the  fraud,  and  cannot  then  plead  it.^  So  if  the  maker  of  a 
note  held  by  an  indorsee  who  knew  that  the  consideration 
between  the  maker  and  the  payee  had  tailed  when  he  took  it, 
executes  to  him  a  new  note,  it  has  been  held  to  be  a  waiver  of 
the  defense,  and  the  payee  of  the  new  note  can  recover."^ 

Where  a  note  secured  by  mortgage  or  deed  of  trust  is  re- 
newed, the  mortgage  is  valid  as  a  security  for  the  renewal 

'  Clopton  V.  Elkin,  49  Miss.  95.  See  Guild  v.  Belcher,  119  Mass.  257,  as  to 
recovery  against  partners,  where  one  piutncr  is  not  privy  to  the  entire  considera- 
tion. 

*  Warren  v.  Chapman,  105  Mass.  87. 

"  Doty  v.  Knox  Co.  Bank,  16  Ohio,  N.  S.  133. 

*  Sawyer  v.  Wiswell,  9  Allen,  39 ;  Holden  v.  Cosgrove,  13  Gray,  216 ;  Scud- 
dcr  V.  Thomas,  34  Ga.  239. 

"  Sawyer  v.  Wiswell,  9  Allen,  39. 

*  Sawyer  v.  Wiswell,  9  Allen,  39.  '  Gill  v.  Morris,  11  Hciskell,  614. 


180  CONSIDERATION  OF  NEGOTIABLE   INSTRUMENTS. 

note/  and  it'  tlie  renewal  note  be  a  forgery  it  does  not  dis- 
charge the  original,  although  the  original  was  surrendered 
up,  nor  is  the  indorser  of  the  original  discharged,  his  liability 
having  been  fixed  by  notice.^  "  When  a  dealer  at  bank  pays 
off  a  note  by  renewal,  the  debt  is  the  same ;  the  debt  remains 
unpaid,  the  credit  is  extended."  ^  And  as  a  general  rule  the 
surrender  of  the  pre-existing  note  does  not  discharge  it/ 

§  206.  If  a  note  or  bill  be  given  for  a  consideration  Avhich 
is  in  part  illegal,  a  new  note  for  the  same,  or  in  renewal  of 
the  first,  is  equally  void.^  But  a  new  note  for  that  part  of 
the  consideration  which  is  legal  is  good  and  valid.  And  if 
several  new  notes  are  given  for  the  old  one,  some  of  the  new 
ones  may  be  taken  to  be  for  the  legal  part,  and  so  be  valid, 
especially  if  they  are  only  adequate  to  this  part,  or  if  the  de- 
duction be  otherwise  favored  by  circumstances.*' 

§  207.  In  ivliot  ivay  illegal  consideration  may  he  imrged. — 
"When  there  is  such  illegality  in  the  consideration  of  a  bill 
or  note  which  vitiates  it  in  all  hands  there  are  several  ways 
in  w^hich  it  may  be  purged  and  a  new  security  become  valid. 
Thus,  Firstly,  if  there  was  usury  in  the  consideration,  and  it 
is  either  paid  up  or  is  remitted,  there  is  no  doubt  that  if  a 
new  bill  or  note  were  given,  and  the  usury  in  the  original 
instrument  excluded,  such  new  bill  or  note  would  be  valid.^ 
Secondly.  If  the  usurious  or  otherwise  invalid  security  had 
been  acquired  by  a  hona  fide  holder  for  value,  and  without 
notice,  a  new  bill  or  note  executed  by  the  drawer,  maker, 

'  Aillct  V.  Woods,  24  La.  Ann.  193 ;  McNamara  v.  Coudon,  1  MacArthur,  364. 

'  Hitter  v.  Singmaster,  73  Penn.  St.  400. 

'  Farmers'  Bank  v.  Mutual  Ass.  Soc'y,  4  Leigh,  88  ;  Moses  v.  Trice,  21  Grat. 
556  ;  Tardy  v.  Boyd,  26  Grat.  638. 

'  See  Vol.  II,  §1266. 

'  1  Parsons  N.  «&  B.  217;  Chapman  v.  Black,  2  B.  &  Aid.  588;  Wynne  v.  Cal- 
lander, 1  Russ.  293  ;  Preston  v.  Jackson,  2  Stark.  237. 

"  Hubner  v.  Richardson,  Bayley  on  Bills,  302  ;  Crookshank  v.  Rose,  5  C.  & 
P.  19. 

'  De  Wolf  T,  Johnson,  10  Wheat,  367;  Hammond  v.  Hopping,  13  Wend.  505; 
Barnes  v.  Hcdley,  2  Taunt.  184;  1  Camp.  157;  2  Parsons  N.  &  B.  420;  Bayley 
on  Bills,  301. 


RENEWAL  BILLS  AND  NOTES.  181 

acceptor,  or  other  party  bound  upon  the  first  to  such  hona 
Jide  holder,  would  be  valid. ^  Thirdly.  It'  the  usurious  or 
otherwise  invalid  security  is  lifted,  and  a  third  party,  a 
stranger  in  whole  or  part  to  the  original  security,  intervenes, 
and  for  motives  peculiar  to  himself  and  unaftected  by  the 
illegal  consideration,  supplants  it  by  a  new  security  made  by 
himself  to  the  original  payee,  it  would  be  valid,^  and  it  mat- 
ters not  that  the  principal  in  the  original  becomes  a  surety 
upon  the  new  security.^  If  the  new  party  be  released,  and 
the  old  contract  is  revived,  the  novation  is  rescinded,  and 
usury  may  be  pleaded.^  Fourthly.  If  A.  makes  a  usurious 
or  otherwise  illegal  agreement  with  B.,  and  gives  a  bill  or 
note  to  him  for  the  amount,  and  then  makes  a  new  bill  or 
note  to  C,  to  whom  B.  is  indebted,  the  new  note  is  valid.^ 

Fifthly.  It  has  also  been  held  that  if  A.  make  a  usuri- 
ous or  otherwise  illegal  note  to  B.,  and  afterward  supplant 
it  by  the  joint  note  of  himself  and  C.  to  B.,  the  joint  note  is 
valid ;  "^  and  Comyn  says,  "  Where  third  persons  are  mixed 
up  with  the  new  transaction,  the  courts  regard  it  with  a 
favorable  eye."  '^ 

'Torbett  v.  Worthy,  1  Heiskell,  107;  Calvert  v.  Williams,  64  N.  G.  168; 
Drake  v.  Chandler,  18  Grat,  913 ;  Cuthbert  v.  Haley,  8  T.  R.  390. 

'  Stone  V.  Smith,  6  Mumford,  541  ;  Law's  Ex'r  v.  Sutherland,  5  Grat.  357 ; 
Drake  V.  Chandler,  18  Grat.  913;  AV ales  v.  Webb,  5  Conn.  154;  Windham  v. 
Doles,  59  Ga.  266. 

=  Drake  v.  Chandler,  18  Grat.  909. 

*  Archer  v.  McCray,  59  Ga.  547. 

'  Regina  v,  Sewel,  7  Mod.  118;  Drake  v.  Chandler,  18  Grat.  913;  Sherwood 
V.  Archer,  17  N.  Y.  S.  C.  (10  Hun),  73. 

*  Hulme  V.  Turner,  4  Esjj.  N.  P.  C.  111.  In  this  case  the  payee  of  a  note 
given  for  a  usurious  consideration  arrested  the  maker,  and  to  procure  his  libera- 
tion a  third  person  joined  the  maker  of  the  note  in  another  note  for  the  amount 
of  the  debt ;  and  the  chief  justice  said  he  was  clearly  of  opinion  the  considera- 
tion of  the  first  note  could  not  be  questioned  in  an  action  on  the  second,  unless 
it  could  be  shown  that  it  was  a  colorable  shift  to  evade  the  statute,  devised  when 
the  money  was  oiiginally  lent  and  the  first  note  granted.  See  Drake  v.  Chandler, 
18  Grat.  913,  We  have  seen  it  decided  in  a  nisi  prius  Virginia  case,  that  the 
liberation  of  the  party  was  the  consideration  of  the  new  joint  note,  and  that  only 
upon  that  ground  could  the  decision  of  Hulme  v.  Turner  be  sustained.  lu  Drake 
V.  Chandler  there  is  no  allusion  to  this  view. 

'  Comyn  on  Usury.  186, 


182  CONSIDERATION  OF  NEGOTIABLE  INSTRUMENTS. 

Sixthly.  It  has  also  been  held  that  if  a  joint  note  be 
illegal,  the  note  of  one  joint  promissor,  with  a  new  party  as 
surety  thereon,  would  be  valid.^ 

Seventhly.  If  the  party  principal  in  the  original  and  in- 
valid security  executes  a  new  one,  leaving  oiT  a  surety  upon 
the  first — or  adding  a  surety  where  there  was  none  upon  the 
first — or  substituting  a  new  surety  for  one  that  was  u])on  the 
first — in  all  these  cases  there  would  still  be  a  strai^rht  and 
unbroken  line  of  obligation  from  the  principal  to  the  payee, 
And  we  should  say  that  the  new  security  was  a  mere  renewal 
of  the  first,  and  would  be  invalid.^ 

Eighthly.  It  has  been  held  that  where  an  indorser  upon 
a  note  void  for  usury  gives  his  own  note  for  the  amount  ap- 
parently due,  it  is  tainted  with  the  original  usury  and  in- 
valid.'^ But  if  the  original  note  were  not  usurious,  usury  in 
the  renewal  note  would  not  prevent  recovery  of  the  amount 
due  on  the  first,  and  an  indorser  of  the  first  by  indorsing  the 
second,  waives  the  necessity  of  protest  and  notice  thereon  in 
order  to  chai'ge  him.^ 

'  Gresham  v.  Morrow,  40  Ga.  487,  In  this  case  it  was  held  that  where  one 
who  held  the  note  of  two  joint  promissors,  given  for  slaves,  and  in  full  satisfac- 
tion thereof,  took  the  note  of  one  joint  promissor,  with  a  stranger  as  his  security, 
it  was  a  novation  of  tlie  del)t  ;  and  the  consideration  of  the  new  note  was  not 
slaves,  but  the  satisfaction  of  the  first  note. 

=  Campbell  v.  Sloan,  62  Penn.  St.  481. 

'  First  National  Bank  v.  Plankinton,  27  Wis.  177. 

*  Leary  v.  Miller,  61  N.  Y.  490. 


J 


BOOK    II. 

WHO  MAY  BE  Px\ETIES. 


CHAFrER  viir. 

PEESONS   PAETIALLY    OR    WHOLLY     DISQUALIFIED. 

§  208.  It  was  once  thought  that  none  but  merchants 
eoukl  be  parties  to  bills  and  notes,  as  they  are  purely  mer- 
cantile instruments,  but  this  notion  long  since  became  obso- 
lete.^ And  it  is  well  settled  that  any  person  laboring  under 
no  personal  or  political  disability  may  be  a  party  to  any  ne- 
gotiable contract.  AVe  shall  first  speak  of  tho^e  who  are 
partially  or  wholly  disqualified  by  such  disability,  aud  who 
are  (I)  lunatics,  (II)  alien  enemies,  (HI)  infonts,  (IV)  mar- 
lied  women.  (V)  persons  under  guardianship,  (VI)  bank- 
rupts. We  shall  then  speak  of  those  who  may  be  parties, 
other  than  private  individuals,  and  who  are  (I)  personal 
representatives,  (II)  guardians,  (III)  trustees  who  may  be 
included  under  the  head  of  fiduciaries — and  (IV)  agents,  (V) 
copartnership  firms,  (VI)  private  corporations,  (VII)  public 
corporations,  and  (VIU)  government. 

SECTION  I. 

LTTNATICS,    IMBECILES   AND   DRUNEAKDS. 

§  209.  Every  person  is  presumed  to  be  of  sane  mind  until 
the  contrary  be  shown  by  him  who  asserts  it ;  ^  and  insanity 
or  imbecility  cannot  in  England  be  shown  under  a  general 

■  Chitty  on  Bills  [*15],  20. 

'  Jackson  v.  King,  4  Cow.  207 ;  Jackson  v.  "Van  Duscn,  o  Johns.  144 ;  Edwards 
on  Bills,  64;  1  Parsons  N.  &  B.  150. 


184  PERSO^'S  PARTIALLY   OK  ^Y^OLLY  DISQUALIFIED. 

plea  that  the  defendaut  did  not  execute  thu  bill,  note,  oi- 
other  instrument  declared  on,  but  must  be  specially  pleaded.^ 
The  earlier  authorities  of  the  English  law  held  that  a 
man  should  not  be  allowed  to  stultify  himself  by  alleging 
his  own  lunacy  or  imbecility;^  but  such  a  doctrine  sounds 
more  like  the  gibberish  of  a  lunatic  than  like  the  decree  of 
a  humane  and  enlightened  lawgiver.  The  maxim  of  the 
civil  law,  "fmnosus  nullum  negotium  gerere  'potest^  quia  non 
intdligit  quid  agit!''  expresses  the  sense  of  modern  juris- 
prudence on  the  subject.  And  it  may  now  be  regarded  as 
a  general  rule  of  universal  law,  that  the  contracts  of  a 
lunatic,  idiot,  or  other  person  non  coinpos  mentis,  from  age  or 
23ersonal  infirmity,  are  utterly  void,'' 

§•210.  Prof  Parsons  qualifies  the  doctrine  stated  in  the 
text,  by  observing,  that  "possibly  this  defense  (of  insanity, 
imbecility,  or  aberration),  to  be  eftectual  must  go  far  enough 
to  show  that  this  defect  of  mind  was  known  to  the  other 
contracting  party."*  And  this  view  has  obtained  in  a 
number  of  cases  in  Eno;land  and  the  United  States.  Thus  it 
has  been  held  no  defense  to  an  action  for  labor  done  and 
goods  sold,  that  the  defendant  was  of  unsound  mind,  unless 
the  plaintiff  knew  the  fact,  or  took  advantage  of  it.^  But 
we  can  see  no  philosoj)hy  in  these  rulings.  If  the  defendant 
had  no  fiiculties  of  discretion,  and  were  in  fact  deranged, 
the  mere  circumstance  that,  for  the  time  being,  he  so  deported 
himself  as  to  conceal  his  lunacy  or  imbecility,  cannot  alter 
his  right  to  be  protected  against  his  own  misfortune.  And 
though  honest  persons  may  be  ignorant  of  his  condition, 
that  is  their  misfortune,  and  they  should  not  be  allowed  to 

'  Harrison  v.  Richardson,  1  Mood.  &  Rob.  504  ;  Byles  (Sharswood'3  ed.) 
[•60],  150. 

"  Beverley's  Case,  4  Rep.  120;  Stroud  v.  Marshall,  Cro.  Eliz.  398;  1  Parsons 
on  Contracts,  383. 

=  Edwards  on  Bills,  03;  Story  on  Bills,  §  100;  Story's  Eq.  Juris.  §  222;  Byles 
on  Bills  (Sharswood's  ed.)  [*G0].  150  ;  see  1  Parsons  N.  &  B.  149. 

'  1  Parsons  N.  &  B.  149,  150. 

»  Molton  V.  Camroux,  4  Exch.  17  ;  Brown  v.  Todrell,  3  Car.  &  P.  30;  Moody 
&  M.  105;  Beals  v.  Shcc,  10  Penn.  St.  56;  Byles  (Sharswood's  ed.)  [61],  151. 


LUNATICS,    IMBECILES   AND  DRUNKARDS.  185 

throw  it  upon  one  already  beljiless.^  "  It  is  a  hard  case  either 
way,  but  it  is  veiy  important  that  courts  of  justice  should 
afford  protection  to  those  individuals  who  are  unfortunately 
unable  to  be  their  own  guardians,"  is  the  language  of  Lord 
Tenterden,  C,  J.,  in  a  case  where  a  note,  drawn,  in  an  unu- 
sual form,  by  an  imbecile,  was  held  void  in  the  hands  of  an 
innocent  indorsee.^  And  no  matter  how  perfect  the  note 
may  be  in  form,  it  would  be  void  in  the  hands  of  every  per- 
son, however  innocent,  as  against  the  imbecile  or  lunatic ;  ^ 
but  in  this  view,  so  obviously  reasonable  and  just,  the  au- 
thorities are  not  entirely  concurrent. 

§  211.  Mere  weakness  of  mind,  not  amounting  to  im- 
becility or  insanity — mere  immaturity  of  reason,  or  want  of 
experience  and  skill  in  business,  is  no  ground  of  defense 
either  in  law  or  equity,  provided  no  fraud  has  been  practiced 
on  the  party .^  But  if  the  weakness  of  mind  be  so  great  as 
to  incapacitate  the  party  to  guard  against  imposition  and 
undue  influence,  it  will  suffice  to  vacate  his  contracts.^ 

§  212.  hi  respect  to  necessaries  an  exception  arises.  In 
this  regard  an  imbecile  stands  upon  the  footing  of  an  infant. 
And  his  executed  contracts  for  necessaries,  made  while  he 
was  temporarily  or  apparently  sane,  wdth  a  party  acting  in 
entire  good  faith,  w^ould  be  enforced.®  And  if  a  bill  or  note 
w^ere  executed  by  him  for  necessaries  under  such  circum- 
stances, it  would  doubtless  be  valid,  at  least  to  the  extent  of 
their  actual  and  proven  value.'''     A  lunatic  has  been  held 

'  Van  Patton  v.  Beals,  46  Iowa,  63, 

'  Sentance  v.  Poole,  3  Car.  &  P.  (1837);  Chitty  on  Bills  (18  Am.  ed.)  [*18J^ 
24  ;  Thomson  on  Bills  (Wilson's  ed.)  455. 

'  Seaver  v.  Phelps,  11  Pick.  304,  -nhere  it  was  held  that  an  imbecile  could  not 
pledge  a  note,  although  the  pledgee  were  entirely  ignorant  of  his  condition,  and 
innocent  of  fraud.     Van  Patton  v.  Beab,  46  Iowa,  63. 

*  Stew^art  v.  Liapenard,  26  Wend.  299;  Faruum  v.  Brooks,  9  Pick.  312;  Os- 
mond V.  Fitzroy,  3  P.  Wms.  129;  Lewis  v.  Pead,  1  Ves.  Jr.  19. 

''  Johnson  v.  Chadwell,  8  Humph.  145. 

"  McCullis  V.  Bartlett,  8  N.  H.  569 ;  La  Rue  v.  Gilkyson,  4  Penn.  St  375  ; 
Richardson  v.  Strong,  13  Ired.  106. 

'  1  Parsons  N.  &  B.  149;  Van  Patton  v.  Marks,  4G  Iowa.  63. 


18()  PERSONS  PARTIALLY   Oil   WHOLLY   DISQUALIFIED. 

boiiiul  for  medical  services  rendered  his  wife  ;  ^  and  in  En- 
gland, where  a  nobleman  ordered  carriages  suitable  to  his 
rank,  and  the  coachmaker  supplied  them  bona  fide,  and  they 
were  actually  used,  it  was  held  that  an  action  was  maintain- 
able on  the  contract,  not^vithstanding  there  had  l)een  an  in- 
quisition of  lunacy  iiuding  him  to  be  of  unsound  mind  at 
the  time  the  carriages  were  ordered.'* 

§  213.  In  the  United  States  inquisitions  of  lunacy,  under 
statutes  providing  for  the  appointment  of  guardians  over 
persons  of  unsound  mind,  have  been  frequently  regarded  as 
conclusive  evidence  of  lunacy  as  against  all  persons.^  But 
other  authorities  hold  the  inquisition  conclusive  evidence 
only  as  against  the  parties  to  it ;  and  permit  others  to  rebut 
it  by  clear  evidence.^  And  this  seems  to  us  the  best  view.^ 
In  England,  the  inquisition  is  only  presumptive  evidence  of 
lunacy.'^     Before  office  found,  the  acts  of  a  lunatic  have  been 

'  Pearl  v.  McDowell,  3  J.  J.  Marsh,  658 ;  Fitzgerald  v.  Reed,  9  Smeed  &  M.  94. 

''  Baxter  v.  Earl  of  Portsmouth,  7  Dow.  &  Ry.  614;  2  Car.  &  P.  178.  In  Dune 
V.  Kirkall,  8  C.  «fc  P.  679,  it  was  held  that  a  lunatic  was  bound  by  agreement  for 
use  and  occupation  of  a  house,  although  not  necessary  for  her,  it  not  appearing 
that  tlie  plaintiff  knew  she  was  a  lunatic. 

'Leonard  v.  Leonard,  14  Pick.  280;  Wadsworth  v.  Sherman,  14  Barb.  169; 
Fitzhugh  V.  Wilcox,  12  Barb.  235 

«  Den  V.  Clarke,  5  Hals.  117;  Rogers  v.  Walker,  6  Penn.  St.  371 ;  Edwards  on 
Bills,  64. 

"  Hicks  V.  Marshall,  15  N.  Y.  S.  C.  328  (1876).  In  this  case  suit  Avas  brought 
against  the  maker  of  a  note  by  a  lonafide  holder  for  value  without  notice  of  any 
defect.  Proceedings  upon  an  inquisition  of  lunacy,  had  after  making  of  the 
note  and  bringing  of  the  suit,  were  given  on  evidence,  and  the  defendant  de- 
clared to  be  of  unsound  mind  when  he  made  the  note.  It  was  held  that  ti»e  in- 
quisition established  prima  facie  the  insanity  of  the  defendant  at  the  time  he 
made  the  note,  and  that  in  order  to  recover,  the  plaintiffs  must  show  either  that 
he  was  sane  at  the  time,  or  that  he  had  received  such  a  consideration  for  the 
note,  that  justice  and  equity  required  it  to  be  paid  out  of  his  estate. 

In  Osterhout  v.  Shoemaker,  3  Hill,  516,  Bronson,  J.,  says:  "I  see  no  princi- 
ple upon  which  the  inquisition  taken  upon  a  commission  of  lunacy  can  be  given 
in  evidence  to  defeat  the  rights  of  third  persons  who  were  strangers  to  the  pro- 
ceedings. *  *  But  it  seems  to  l)e  settled  that  such  evidence  is  admissi- 
ble, though  not  conclusive."  See  also  Hart  v.  Dearaer,  6  Wend.  497;  Goodall  v. 
Harrington,  3  N.  Y.  S.  C.  345;  Hoyt  v.  Adee,  3  Lansing,  173. 

"  Sergeson  v.  Sealcy,  2  Atk.  412;  Faulder  v.  Silk,  3  Camp.  126. 


LUNATICS,    IMBECILES  AND  DRUNKARDS.  187 

said  to  be  voidable  only  ;  ^  afterward  void.-  But  this  dis- 
tinction would  not  extend  so  far  as  to  prevent  the  contract 
of  a  lunatic  from  being  ratified  and  confirmed  after  his 
restoration  to  sanity.^  And  if  after  restoration,  he  continues 
to  receive  benefits  under,  instead  of  disafiirming  the  contract, 
it  will  be  deemed  a  ratification."* 

§  214.  Driinlcenness  is  a  species  of  mental  aberration, 
produced  by  intoxicating  stimulants.  And  if  a  person  be- 
come so  diunk  as  to  be  deprived  of  understanding  and  reason, 
there  is  no  doubt  that,  while  in  such  condition,  he  has  no  ca- 
pacity to  enter  into  a  contract.  And  if  he  should  sign  a 
negotiable  instrument,  either  as  maker,  drawer,  indorser,  or 
acceptor,  it  would  certainly  be  void  as  to  all  parties  having 
notice  of  the  condition  in  which  he  signed  it.^  If  the  drunk- 
enness were  so  complete  as  to  suspend  all  rational  thought, 
the  better  opinion  is  that  any  instrument  signed  by  the  party 
w^ould  be  utterly  void  even  in  the  hands  of  a  hona  fide 
holder  without  notice,  for,  although  it  may  have  been  the 
party's  own  fault  that  such  an  aberration  of  mind  was  pro- 
duced, when  produced,  it  suspended  for  the  time  being  bis 
capacity  to  consent,  which  is  the  first  essential  of  a  contract.^ 
"  It  is  just  the  same,"  says  Alderson,  B.,  "  as  if  the  defendant 
had  written  his  name  on  the  bill  in  his  sleep  in  a  state  of 
somnambulism."  '^  But  it  has  been  thouglit  and  held,  that 
even  when  the  drunkenness  was  complete,  a  bill  or  note  then 
signed  would  be  valid  in  the  hands  of  a  hona  jide  holder 
without  notice.^     If  the  party  were  fully  aware  of  what  he 

'  Jackson  v.  Gumaer,  2  Cow.  552. 

'  Pearl  v.  McDowell,  3  J.  J.  Marsh.  658;  Edwards  on  Bills,  64. 

'  1  Parsons  N.  &  B.  151. 

*  Arnold  v.  Riebmond  Iron  Works,  1  Gray,  434 ;  but  see  Berkeley  v.  Cannon, 
3  Ricb.  (Law)  136. 

"  Gore  V.  Gibson,  13  M.  &  W.  623 ;  Pitt  v.  Smith,  3  Camp.  33  ;  Molton  v.  Cam- 
rony,  2  Exch.  487  ;  4  Exch.  17  ;  Wigglesworth  v.  Steers,  1  Hening  &  Mud.  70  ; 
Jenners  v.  Howard,  6  Blackf.  240  ;  Clark  v.  Caldwell,  6  Watts,  139;  1  Parsons 
on  Contracts,  383-84. 

'  1  Parsons  N.  &  B.  151.  '  Gore  t.  Gibson,  supra. 

*  State  Bank  v.  McCoy,  69  Penn.  St.  204  ;  Johnson  v.  ]Medlicott,  3  P.  Wms. 
130;  Thomson  on  Bills  (Wilsons  cd.)  6:3;  Chitty  on  Bills  (13  Am.  ed.)  [*1S],  24. 


188  PERSONS  PARTIALLY  OR  WHOLLY   DISQUALIFIED. 

was  doing  when  lie  signed  the  paper  it  woiihl  clearly  be 
Inudinof,  as  we  think,  in  the  hands  of  a  bona  fide  holder.^ 
Clearly,  "  the  merriment  of  a  cheerful  cup,  which  rather 
]-evives  the  spirits  than  stupefies  the  reason,  is  no  hindrance 
to  the  contracting  of  just  obligations."  - 

§  215.  If  the  party  made  himself  drunk  for  the  purpose 
of  enterinir  into  aofreements  and  then  avoidius^  them,  the 
fraudulent  intent  antedating  his  drunkenness  w^ould  render 
it  incompetent  for  him  to  avail  of  the  defense.^ 

Drunkenness,  when  relied  upon  as  a  defense,  must  be 
specially  pleaded.''  If  the  party  buy  goods  when  drunk,  and 
keep  them  when  sober,  he  estops  himself,  and  cannot  then 
plead  his  drunkenness.^  Where  a  note  based  on  insufficient 
consideration  w^as  obtained  from  a  person  under  the  influence 
of  liquor  at  the  time  of  its  execution,  and  enfeebled  in  body 
and  mind  by  long-continued  disease  and  drunkenness,  it  was 
held  in  Alabama  that  a  presumption  of  fraud  arises,  which 
must  be  countervailed  by  proof  of  fair  consideration,  and  fair 
dealing  on  the  part  of  the  holder  seeking  to  enforce  pay- 
ment.*^ 

SECTION  II. 

ALIENS   AND    ALIEN    ENEMIES. 

§  216.  The  mere  fact  that  a  person  is  an  alien  and  a  resi- 
dent of  a  foreign  country  in  nowise  impairs  the  right  of 

'  In  Miller  v.  Finloy,  26  ]\Iich.  249,  it  was  claimed  that  a  father  who  signetl  a 
note  already  signed  by  his  son,  while  in  such  a  state  of  drunkenness,  procured 
by  the  payee,  that  he  was  not  responsible  by  his  acts.  The  evidence  for  the 
plaintiff  tended  to  show  that  he  was  fully  aware  of  the  transaction  between  his 
son  and  the  payee,  and  took  some  part  in  it.  The  evidence  of  the  son  did  not 
indicate  his  extreme  intoxication ;  and  the  father  himself  seemed  to  recollect 
eigning  the  note.  Campbell,  J.,  said  :  "  The  defense  rests  upon  the  ground  of 
fraud,  and  not  of  illegality,  and  while  if  the  old  man's  story  is  true,  the  note 
would  be  voidable  as  against  the  payee,  it  would  not  be  a  nullity  as  to  all  per- 
sons." 

"  Puffendorf,  Book  3,  ch.  6,  §  4  ;  Story  on  Contracts,  §  27;  Cook  v.  Clay- 
worth,  18  Vesey,  12,  Sumner's  note. 

=  1  Parsons  N.  &  B.  Ill ;  1  Parsons  on  Contracts,  384,  385. 

*  Gore  V.  Gibson,  1:3  M.  &  W^  G23;  Byles  on  Bills  (Sharswood'sed.)  [*61],  lo3. 

"  Gore  V.  Gii)son.  13  M.  &  W.  023.  "  Holland  v.  Barnes,  53  Ala.  83. 


ALIENS  AND   ALIEN   ENEMIES.  189 

the  citizens  of  another  country  to  contract  with  him,  or  his 
right  to  contract  with  them.  On  the  contrary,  commercial 
intercourse  between  different  nations,  under  relations  of 
amity  with  each  other,  are  to  be  favored  and  encouraged. 
But  if  war  should  break  out  between  two  countries,  it  at 
once  interposes  a  barrier  to,  and  an  interdiction  of,  all  com- 
mercial correspondence,  intercourse  and  dealing  between  the 
citizens  of  the  two  countries.  The  hostile  countries  become 
sealed  as  against  each  other;  and  both  for  the  purpose  of 
identifying  the  citizen  tlioroughly  and  emphatically  with  the 
policy  and  interests  of  his  country,  and  of  preventing  com- 
munications to  the  enemy  which  might  be  damaging  in  their 
character,  the  law  of  nations  absolutely  prohibits  all  inter- 
course between  the  citizens  of  belligerent  countries,  and 
pronounces  all  contracts  between  them  utterly  void.^  Such 
contracts  are  not  merely  voidable,  but  ah  origine  void,  and 
incapable  of  being  enforced  or  confirmed.^  And  the  rule 
applies  not  only  to  citizens  and  native  subjects,  but  as  well 
to  all  persons  domiciled  in  the  respective  countries.^ 

This  disability  of  alien  enemies  to  contract  does  not  rest 
upon  any  peculiarity  of  English  or  American  law,  but  upon 
the  universal  public  law^  of  nations,  as  stated  and  approved 
by  the  most  eminent  writers,  such  as  Grotius,  Puffendorf, 
Vattel,  Bynkershoek ;  and  in  the  present  age,  Wheatou, 
Story,  Kent,  Parsons,  and  others.^ 

§  217.  It  results  from  these  principles,  that  if  the  United 
States  and  the  United  Kingdom  of  Great  Britain,  Scotland 
and  Ireland  were  at  war,  a  citizen  of  the  United  Kingdom 

'  Giiswold  V.  Waddington,  19  Johns.  488,  Chancellor  Kent  saying  of  this  in- 
terdiction :  "  It  reaches  to  all  interchange  or  removal  of  property,  to  all  negotia- 
tion and  contracts,  to  all  communication,  to  all  locomotive  intercourse,  to  a  state 
of  utter  seclusion,  to  any  intercoiirse  but  one  of  open  hostility,  to  any  meeting^ 
but  in  actual  combat,"     The  Julia,  8  Cranch,  131. 

-  Griswold  v.  Waddington,  16  Johns.  43S  ;  Thomson  on  Bills,  73  ;  Story  on 
Notes,  §  94. 

'  McConnell  v.  Heetor,  1  Bos.  &  P.  113  ;  Roberts  v.  Hardy,  3  Maule  &  Sel.  533. 

*  Wheaton's  International  Law,  5c6;  Story  on  Bills,  §  99;  1  Parsons  N.  &  B. 
153;  1  Kent  Com.  67. 


190  PERSONS   PARTIALLY   OR   WHOLLY  DISQUALIFIED 

could  not  legally  draw  a  bill  of  exchange  upon  a  citizen  of 
the  United  States ;  ^  nor  could  a  citizen  of  the  United  States 
draw  a  bill  upon  a  citizen  of  the  United  Kingdom.^  This 
latter  proposition  of  law  has  been  denied  in  one  of  the  cir- 
cuit courts  of  the  United  States,  and  in  Kentucky  ;^  but  the 
weight  of  authority,  as  well  as  the  clearly  defined  principles 
of  international  law,  which  have  been  already  stated,  over- 
whelmingly sustain  the  text.  And  it  has  been  observed, 
in  respect  to  the  circuit  court  decision  above  referred  to, 
that  "even  that  case  contains  special  circumstances  not  exist- 
ing in  the  present  case.     The  bill  in  that  case  was  drawn 


'  Willison  V.  Pattesou,  7  Taunt.  439;  1  Moore,  133  (1817).  In  this  case,  a 
British  subject,  resident  in  England,  had  in  his  hands  funds  of  an  alien  enemy, 
who  drew  on  him  a  bill  payable  to  the  drawers  order,  and  indorsed  it  to  the 
plaintiff,  an  English-born  subject  resident  in  hostile  territory.  Held,  that  the 
indorsee  could  not  recover. 

In  Moon  v.  Foster,  decided  by  Chase,  C.  J.,  in  U.  S.  Circuit  Court  at  Rich- 
mond, Va.,  in  1868  (Chase's  decisions  reported  by  Johnson,  p.  223),  it  appeared 
that  during  the  late  Confederate  war  the  drawer  at  Winslow,  N.  C,  drew  on  a 
drawee  at  Portsmouth,  Va.,  the  latter  place  being  within  the  United  States 
military  lines.  The  chief  justice  instructed  the  jury  that  "if  they  should  find 
that  Winslow  was  not,  at  the  time  of  making  and  issuing  the  draft,  in  the  occu- 
pation or  control  of  the  national  forces,  then  the  draft  in  controversy,  being  an 
act  of  i)rohibited  commercial  intercourse,  was  not  valid,  negotiable  paper.'' 
Cited  in  19  Grat.  433.  Billgerry  v.  Branch,  19  Grat.  393,  433;  Woods  v.  Wilder, 
43  N.  Y.  164;  Wheaton  on  Inter.  Law%  §  317;  1  Kent  Com.  67;  Story  on  Bills, 
§  100;  Thomson  on  Bills,  73;  1  Parsons  N.  &  B.  152;  Tarletou  v.  Southern  Bank, 
49  Ala.  229. 

^^  Ibid. 

'  United  States  v.  Barker,  1  Paine's  C.  C.  156  (1820).  On  the  2d  of  July, 
1814,  a  bill  of  exchange  was  drawn  by  a  citizen  of  the  United  States  on  a  British 
subject  in  Liverpool,  in  favor  of  the  United  States,  which  was  then  at  war  with 
Great  Britain.  It  was  held  a  lawful  transaction,  and  Livingston,  J.,  said:  "The 
opinion  of  the  court,  then,  is,  that  the  plaintiff,  by  drawing  the  bill  in  question, 
violated  neither  the  laws  of  nations  nor  any  municipal  regulation  of  his  own 
country;  that  he  did  an  act  perfectly  innocent,  if  not  meritorious,  and  which 
lias  too  long  received  the  sanction  of  public  opinion  and  general  usage  to  render 
it  necessary  or  proper  to  be  checked  by  the  interposition  of  a  court  of  justice, 
which  could  not  be  done  without  sacrificing  the  interest  of  our  innocent  and 
unsuspecting  merchants,  to  gratify  the  cupidity  of  those  who  may  since  have 
been  advised  that  the  transaction  was  unlawful,  and  may  be  desirous  of -taking 
advantage  of  it."  Followed  and  ai)proved  in  Haggard  v.  Conkwright,  7  Bush 
(Ky.),  16  (18C9). 


ALIENS  AND  ALIEN   ENEMIES.  101 

here  by  a  citizen  of  tlie  United  States  against  funds  which 
he  had  in  England,  and  was  indorsed  to  the  United  States 
Government,  and  prosecuted  in  its  name  and  Lehalf "  ^  It  was 
not  upon  these  special  circumstances  that  the  decision  turned, 
but  they  suggest  an  exception  to  the  general  rule  in  favor  of 
the  Government,  which,  upon  considerations  of  public  policy, 
may  govern  itself  differently  from  its  subjects. 

§  218.  In  like  manner,  the  citizen  of  a  country  cannot  ac- 
cept a  bill  drawn  by  an  alien  enemy — that  is,  a  citizen  of  a 
country  at  war  with  his  own.-  Nor  indorse  a  bill  or  note 
to  such  alien  enemy,  nor  be  indorsee  of  one  from  him.^  Nor 
can  he  execute  a  note  to  such  alien  enemy,  nor  be  payee  of  a 
note  made  by  him;"*  though  it  would  seem  that  if  the  note 
were  given  by  an  agent-acting  under  authority  given  before 
the  Avar,  and  in  renewal  of  a  note  made  before  the  war,  it 
would  be  valid.^ 

In  the  late  war  between  the  Confederate  States  and  the 
United  States,  many  transactions  between  parties  on  opposite 
sides  of  the  hostile  line  occurred,  and  the  principle  that  for- 
bids communication  between  alien  enemies  has  been  regarded 
by  the  courts  of  the  United  States,  and  of  the  several  States, 
as  applica])le  to  them.  For  while  the  Confederate  States 
were  short  lived,  for  the  time  being  they  waged  war  like  an 
independent  nation,  and  were  accorded  belligerent  rights.^ 

§  219.  The  subject  of  a  country  at  war  with  another, 
cannot  acquire  the  rights  of  an  indorsee  of  a  bill  drawn  by 
an  alien  enemy  iipon  a  citizen  of  his  own  country,  provided 
he  knew  at  the  time  of  the  state  of  war  between  them ;  for 
by  receiving  a  bill  which  is  enemy's  property,  he  makes  him- 


■  Woods  V.  Wilder,  43  N.  T.  164,  Rapallo,  J.  '  Ibid. 

'  Billgerry  v.  Branch,  19  Grat.  393. 

♦  Ibid.     McVeigh  v.  Bank  of  Old  Dominion,  '2G  Grnt.  785. 

*  McVeigh  V.  Bank  of  tiie  Old  Dominion,  26  Grat.  785. 

"  Billgerry  V.  Branch,  19  Grat.  393;  Moon  v.  Foster,  Chief  Justice  Chase's 
<lccision,  cited  in  19  Grat.  433;  Chase's  Decisions,  232;  Wood  v.  Wilder,  43  N. 
Y.  164;  Ward  v.  Smith,  7  Wall.  447;  The  Prize  Cases,  2  Black  (S.  C.)  635; 
The  Venice,  2  Wall.  258 ;  The  Hampton,  5  Wall.  372 ;  The  William  Bagaley,  5 
Wall.  377 ;  Hanger  v.  Abbott,  6  W^all.  532;  Tarleton  v.  Southern  Bank,  49  Ala. 
229;  McVeigh  v.  Bank  of  Old  Dominion,  26  Grat.  785. 


192  PERSONS  PARTIALLY   OR  WHOLLY  DISQUALIFIED. 

self  an  instrument  to  enable  such  enemy  to  sue  in  the  courts 
of  his  own  country,  and  either  encourages,  or  participates  in 
that  intercourse  and  correspondence  which  the  laws  of  na- 
tions interdict.^  If  it  does  not  appear  that  the  indorsee 
knew  that  the  instrument  was  inv^alid  as  between  the  orig- 
inal parties  on  account  of  the  existence  of  war  between  their 
respective  countries,  they  w^ould  be  liable  to  him  upon  it ; 
but,  as  a  general  rule,  the  place  ^vhere  the  bill  or  note  is 
dated,  and  the  names,  or  address  of  the  parties  thereon  noted, 
will  indicate  its  true  nature ;  and  a  declaration  of  war  is 
always  matter  of  such  immediate  and  general  notoriety  that 
no  one  can  long  remain  ignorant  of  it.^  It  has  been  held, 
however,  that  an  assignment  of  a  certificate  of  deposit  issued 
by  a  bank  within  the  lines  of  a  hostile  government,  is  valid.* 

§  220.  Although  a  bill  or  note  drawm,  indorsed  or  ac- 
cepted in  favor  of  an  alien  enemy,  may  not  be  valid  as  be- 
tween the  original  parties,  yet  if  it  be  drawn  upon  the  citizen 
of  a  hostile  country  by  an  alien  enemy,  in  favor  of  a  neutral, 
and  no  illegal  use  of  it  were  intended  or  particij^ated  in,  it 
would  be  valid  in  the  hands  of  the  neutral  as  against  the 
draw^er,  and  also  as  against  the  drawee  if  he  accepted.  And 
the  same  rule  would  apply  to  indorsements  to  neutrals  of 
bills  or  notes  executed  betw^een  citizens  of  countries  at  war ; 
and  to  the  drawing  of  bills,  making  of  notes,  and  indorsing 
of  bills  or  notes  by  neutrals  in  favor  of  fellow-subjects  or 
other  neutrals ;  for  a  state  of  war  does  not  suspend  commerce 
between  neutrals.* 

§  221.  Except lo7is  to  general  rule. — There  are  some  excep- 
tions to  the  general  interdiction  of  intercourse  between  alien 
enemies.  Thus,  if  a  prisoner  of  war  should  draw  a  bill  on  a 
fellow-citizen  in  his  own  country,  or  should  make  or  indorse 
a  note,  that  bill  or  note,  whether  payable  or  indorsed  to  an 
alien  enemy,  would  be  valid  if  it  were  drawn,  made,  or  in- 

'  Tlaomson  on  Bills,  74.  '  Thomson  on  Bills,  74. 

'  Morrison  v.  Lovell,  4  Ilagan  (West.  Va.)  346. 

*  Story  on  Bills,  j§  103,  104;  Story  on  Notes,  §§  98,  99;  Ed^\ards  on  Bills,  74. 


ALIENS  AND  ALIEN   ENEMIES.  193 


(loi'sed  for  the  purpose  of  obtaining  necessary  articles  of  sub- 
sistence or  comfort.^  l^o,  if  it  were  drawn,  made,  or  indorsed 
for  the  ransom  of  a  captured  ship,^  or  for  the  repairs  of  a 
ship  in  an  enemy's  country,  protected  by  cartel  between  the 
belligerents.'^  And  such  instruments  might  be  sued  upon  on 
the  return  of  peace.  Bnt  it  w^ould  have  to  appear  affirma- 
tively that  the  consideration  of  the  bill  or  note  exempted  it 
from  the  general  rule.  After  the  ex])iration  of  a  temporary 
act  prohibithig  the  payment  of  bills  drawn  during  a  state  of 
war,  under  a  penalty,  a  mere  verbal  promise  to  pay  such  bills 
would  be  valid.* 

§  222.  The  effect  of  w^ar  between  two  countries  is  to 
suspend  at  once  all  contracts  between  the  citizens  of  those 
countries  which  require  communication  between  them.^  But 
if  an  alien  enemy  has  an  agent  in  the  hostile  country,  war 
does  not  revoke  the  agency  ;  and  the  agent  may  still  act  for, 
receive,  and  pay  out  money  for  his  principal ;  give  or  receive 
notice  of  dishonor  of  his  commercial  paper,  and  represent  his 
principal  in  all  transactions  not  contrary  to  the  policy  or  in- 
terests of  the  government  wherein  the  agent  resides,^  that  is 
to  say,  provided  they  can  be  conducted  without  intercourse 
or  communication  between  the  citizens  or  subjects  of  the  con- 
tending powers — such  as  agencies  to  collect  and  preserve, 
but  not  to  transmit  money  or  property.*     But  it  seems  they 

•  Daubuz  V.  Morohead,  C  Taunt,  382;  Edwards  on  Bills,  74. 

-  Kicord  V.  Bettenham,  3  Burr,  1734;  Coniu  v.  Blackburne,  3  Doug.  G41 ; 
Yates  V.  Hall,  1  T.  R.  73. 

'  Patts  V.  Bell,  8  T.  R.  548;  Sackley  v.  Furse,  15  Johns.  338;  Edwards  on 
Bills,  74,  75;  Story  on  Notes,  §  97;  Story  on  Bills,  §  102. 

*  Duhammel  v.  Pickering,  2  Stark.  90. 

'  Griswold  v.  Waddiugton,  IG  Johns.  438. 

"  Ward  V.  Smith,  7  Wall.  447 ;  Dennistoun  v.  Iinbrie,  Wash.  C.  C.  396 ;  3 
Manhattan  Ins.  Co.  v.  Warwick,  30  Grat.  014;  Hale  v.  Wall,  22  Grat.  434; 
Monseaux  V.  Urquhart,  19  La.  485;  Clarke  v.  Morcy,  10  Johns.  70;  Fishery. 
Krutz,  9  Kans.  510;  Hubbard  v.  Matthews,  54  N.  Y.  48;  Malouey  v.  Stephens. 
11  Heiskell,  738. 

'  Small's  Adm'r  v.  Lumpkin,  2S  Grat.  835.     See  cases  in  preceding  note. 
Vol.  I.— 13 


194  PERSONS  PARTIALLY  OR  WHOLLY  DISQUALIFIED. 

must  be  created  before  the  war  begins.^  Of  the  character 
described  is  an  agency  to  receive  notice  of  j^rotest  of  com- 
mercial paper.^ 


SECTI0:N^  III. 


LNTAJSrrS. 


§  2-23.  In  the  next  place  as  to  infants.  Persons  under 
twenty-one  years  of  age  are  minors,  or  infants  as  they  are 
more  generally  termed,  and  contracts  made  by  them  have 
been  divided  into  three  classes :  Fii-st,  void  contracts,  which 
are  those  clearly  to  the  infont's  disadvantage — as,  for  in- 
stance, a  bond  made  wath  a  penalty ;  second,  voidable  con- 
tracts, which  are  those  which  may  or  may  not  be  for  his 
benefit,  according  to  circumstances — as,  for  example,  a  lease 
of  his  lands  rendering  rent ;  and  third,  valid  contracts,  which 
are  such  as  are  entered  into  for  necessaries.^  And  by  neces- 
saries are  meant  those  things  which  are  needed  by  the  infant, 
and  are  suited  to  his  means  and  rank  in  life. 

But  this  distinction,  as  to  void  and  voidable  contracts,  is 
now  regarded  as  practically  obsolete  ;  all  the  contracts  of  an 
infant,  not  in  themselves  illegal,  being  capable  of  ratification 
by  him  after  he  has  attained  his  majority,  and,  therefore,  be- 
ing voidable  only.  For  if  absolutely  void,  they  w^ould  be  in- 
capable of  ratification.* 

'  U.  S.  V.  Lapine,  17  Wall.  602;  U.  S.  v.  Grossmayer,  9  Wall.  73;  Small's 
Aclm'r  V.  Lumpkins,  28  Grat.  835 ;  Hubbard  v.  Matthews,  64  N.  Y.  44. 

=  Hubbard  v.  Matthews,  54  N.  Y.  44. 

'  Story  on  Notes,  §  77. 

*  1  Parsons  on  Contracts,  295;  Byles  on  Bills  (Sharswood's  ed.)  [*.j9]  145; 
Edwards  on  Bills,  Go  ;  2  Kent  Com.  ["'234],  Lect.  31 ;  Bingham  on  Infancy,  45. 

Chancellor  Kent,  in  his  Commentaries,  says  (see  2  Kent's  Com.  Lect.  31) :  '■  ft 
is  held  that  a  negotiable  note  given  by  an  infant,  even  for  necessaries,  is  void ; 
and  his  acceptance  of  a  bill  of  exchange  is  void  ;  and  a  bond  with  a  penalty, 
though  given  for  necessaries,  is  void.  It  must  be  admitted,  however,  that  the 
tciidcncy  of  the  modern  decisions  is  in  favor  of  the^  reasonableness  and  policy  of 
a  very  liberal  extension  of  the  rule,  that  the  acts  and  contracts  of  infants  should 


INFANTS.  195 

§  224.  For  necessaries  an  infant  may  undoubtedly  bind 
himself,  and  the  better  opinion  is  that  he  may  execute  a  note 
not  negotiable  for  the  amount,  the  consideration  of  which 
might  be  inquired  into,  and  his  protection  from  imposition 
insured — he  being  bound  not  absolutely  for  the  amount  of 
the  note,  but  only  for  the  real  value  of  the  necessaries  for 
which  it  was  given.^  But  it  is  denied  by  some  of  the  authori- 
ties that  an  infant  can  execute  any  note  whatever,  of  any 
bindins:  force,  even  for  necessaries.'^  In  Enorland  it  has  been 
held  that  an  infant  may  execute  a  single  bill  (a  bond  with- 
out a  penalty)  for  the  exact  sum  due  for  necessaries  ;  but  not 
a  bond  with  a  penalty,  or  carrying  interest.^  An  infant  can- 
not bind  himself  for  necessaries  when  he  lias  a  parent  or 
guardian  who  supplies  his  wants ;  *  but  when  he  has  authority 
from  his  guardian  or  parent,  he  may  purchase  them  and  bind 
himself  for  them.^ 

§  225.  Negotiable  jyaper  signed  by  infants.— \vi  respect  to 
negotiable  paper  to  which  infants  have  signed  their  names 
as  parties,  it  may  be  stated  as  a  general  principle,  universally 
recognized  wherever  the  common  law  prevails,  than  an  infant 
cannot  bind  himself  absolutely  as  drawer,  indorser,  acceptor, 
or  maker  of  a  bill  of  exchano-e  or  neo'otiable  note.^  In  a 
case  where  the  acceptor  of  a  bill  pleaded  infancy,  and  it  was 

be  deemed  voidable  only,  and  subject  to  their  election,  when  they  become  of  age, 
either  to  affirm  or  disallow  them.  If  their  contracts  were  absolutely  void,  it 
would  follow  as  a  consequence  that  the  contract  could  Lave  no  effect,  and  the 
party  contracting  with  the  infant  would  be  equally  discharged."  See  Harner  v. 
Dipple,  31  Ohio  St.  73;  Reed  v.  Batchelder,  1  Mete.  559. 

'  1  Parsons  N.  &  B.  68. 

"  Bouchell  v.  Clary,  3  Brev.  194;  Chitty  on  Bills  [*19],  26. 

'Russell  V.  Lee,  1  Lev.  86;  Bylcs  (Sharswood's  ed.)  [*57],  U4;  Chitty  on 
Bills  [*19],  26. 

*  Angel  V.  McClellan,  16  Mass.  28;  Guthrie  v.  Murphy,  4  Watts,  80. 
'  Rundel  v.  Keeler,  7  Watts,  237;  Watson  v.  Ileasel,  7  Id.  344. 

•  Williamson  v.  Harrison,  Holt,  359;  Carth.  160;  3  Salk.  197  (1690).  The 
Court  said :  "  Here  the  infant  was  a  trader,  and  the  bill  of  exchange  was  drawn 
in  the  course  of  trade,  and  not  for  necessaries."  Story  on  Notes,  §  78;  Edwards 
on  Bills.  65. 


19G        rEKSo:5sS  partially  or  wholly  disqualified. 

replied  that  it  was  given  for  necessaries,  Lord  Mansfield^ 
C.  J.,  said :  "  Did  any  one  ever  Lear  of  an  infant  being  liable 
as  an  acceptor  of  a  bill  of  exchange  ?  The  replication  is  non- 
sense, and  ouc:ht  to  have  been  demurred  to."  ^  And  althouQ-li 
the  tenor  of  the  modern  authorities  is  to  liberalize  the  law  on 
the  sul  )ject  of  infancy,  the  doctrine  is  generally  followed  that 
an  infant  cannot  be  a  party  to  a  negotiable  instrument — the 
reason  assigned  being,  that  otherwise,  should  it  be  trans- 
ferred to  a  bona  fide  holder  for  value,  and  without  notice  of 
the  infancy,  the  infant,  if  bound  at  all,  would  be  bound  for 
the  entire  sum,  and  if  inquiiy  were  admitted  into  the  con- 
sideration, the  instrument  would  lose  its  character  as  nego- 
tiable paper.^ 

§  226.  The  views  of  this  subject  which  strike  us  as  the 
most  reasonable  may  be  stated  as  follows :  If  the  payee  of  a 
note  made  by  an  infant  were  to  sue  him  u[)on  it  as  maker, 
and  he  pleaded  infancy,  the  payee  might  reply  that  it  was 
executed  for  necessaries,  and  that  such  necessaries  were  rea- 
sonably worth  the  amount  specified  in  the  note.  The  burden 
of  proof  would  rest  upon  the  plaintiff  to  sho^\^  that  the  con- 
sideration was  necessaries,  and  also  to  show  their  value ;  and 
no  more  than  the  value  proved  could  be  recovered.  And 
this  view  would  apply  whether  the  note  were  in  form  nego- 
tiable or  not.^ 

If  the  indorsee  of  the  payee  of  such  a  note  were  to  sue 
the  indorser,  the  latter  would,  of  course,  be  bound  to  him 
whether  the  maker  were  an  infant  or  not ;  for  by  indorse- 
ment he  warrants  the  capacity  of  prior  parties  and  the  entire 

'  Williamson  v.  Watts,  1  Camp.  552. 

'  Swasey  v.  Vanderheyden,  10  Johns.  33;  Wamsley  v.  Lindenberger,  2  Rand. 
478;  McCrillis  v.  How,  2  N.  II.  348;  Conn  v.  Coburn,  7  N.  H.  368;  McMinn  v. 
Richmonds,  6  Yerg.  9 ;  Henderson  v.  Fox,  5  Ind.  489;  Fenton  v.  White,  1  South. 
100;  Bouchell  v.  Clary,  3  Brev.  194  ;  1  Parsons  N.  &  B.  69  ;  Story  on  Notes,  §  68  ; 
Story  on  Bills,  §  84. 

'See  Earle  v.  Reed,  10  Mete.  387;  DuBose  v.  AVhcddon,  4  McCord,  221 
(1827);  Haines' Adm'r  V.  Tannaut,  2  Hill  (S.  C.)  400  (1834);  see  Edwards  on 
Bills,  65;  and  Kyd  on  Bills,  29. 


INFANTS.  197 

validity  of  the  paper/  And  were  the  indorsee  to  sue  the 
maker,  and  he  were  to  plead  infancy,  there  seems  to  be  no 
good  reason  why  it  might  not  be  replied  tliat  the  note  w^as 
given  for  necessaries,  and  that  they  were  Avorth  the  amount 
specified ;  and  that  the  indorsee,  like  the  l)ayee,  should  be 
entitled  to  recover  upon  proving  the  consideration  to  have 
been  necessaries,  and  upon  showing  their  value.^  The  dis- 
tinction taken  in  some  cases,^  that  the  payee  may  sue  the 
infant  as  maker,  but  that  an  indorsee  cannot  do  so,  seems  ex- 
tremely technical  and  unreasonable.  If  not  absolutely  void 
as  to  the  payee,  we  cannot  perceive  why  it  should  be  so  held 
as  to  an  indorsee,  who,  while  be  could  not  stand  upon  a  bet- 
ter footing  than  the  indorser  as  against  the  infant,  certainly 
should  not  be  placed  upon  a  worse ;  for  the  payee  must  gen- 
erally have  a  better  opportunity  to  know  tlie  fact  of  infancy 
than  he.  Nor  can  we  see  that  holdino;  the  oris^inal  consider- 
ation  to  be  open  to  j)roof,  upon  infancy  being  sliown,  would 
damage  the  character  of  a  negotiable  note  more  than  declar- 
ing it  utterly  void. 

Justice  seems  to  require  that  the  mere  negotiable  form  of 
the  jiaper  should  not  destroy  all  validity ;  and  although  it 
could  not  be  said  to  be  negotiable  in  the  full  sense  of  the 
term — protection  to  the  infant — which  is  the  sole  object  of  the 
law — requires  no  more  than  that  his  infancy  should  shield 
him  from  all  liability  beyond  the  actual  value  of  the  necessa- 
ries furnished  ;  and  justice  to  the  holder  demands  that  at 

'  See  Chapter  XXI,  on  Transfer  by  Indorsement. 

'  This  doctrine  is  intimated  in  DuBois  v.  Wheddon,  4  McCord,  221,  by  Chan- 
cellor Nott,  who  said:  "I  sec  no  reason  why  he  (an  infiint)  may  not  be  bound  by 
a  bond  or  a  bill  of  exchange.  It  is  not  true  that  no  inquiry  can  be  made  into 
the  consideration.  The  statutes  against  usury  and  gaming  are  every  day  set  off 
as  defenses  to  actions  on  bills  of  exchange  and  negotiable  notes,  even  in  the 
hands  of  innocent  indorsees."  In  Bradley  v.  Pratt,  23  Vt.  378,  Redfield,  J., 
favors  this  view ;  but  says  it  could  not  probably  be  recognized  "  without  too 
great  an  infringement  of  the  rules  of  law  in  regard  to  negotiable  paper  while 
current." 

'  Earle  v.  Reed,  10  Mete.  387. 


198  PERSONS  PARTIALLY  OR  WHOLLY  DISQUALIFIED. 

least  that  should  be  given  him.^     The  Scotch  law  is  entirely 
in  harmony  with  these  views.^ 

§  227.  Infant  as  ^;rt?/e<?  and  indorser. — An  infant  may 
undoubtedly  be  the  payee  of  a  bill  or  note,  and  may  sue 
upon  and  enforce  it,  since  it  cannot  be  but  for  his  benefit  if 
the  consideration  thereof  does  not  move  from  himself  but 
from  some  tliird  person,  or  if  it  be  for  a  debt  justly  due  to 
him.^  But  whether  or  not  an  infant  can  personally  receive 
payment  is  a  diiferent  question.  As  a  general  rule  payment 
should  be  made  to  his  guardian,  and  if  it  be  made  to  the-  in- 
fant personally,  and  be  thereby  dissipated  and  lost,  the  payer 
w^ould  not  be  discharged.*  An  infant  may  also  indorse  a  bill 
or  note  made  payable  to  him  or  order,  so  far  at  least  as  to 
enable  the  indorsee  to  recover  against  the  drawer,  acceptor 
or  maker,  who  by  undertaking  to  pay  to  him  or  to  his  order, 
are  estopped  to  deny  his  capacity  to  order  payment  to  be 
made  to  the  indorsee.^     And  to  this  extent  the  infant's  in- 


'  In  a  note  to  Byles  on  Bills  [*59]  148,  note  1,  tbe  learned  American  editor, 
Judge  Sharswood,  says :  "  A  note  may  be  valid  as  such,  though  not  negotiable  ; 
in  other  words,  though  it  may  be  so  circumstanced  as  to  let  in  all  inquiries  as  to 
its  consideration  in  the  hands  even  of  a  lona  fide  holder.  So  here,  on  proof  that 
the  maker  is  an  infant,  the  negotiability  of  the  note  is  at  an  end ;  but  it  does  not 
cease  to  be  a  note.  It  may  be  sued  on  by  the  holder  in  his  own  name.  He 
stands  in  the  shoes  of  the  original  payee,  and  can  recover  whatever  he  would 
have  been  entitled  to  recover.  If  the  note  is  voidable,  then  without  ratification 
it  cannot  be  sued  on  at  all.  The  holder,  at  most,  must  be  subrogated  to  the 
rights  of  the  original  payee,  in  an  action  against  the  infant  in  the  name  of  the 
payee,  on  a  declaration  founded  on  the  original  consideration.  It  is  evident  that 
the  Kentucky  case  (Beeler  v.  Young,  1  Bibb,  519)  can  only  be  supported  on  this 
footing;  and,  contrary  to  its  own  syllabus,  it  really  affirms  tJuit  the  note  is  valid 

as  a  note,  though  it  is  not  a  negotiable  note." 
'  Thomson  on  Bills  (Wilson's  ed.) 
2  Warwick  v.  Bruce,  2  Maul.  &  S.  205;  Holladay  v.  Atkinson,  5  Barn.  &  C. 

501  ;  Teed  v.  Elworth,  14  East,  210 ;  Story  on  Notes,  §  79 ;  Story  on  Bills,  §  85 ; 

Byles  on  Bills  (Sharsvvood's  ed.)  [*G0],  150;  Cliitty  on  Bills  [*20J,  28. 
*  Phillips  V.  Paget,  2  Ark.  80. 
'Nightingale  v.  Withington,  15  Mass.  272;  Frasier  v.  Massey,  14  lud.  352; 

Hardy  v.  Waters,  38  Me.  450 ;  Grey  v.  Coopers,  3  Doug.  65  (1782) ;  Taylor  v. 

Croker.  4  Esp.  187  (1803);  Jones  v.  Darch,  4  Price,  300  (1817);  Drayton  v.  Dale, 

2  B.  &Q.  293;  2  Dow.  &  By.  534  (1823);  Chicty  on  Bills  [*20],  26-29;  Story  on 

Notes,  §  80;  Story  on  Bills,  §  85;  Thomson  on  Bills,  134,    135;  Byles  (Shars- 

wood's  ed.)  [*60],  149;  Edwards,  246. 


INFANTS.  J  99 

dorsement  would  be  valid,  even  if  made  by  bis  authorized 
agent  or  attorney.^  "  It  would  be  absui'd,"  it  has  been  said 
by  Parker,  C.  J.,  "  to  allow  one  who  has  made  a  promise  to 
pay  to  one  who  is  an  infant,  or  his  order,  to  refuse  to  pay  the 
money  to  one  to  whom  the  infant  had  ordered  it  to  be  paid, 
in  direct  violation  of  his  promise."  ^  And  in  respect  to  the 
drawer  of  a  bill  payable  to  an  infant  or  order,  Lord  Mans- 
field said:  "The  drawer  says.  Met  anybody  trust  the  payee 
on  my  credit.'  "  ^ 

§  228.  The  infant  cannot,  of  course,  be  bound  by  his  in- 
dorsement to  pay  the  bill  or  note,  and  Story  says :  "  The 
infant  may  indeed  avoid  it,  and  intercept  the  payment  to 
the  indorsee,  or  by  giving  notice  to  the  antecedent  parties  of 
his  avoidance,  furnish  to  them  a  valid  defense  against  tlie 
claim  of  the  indorsee.  But  until  he  does  so  avoid  it,  the 
indorsement  is  to  be  deemed,  in  respect  to  such  antecedent 
parties,  as  a  good  and  valid  transfer."  ^  But  whatever  might 
be  the  infant's  right  to  rescind  his  contract  as  against  those 
deriving  title  through  him,  it  is  clear  that  when  they  have 
parted  with  value  for  the  instrument,  prior  parties  who,  by 
making  it  payable  to  the  infant,  have  warranted  his  capacity 
to  indorse  it,  cannot  escape  responsibility  for  such  w^arrauty. 
And  they  may  consequently  be  compelled  to  pay  the  bill  or 
note  twice.^  The  case  would  be  different  in  respect  to  an 
indorsement  by  an  infant  himself  an  indorsee  and  not  the 
payee.^ 

§  229.  An  infant's  indorsement  is  voidable,  not  absolutely 
void.'^  And  it  has  been  thought  that  where  he  receives  a  full 
consideration  for  the  transfer  of  property,  such  as  a  negoti- 
able bill  or  note,  and  makes  a  manual  delivery  of  it,  his  right 


'  Hardy  v.  Waters,  38  Me.  450.  ''  Nightingale  v.  Withington,  stipra. 

'  Grey  v.  Cooper,  3  Doug.  65.  *  Story  on  Notes,  §  80. 

'  Smith  V.  Marsack,  6  C.  B.  488  ;  18  L.  J.  C.  P.,  65  (1848);  see  post,  §  242, 
note  5,  and  ante,  §  90;  Taylor  v.  Croker,  4  Esp.  187. 

•  See  Story  on  Bills,  §  85,  p.  98  (Bennett's  ed.),  note  3. 

"  Goodsell  V.  Myers,  3  Wend.  479;  Edwards  on  Bills,  245;  cojitra,  see  10 
Johns.  33. 


200  PERSONS  PARTIALLY   OR  WHOLLY  DISQUALIFIED. 

to  rescind  or  avoid  tlic  contract  is  suspended  until  lie  be- 
comes of  ao-e.^     And  tlien  be  is  not  allowed  to  disaffirm  the 

o 

contract  unless  lie  returns  the  consideration  paid  to  him."^ 
We  should  say  that  he  might  disaffirm  the  contract  and 
return  the  consideration  at  any  time,  provided  it  was  not 
unreasonably  delayed  after  he  became  of  age.'^ 

§  230.  Itatification  by  adult  of  hills  and  notes  executed 
when  an  infant. — The  bill  of  exchange  or  promissory  note  of 
an  infant  is  not  absolutely  void,  but  voidable  only  at  his 
election."*  And  if,  after  reaching  full  age,  the  then  adult 
ratify  and  confirm  his  bill  or  note  executed  while  he  was  an 
infant,  w^hether  it  were  framed  so  as  to  be  negotiable  or  not, 
he  will  be  Ijound  to  pay  the  instrument  according  to  its 
terms.  For  by  ratification  the  adult  validates  the  instrument 
in  all  respects,  and  it  becomes  the  same  as  if  it  had  been  exe- 
cuted by  an  adult."^  The  effect  of  the  ratification,  as-  stated 
by  Shaw,  C.  J.,  is,  "  to  ratify  and  confirm  the  contract,  and 
give  it  the  same  legal  effect  as  if  the  promisor  had  been  of 
legal  capacity  to  make  the  note  when  it  was  made.'"^  And 
consequently  the  bill  or  note  may  be  sued  upon,  without  any 

'  Roof  V.  Stafford,  7  Cow.  179;  9  Cow.  62G.  On  the  last  hearing  of  this  case 
it  was  held  that  the  infant  might  avoid  a  sale  of  chattels  while  an  infant,  but 
not  a  sale  of  land. 

''  Medbury  v.  Watrous,  7  Hill,  110. 

»  See  Bool  v.  Mix,  17  Wend.  119;  2  Kent  Com.  [=^237],  notes;  Schouler's 
Domestic  Relations,  54G,  as  to  personal  property. 

*  Cole  V.  Pennell,  2  Rand.  17'!;  Wamsly  v.  Lindenberger,  2  Rand.  479;  Wil- 
liams V.  Moore,  11  M.  &  W.  25G,  Parke,  B.,  saying:  "The  promise  of  an  infant 
is  not  void  in  any  case,  unless  the  infant  choscs  to  plead  his  infancy."  Byles 
(Sharswood's  ed.)  [*58],  145  ;  Edwards  on  Bills,  65,  66. 

'  Id. ;  Hunt  v.  Massey,  5  Barn.  &  Ad.  903.  In  this  case,  the  drawer  sued 
the  acceptor  of  a  bill.  It  appeared  that  the  acceptor  was  an  infant  when  he  ac- 
cepted, but  had  ratified  the  l)ill  after  he  reached  full  age.  Taunton,  J.,  said: 
"Where  a  voidable  contract  is  made  by  a  party  under  age,  and  ratified  after  he 
has  attained  full  age,  is  it  not  usual  to  declare  on  the  original  promise?  The 
first  promise  here  was  voidable  only.  As  soon  as  it  was  ratified,  it  became  bind- 
ing ab  initio.''''  W^est  v.  Penny,  16  Ala.  186;  Edgerly  v.  Shaw,  5  Foster,  514; 
Lawson  v.  Lovejoy,  8  Greenl.  405  ;  Reed  v.  Batchelder,  1  Mete.  559  ;  Cheshire  v. 
Barrett,  4  McCord,  241;  Little  v.  Duncan,  9  Rich.  55;  Goodsell  v.  Myers,  3 
Wend.  479. 

•  Reed  v.  Batchelder,  1  Mete.  559. 


INFANTS.  201 

allegation  of  ratification — that  being  necessary  to  appear  only 
in  rebuttal  of  the  plea  of  infancy,  when  pleaded.^  It  was 
held  in  Enjrland  at  one  time,  and  also  in  the  United  States, 
that  if  an  action  be  brought  on  a  contract  made  by  an  infaqt, 
a  ratification,  proved  to  have  been  made  after  action  brought 
would  not  suffice ;  ^  but  this  view  has  been  sharj:)ly  criti- 
cised, and  is  not  tenable."^  The  ratification  inures  to  the 
benefit  of  every  subsequent  holder/ 

§  231.  What  amounts  to  ratification. — Unless  a  written 
ratification  be  required  by  statute,  a  verbal  ratification  will 
be  effectual.^  As  to  what  words  will  amount  to  a  ratification, 
a  mere  recognition  that  the  debt  existed,  or  contract  was 
made,  is  not  sufficient/'  No  peculiar  form  of  words  is  requi- 
site, but  there  must  be  a  direct  and  explicit  recognition  of 
the  contract,  and  words  expressing  or  necessarily  implying  a 
promise  to  fulfill  it.  Thus,  if  the  adult  says,  "  I  have  not  the 
money  now,  but  when  I  return  from  my  voyage  I  will  settle 
with  you,"  or,  "  1  owe  you,  and  will  pay  you  when  I  return," 
it  is  sufficient/  So  if  he  promises  to  "  remit  in  a  short  time,"  ^ 
or  says,  "all  that  is  justly  your  due  shall  be  paid,"  ^  or  de- 
clares his  intention  to  pay  the  note,  and  authorizes  an  agent 
to  pay  it,  though  nothing  is  done/'^  And  the  words,  "I  will 
pay  the  note  as  soon  as  I  can  make  it,  but  not  this  year.  I 
understand  the  holder  is  about  to  sue  it,  but  she  had  better 
not,"  have  been  ^^  held  enough. 

'  Svpra,  notes  i  and  2. 

'  Thornton  v.  niingworth,  2  Barn.  &  C.  824;  Byles  (Sharswood's  cd.) 

»  1  Parsons  N.  «fc  B.  72;  Byles  (Sharswood's  ed.)  [*58J,  145,  note  1. 

*  Reed  v.  Batchelder,  1  Mete.  559. 

^  Martin  v.  Mayo,  10  Mass.  137  ;  West  v.  Penny,  16  Ala.  186  ;  Reed  v. 
Boshears,  4  Sueed,  118. 

«  Thrupp  V.  Fielder,  2  Esp.  628  ;  Robins  v.  Eaton,  10  N.  II.  oGl  ;  Benluun  v. 
Bishop,  9  Conn.  330  ;  Whitney  v.  Dutch,  14  Mass.  460  ;  Hale  v.  Gcrrish,  8  N.  11. 
374 ;  Chitty  on  Bills  [*20],  27. 

'  Whitney  v.  Dutch,  14  IMass.  460. 

'  Hartley  v.  Wharton,  11  Ad.  &  El.  934.  °  Wright  v.  Steele,  2  X.  II   51. 

•»  Orvis  V.  Kimball,  3  N.  II.  314. 

"  Bobs  V.  Hansel,  2  Bailey,  114,  but  queiT  ;  1  Parsons  N.  &  B.  74. 


202  PERSONS  PARTIALLY  OR  WUOLLY   DISQUALIFIED. 

§  232.  All  admission  by  the  adult,  aud  the  declaratioQ 
that  the  party  would  get  his  pay,  but  accompanied  by  a  re- 
fusal to  give  a  note,  would  not  amount  to  a  ratification.^ 
Nor  would,  an  admission,  accompanied,  by  a  promise  to  en- 
deavor "  to  get  my  brother  bound  with  me."^  Nor  would 
the  language,  "  I  consider  your  claim  worthy  my  attention, 
but  not  my  first  attention,"  ^  "  I  will  have  to  pay  I  suppose, 
but  I  shall  do  so  at  my  convenience."  ^  Nor  would  a  direc- 
tion in  the  adult's  will,  that  his  just  debts  be  paid,  apply  to 
debts  contracted  in  infancy.^ 

§  233.  The  promise  of  the  adult  must  be  made  to  the 
party  with  whom  he  contracted,  or  his  authorized  agent,  in 
order  to  amount  to  ratification;  and  if  made  to  a  third 
party,  it  w^ill  be  insufiicient.'^  "  It  results  from  the  fact  of  the 
orio-inal  contract  not  beino;  bindino;  on  the  infant,  that  the 
new  j^romise  must  possess  all  the  ingredients  of  a  complete 
agreement,  to  enable  the  plaintiff  to  recover  against  the  in- 
fant. Hence,  as  no  agreement  is  complete  until  the  minds  of 
the  contracting  parties  meet,  the  new  promise,  to  be  binding 
on  the  infant,  must  be  made  to  the  creditor  in  person,  or  to 
his  agent.  The  new  promise  creates  a  new  contract ;  aud  the 
old  debt  supplies  the  consideration."  ^  And  if  it  be  coupled 
with  a  condition,  as  to  pay  "  when  able,"  the  plaintiff  must 
show  the  happening  of  the  contingency,  but  need  not  show 
that  payment  may  be  made  without  inconvenience.^ 

If  the  promise  be  shown  to  have  depended  on  any  other 
condition,  its  fulfillment  must  be  proven.^ 

§  234.  Mere  part  payment  does  not  amount  to  ratification 

'  Hale  V.  Gerrish,  3  N.  H.  374.  '  Ford  v.  Phillips,  1  Pick.  203. 

'  Vvilcox  y.  Roath,  13  Conn.  550.  *  Duulap  v.  Hale,  3  Jones,  N.  C.  381. 

"  Smith  V.  Mayo,  9  Mass.  63. 

'  Goodsell  V.  Myers,  3  Wend.  479  ;  Bigelow  v.  Graunis,  2  Hill,  150  ;  Hoit  v. 
Underhill,  9  N.  H.  439  ;  Reed  v.  Boshears,  4  Suced,  118. 

'  Hodges  V.  Hunt,  33  Barb.  150,  Paige,  J. 

'  Thompson  v.  Lay,  4  Pick.  48;  Cole  v.  Saxby,  3  Esp.  159;  Everson  v.  Car- 
penter, 17  Wend.  419. 

»  lb.;  Proctor  v.  Sears,  4  Allen,  95:  Chandler  v.  G'.ovcr,  33  Penn.  St.  509. 


INFANTS.  203 

by  the  adult.^  Nor  does  a  submission  to  arbitration,  unless 
it  proceed  to  a  decision  that  the  adult  must  pay.*^  But  ex- 
pressions of  intention  to  abide  by  a  former  aAvard,  or  accept- 
ing its  benefits,  would  suffice.^  And  the  infiint's  conduct 
may  be  such  as  to  amount  to  ratification.  Mere  silence  and 
failure  to  disafiirm  will  not  be  sufficient  alone ;  but  connected 
with  circumstances  may  become  so.  Thus,  if  the  adult  keep 
property  purchased  in  infancy,  after  being  requested  to  re- 
turn it  if  he  did  not  intend  to  keep  it,  it  was  held  to  be  a 
ratification."*  And  where  an  infant  bought  a  yoke  of  oxen, 
for  which  he  gave  his  note,  and  after  bis  majority  sold  them 
and  used  the  money,  the  like  decision  was  rendered.^  And 
there  are  other  decisions  to  like  eftect,  where  the  adult  has 
retained  land  purchased  in  infancy,*'  or  personal  property,'' 
or  taken  a  deed  to  property.^  If  the  adult  refuse  to  return 
the  consideration  when  notified  to  do  so,  and  still  has  it  in 
his  power,  it  seems  clear  that  he  should.be  bound  ;  but  mere 
retention  of  the  consideration,  without  such  notice  to  return, 
would  not  alone  suffice,'^  and  if  it  had  been  disposed  of  be- 
fore the  infant  reached  his  majority,  the  failure  to  return  it 
would  be  no  ratification.^'^ 

§  235.  Ignorance  of  the  law  excuses  no  one,  and  there- 
fore it  is  not  necessary  to  a  valid  ratification  of  a  contract 
made  by  an  infant,  that  the  adult  ratifying  should  know 
the  fact  that  his  infancy  rendered  his  contract  invalid. ^^  A 
different  view  has  been  taken  in  some  cases,^'^  but  the  doc- 


'  Smith  V.  Mayo,  9  Mass.  02;  Robbins  v.  Euton,  10  N.  11.  5G1 ;  Hinely  v. 
Margaritz,  3  Barr,  428. 

'  Benham  v.  Bishop,  9  Conn.  330;  1  Parsons  K  &  B.  75,76. 

'  Barnaby  v.  Barnaby,  1  Pick.  221 ;  Jones  v.  Phoenix  Bank,  4  Seld.  228. 

*  Aldrich  v.  Grimes,  10  N.  H.  194. 

'  Lawson  v.  Lovejoy,  8  Greenlf.  405.  °  Armfield  v.  Tate,  7  Ired.  258. 

'  Cheshire  v.  Barrett,  4  McCord,  241;  Thomasson  v.  Boyd,  13  Ala.  419. 

'  Montgomery  v.  Witbeck,  23  Minu.  173. 

'  Benham  v.  Bishop,  9  Conn.  330.  '"  Robl)ins  v.  Eaton,  10  N.  H. 

"  IMorse  v.  Wheeler,  4  Allen,  570. 

'"  Harmer  v.  Killing,  5  Esp.  193;  Reed  v.  Boshears,  4  Sneed,  118;  Hinely  t. 
Margaritz,  3  Barr,  428;  Curtin  v.  Patten,  11  S.  &  R.  305. 


204  TERSONS   PARTIALLY   OR  ^VHOLLY  DISQUALIFIED. 

trine  of  the  text  is  sustained  both  by  decisions  of  courts 
and  opinions  of  distinguished  juridical  writers.^  It  will,  at 
least,  be  presumed  that  an  adult,  ratifying  a  contract  entered 
into  in  infancy,  knew  tlie  ftict  that  he  was  not  legally  bound.'^ 

§  236.  In  England  and  some  of  the  United  States,  ratifi- 
cation must  be  in  writing.  In  1828,  Parliament  enacted  the 
:jitatute  of  9  George  IV,  c.  14,  commonly  called  Lord  Tenter- 
den's  act,  whereby  it  is  provided  that  "  no  action  shall  be 
maintained  whereby  to  charge  any  person,  upon  any  promise 
made  after  full  age,  to  pay  any  debt  contracted  during  infancy, 
or  upon  any  ratification,  after  full  age,  of  any  promise  oi* 
simple  contract  made  during  infancy,  unless  such  promise  or 
ratification  shall  be  made  by  some  writing  signed  by  the  party 
to  be  charged  therewith."  And  similar  statutes  have  been 
enacted  in  most  of  the  United  States.^  In  England,  the 
Court  of  Exchequer  held  that  the  statute  made  a  distinction 
between  new  promises  and  ratification,  and  that  "  ratifica- 
tion," as  therein  used,  would  go  so  far  as  to  comprehend  such 
a  ratification  as  would  make  a  person  liable  as  principal  for 
an  act  done  by  another  in  his  name.''  But  tliis  view  has  been 
criticised.^  And  the  view  of  Martin,  B.,  in  a  later  case,  in 
the  same  court  (in  which,  however,  the  judges  were  divided 
in  opinion),  defining  ratification  to  be  a  "  consent  by  a  per- 
son, after  he  becomes  of  full  age,  to  be  liable  for  a  debt  con- 
tracted during  infancy,  expressed  to  the  efi:ect  that  he  is  will- 
ing to  affirm  it  and  treat  it  as  valid,"  ^  seems  to  be  a  clear 
and  correct  conception  of  the  subject. 

§  237.  If  an  infant,  after  he  becomes  of  age,  retire  from 
a  firm,  of  which  he  has  been  a  member,  lie  must  give  notice 
of  the  fiict ;   otherwise  he  will  be  bound  by  its  contracts 


'  Scbouler  on  Domestic  Relations,  583. 
'  Taft  V.  Scrgeaut,  18  Barb.  323. 

'  Code  of  Virginia  (ed.  1873),  p.  985,   cli.   140.     See   Brown   ou   Statute   of 
Frauds,  and  Throop  on  Verbal  Agreements. 

*  Parsons  N.  &  B.  77 ;  Scliouler  ou  Domestic  Relations,  576. 

'  Harris  v.  Wall,  1  Exch.  122.  °  Mawson  v.  Blane,  10  Exch.  206. 


MARRIED    WOMEN.  20r> 

made  after  his  majority.^  But  the  mere  fact  that  he  con- 
tinues in  a  firm,  after  his  majority,  is  no  ratification  of  con- 
tracts made  by  the  firm  while  he  was  an  infant.^ 

§  238.  If  an  inf^int,  together  with  an  adult,  make  a  joint 
promissory  note,  it  has  been  held,  in  England,  tliat  the  payee 
may  bring  his  action  upon  it  against  the  adult,  without 
making  the  infant  a  party.^  But  in  the  United  States,  a 
difi'ereut  view  is  taken,  the  infant's  undertaking  being  void- 
able, not  absolutely  void ;  *  and  this  view  is  specially  ap- 
plicable when  the  note  is  not  negotiable."'^ 

SECTION  lY. 

MARRIED       WOMEN. 

§  239.  By  the  common  law  of  England,  and  of  many  of 
the  States  of  the  United  States,  in  which  it  has  been  adopted 
and  preserved,  the  wife  merges  her  personality  by  marriage 
in  the  person  of  her  husband.  They  two  become  in  law  one 
person,  in  so  far  as  afiects  the  business  concerns  of  life.  That 
person  is  the  husband,  and  the  wife  can  make  no  contract 
binding  upon  herself,  or  upon  her  husband  without  his  con- 
sent.^ This  rule  of  the  common  law,  whicli  grew  out  of  the 
feudal  system,  has  been  modified  or  abolished  by  statute  in 
some  of  tlie  States,  and  the  tendency  of  legislation  is  to  en- 
large and  enfranchise  the  capacity  of  married  women,  espe- 
cially in  those  States  which  are  the  seats  of  great  commercial 

*  Goode  V.  Harrison,  5  B.  «fe  Aid.  147.       »  Crabtree  v.  May,  1  B.  Mon.  289. 

'  Burgess  v.  Merrill,  4  Taunt.  468;  Chandler  v.  Parkes,  3  Esp.  76;  Jaflray  v. 
Frebain,  5  Esp.  47  ;  Edwards  on  Bills,  67,  note;  Byles  [*59],  149. 

*  Slocuiu  V.  Hooker,  13  Barb.  563;  13  Barb.  536. 

*  Cole  V.  Penuell,  2  Rand.  174;  Wamsley  v.  Lindenbergcr,  2  Rand.  478; 
Green,  J.,  saying  :  "In  England,  a  note  of  hand  given  by  an  infant,  even  for 
necessaries,  is  perhaps  void,  because,  having  the  effect  of  a  bill  of  exchange 
by  statute,  he  might  be  precluded  from  contesting  the  consideration  against  a 
third  person.  But  no  such  an  objection  exists  as  to  the  note  of  hand  given  in  this 
case." 

"  1  Blackstone's  Commentaries,  442;  2  Kent  Com.  129. 


206  PEESOXS  PARTIALLY  OR  WHOLLY  DISQUALIFIED. 

centers.  Experiments  upon  social  institutions  are  the  order 
of  the  day,  but  innovations  of  the  kind  are,  to  say  the  least, 
of  very  doubtful  policy. 

§  240.  AYherever  the  common  law  prevails  a  married 
woman  cannot  bind  herself  as  the  drawer,  acceptor,  maker  or 
indorser  of  a  negotiable  instrument,  and  such  instruments 
sio-ned  by  her  (unless  as  agent  for  another)  are  absolutely 
void.^  And  even  a  promise  made  by  her  after  her  husband's 
death  to  pay  a  bill  or  note  which  she  executed  during  liis 
lifetime  will  not  bind  her  unless  upon  a  new  and  good  con- 
sideration.^ 

§  241.  The  wife's  identity  is  so  completely  merged  in  the 
husband's  that  she  can  no  more  contract  with  him  than  with 
a  strauf^er.  Therefore  the  drawinsf  or  indorsement  of  a  bill 
or  note  by  a  husband  to  his  wife  is  void,  and  she  cannot  sue 
npon  it  either  in  his  lifetime,^  or  against  his  executor  after 
his  decease.*  But  the  husband  may  indorse  it  to  her  in 
order  that  she  may  be  the  mere  conduit,  and  indorse  it  over 
to  another  party,  the  whole  transaction  being  regarded  as 
the  husband's.'^  So  the  bill  or  note  of  a  married  woman 
payable  to  her  husband  is  void,  but  if  he  indorse  it  he  is 
liable  upon  his  indorsement.^  And  if  a  note  be  given  by  a 
husband  to  his  wife  for  money  advanced  by  her  out  of  her 
separate  estate,  it  constitutes  a  declaration  of  trust  in  favor  of 
the  wife.'' 


'  Mason  v.  Morgan,  2  Ad.  &  El.  30;  Howe  v.  Wildes,  34  Me.  566;  Chouteau 
V.  Merry,  3  Mo.  254;  Van  Stcenburgh  v.  Hoffman,  15  Barb.  28;  Chitty  on  Bills 
(13  Am',  ed.)  [*20],  28. 

'Loyd  V.  Lee,  1  Strange,  94;  Cliitty,  Jr.  242(1717);  Meyer  v.  Haworth,  8  Ad. 
&  El.  467;  Littlcfiold  v.  Spec,  2  B.  &  Ad.  811 ;  Eastwood  v.  Kenyon,  11  Ad.  & 
El.  438;  Vance  v.  Well-;,  6  Ala.  737;  8  Ala.  399;  Watkins  v.  Ilalstcad,  2  Sandf. 
811;  Schouler  on  Domestic  Relations,  74;  Byles  on  Bills  (Sharswood'a  ed.) 
[*63].  153. 

'  Gay  V.  Kingsley,  11  Allen,  345. 

*  Jaclcson  v.  Parks,  10  Cush.  550;  Sweat  v.  Hall,  8  Vt.  187. 

»  Slawson  v.  Loring,  5  Allen,  340.  *  Haly  y.  Lane,  2  Atk.  181. 

'  Murray  v.  Glasse,  23  li.  J.  Cb.  126. 


MARRIED    WOMEN.  207 

§  242.  Married  tvoman  as  2^<^l/^^  ^^^d  inclorser. — If  a 
bill  or  note  be  made  payable  to  a  single  woman,  and 
slie  afterward  marries,  it  becomes  the  property  of  lier 
husband ;  and  if  made  to  her  after  marriage,  it  is  the  prop- 
erty of  her  husband.  For  two  reasons,  therefore,  a  mar- 
ried woman,  who  is  the  payee  of  a  negotiable  instrument, 
cannot  transfer  a  perfect  legal  title  to  it,  or  bind  herself  by 
indorsing  it ;  first,  because  she  has  no  capacity  to  contract ; 
and  second,  because  the  instrument  is  her  husband's.^  But 
still,  although  the  husband  might  recover  the  instrument 
which  has  been  transferred  by  his  wife,  in  an  action  of  trover 
against  the  holder,  the  drawer  and  acceptor  of  a  bill  and  the 
maker  of  a  note,  who  have  bound  themselves  to  pay  to  the 
payee  or  order,  are  estopped,  when  that  order  is  made,  to 
deny  its  sufficienc3^  It  does  not  lie  in  their  mouths  to  de- 
clare the  effect  of  their  own  euofasfement  to  be  different  from 
its  terms ;  and  the  holder,  under  the  indorsement  of  a  payee, 
who  is  a  married  woman,  may  recover  against  them.^     And 

'  Cotes  V.  Davis,  1  Camp.  485  (1808);  Barlow  v.  Bishop,  3  Esp.  266;  1  East, 
432  (1801);  Connor  v.  Martin,  1  Strange,  516;  Rawlinson  v.  Stone,  3  Wilson,  5; 
Evans  v.  Secrest,  3  Ind.  545;  Savage  v.  King,  17  Me.  301;  Shuttleworth  v.  Noyes, 
8  Mass.  229. 

'  Smith  V.  Marsack,  6  Com.  B.  486;  Wilde,  C.  J.,  said:  "  In  support  of  a 
contrary  doctrine,  the  cases  of  Connor  v.  Martin,  1  Strange,  516;  Barlow  v. 
Bishop,  1  East,  432,  and  Prince  v.  Brunatte,  1  Bing.  N.  C.  435,  s.  c.  1  Scott, 
342,  were  cited,  on  the  argument,  by  the  counsel  for  the  defendant.  In  Connor 
V.  Martin,  as  reported  in  Strange,  the  plaintiff  declared  on  a  note  made  to  a 
jfeme  covert,  and  indorsed  by  her  to  him  ;  and,  on  argument,  judgment  was  given 
for  the  defendant — the  right  being  in  point  of  law  in  the  husband,  and  the  wife 
having  no  power  to  dispose  of  it.  But  this  case  was  cited  by  Dennison,  J.,  in 
Rawlinson  v.  Stone,  3  Wils.  1,  5,  from  a  note  taken  by  himself  in  court;  and  it 
appears  from  that  learned  judge's  statement,  that  the  promissory  note  in  ques- 
tion had  been  given  to  the  wife  before  marriage.  Barlow  v.  Bishop  is  certainly 
a  direct  authority  for  the  position,  that,  if  a  note  is  drawn  payable  to  a  woman 
or  order,  and  her  indorsee  sues  the  maker,  he  may  set  up  as  a  defense  that  she 
was  a  married  woman,  though  he  kuew  her  to  be  such  at  the  time  he  made  the 
note.  But  it  was  observed  by  Lord  Abinger,  in  Pitt  v.  Chappclow,  8  Mees.  & 
W.  616,  that,  in  Barlow  v.  Bishop,  the  plainlitf  must  be  taken  to  have  known  the 
fact  of  the  husband's  property  in  the  bill,  and,  therefore,  could  not  take  an  as- 
signment of  it  from  the  wife.  Indeed,  it  ajjpears,  from  the  report  of  the  case  at 
nisi  prius,  in  Epinasse,  3  Esp.  266,  that  the  wife  had  given  a  previous  note  for 
the  money  in  her  own  name,  and  that  the  note  in  question  was  given  in  couse- 


203  PERSONS  PARTIAl.LY   OR  WHOLLY  DISQUALIFIED. 

if  there  be  an  indorser,  after  the  married  woman,  he  cannot 
dispute  her  capacity,  as  his  indorsement  warrants  it.^  But 
other  parties  to  the  instrument,  not  being  estopped  by  their 
relation  to  it,  may  show  that  one — not  the  payee — who  has 
indorsed  it,  is  a  married  woman.  These  views  clearly  apply 
^vhere  the  paper  has  been  executed  to  the  ^voraan  after  her 
marriage ;  but  if  made  to  her  before,  disability  subsequently 
created  might  be  pleaded  by  any  party.^ 

§  243.  The  mere  fact  that  the  wife  is  living  separate  and 
apart  from  her  husband,'^  or  that  she  has  eloped  from  her 
husband  and  is  living  in  adultery  with  another  person,^  or 
that  she  has  a  separate  maintenance  secured  to  her,^  or  that 
she  has  been  divorced  from  her  husband's  bed  and  board  (ci^ 


quence  of  such  former  note  not  being  negotiable,  which  appears  to  favor  Lord 
Abinger's  supposition,  that  the  plaintiff  must  have  known  of  her  coverture  be- 
fore the  note  was  indorsed  to  him.  In  Prince  v.  Brunatte,  it  was  certainly  as- 
sumed by  the  court,  as  well  as  by  the  counsel  on  both  sides,  that  such  a  plea  as 
the  i)resent  would  be  a  good  answer  to  the  action  ;  and  the  same  observation 
arises  with  respect  to  the  case  of  Cotes  v.  Davies,  1  Camp.  485,  and  that  of  Prest- 
wick  V.  Marshall,  7  Bing.  565,  s.  c.  5  Moore  &  P.  513.  But  in  none  of  these 
cases  does  it  appear  that  the  point  now  under  consideration  was  ever  made,  viz., 
that  the  case  falls  within  the  general  principle — which  is  stated  by  Bayley,  J., 
in  his  judgment,  in  Drayton  v.  Dale,  2  Bam.  &  Cress.  293,  as  applicable  to  all 
negotiable  securities — that  a  person  shall  not  dispute  the  power  of  another  to 
indorse  an  instrument  when  he  asserts,  by  the  instrument,  that  tlie  other  has 
such  power.  And  we  can  discover  no  reason  why  this  principle  should  not  be 
applicable;  and  if  it  is,  it  appears  to  us  to  govern  the  present  case,  and  to  prove 
that  the  plea  in  question  is  bad.  It  need  scarcely  be  added  that,  in  so  deciding, 
we  do  not  mean  at  all  to  impugn  the  proposition  that,  if  a  bill  or  note  is  made 
paj^able  to  the  order  of  a  married  woman,  the  property  in  it  will  pass  by  the  in- 
dorsement of  the  husband,  or  he  may  sue  on  it,  either  joining  his  wife  as  a  party 
to  the  action,  or  in  his  own  name,  at  his  option.  And,  consequently,  it  cannot 
be  denied  that  the  defendant  may  possibly  be  compelled  to  pay  the  bill  in  ques- 
tion twice.  But  this  is  a  consequence  wliich  follows  from  his  own  act  of  ac- 
crediting the  capacity  of  a  woman  to  indorse,  by  accepting  a  bill  payable  to  her 
order,  who  in  truth  was  incapable." 

'  Prescott  Bank  v.  Caverly,  7  Gray,  217. 

'  See  Smith  v.  Marsack,  6  Com.  B.  486. 

'  Marshall  v.  Rutton,  8  T.  R.  545;  Hatchett  v.  Baddeley,  3  W.  Black.  1079; 
Lean  v.  Schutz,  2  W.  Black.  1195;  Hyde  v.  Price,  3  Ves.  Jr.  443;  Story  on  Bills, 
§  90;  Chitty  on  Bills  (13  Am.  ed.)  [*21],  28. 

*  Ibid.  '  Ibid. 


MARRIED    WOMEN.  209 

mensa  et  thoro)^  will  not  at  common  law  restore  to  the 
married  woman,  ber  right  to  contract.  In  Massachusetts,  a 
different  rule  prevails  wdien  there  has  been  a  divorce  from 
bed  and  board,  and  the  married  woman  may  then  contract.^ 
Everywhere  a  divorce  from  the  bonds  of  matrimony  (ct  vin- 
culo matrimonii)  restores  the  woman  to  full  competency.^ 
The  fact  that  a  married  woman  represents  herself  to  be  un- 
married does  alter  her  disability."* 

§  244.  There  are  certain  exceptional  circumstances  under 
which  the  contracts  of  a  married  woman  may  be  binding 
upon  her,  or  upon  her  husband,  and  we  shall  consider  them 
under  these  heads  :  (1)  When  husband  is  an  alien  or  civilly 
dead.  (2)  When  wife  has  separate  estate.  (3)  When 
wife  is  sole  trader  by  special  custom  or  statute.  (4)  When 
wife  purchases  necessaries.  (5)  When  husband  adopts  her 
name  as  binding  him.     (6)  When  w^Ife  is  agent  of  husband. 

§  245.  And  in  the  first  ijlace^  wlien  the  livshand  is  an 
alien  enemy ^  the  w^ife  may  contract,  for  it  may  be  necessary 
to  her  support  and  maintenance  that  she  may  sue  and  be 
sued,  and  her  husband  is  legally  barred  from  coming  to  or 
communicating  with  her.^  So  if  a  married  woman  be  resi- 
dent in  any  country,  and  her  husband  is  an  alien  wbo  has 
never  been  in  that  country,  it  has  been  held  that  she  may 
then  contract  like  a  feme  sole.^  This  would  clearly  be  the 
case  if  by  the  laws  of  the  country  of  which  the  husband  was 
a  citizen  he  could  not  leave  without  the  sovereign's  permis- 

*  Fairtlionie  v.  Blaquire,  6  Maule  &  S.  73;  Lewis  v.  Lee,  3  Barn.  &  C.  291 ; 
Chitty  on  Bills  (13  Am.  cd.)  [*21],  28;  Byles  (Sbarwood's  ed.)  [*02],  l.')2.  In 
Scotland  it  is  otherwise.  Thomson  on  Bills,  138  ;  and  in  England  as  it  seems 
now  by  statute,  24  &  25  Vic.  c.  86,  §  6. 

'  Dean  v.  Richmond,  5  Pick.  461 ;  see  also  2  Kent  Com.  136. 

'  Chamberlaine  v.  Hewson,  5  Mod.  71;  Chitty  on  Bills  [*21J,  28;  Story  on 
Bills,  §  90 ;  1  Parsons  N.  &  B.  78. 

'  Canuam  v.  Farmer,  3  Exch.  698;  Lowell  v.  D;inicls,  2  Gray,  161. 

''  Derry  v.  Duchess  of  Mazarine,  1  Lord  Raymond,  147;  M'Arthur  v.  Bloom,  2 
Duer,  151. 

"  Kay  V.  Duchesse  de  Peinne,  3  Camp.  123;  Gregory  v.  Paul,  15  Mass.  31  ; 
Story  on  Bills,  §  91 ;  Chitty  (;13  Am.  ed.)  [*22],  29;  1  Parsons  N.  &  B.  84. 
Vol.  L— 14 


210  PERSONS  TARTIALLY  OR  WHOLLY  DISQUALIFIED. 

sion,  for  then  there  would  be  a  legal  barrier  between  tliem.^ 
But  in  the  case  of  an  alien  who  lias  once  resided  in  a  coun- 
try, the  anwuis  revertendi  is  to  be  presumed,  and  it  has  been 
held  in  Enghand  that  a  woman  by  birth  an  alien,  and  the 
wife  of  an  alien,  cannot  be  sued  as  ^ifeme  sole  if  her  husband 
has  lived  in  that  country,  although  he  has  left  it  and  entered 
the  service  of  a  foreign  State.'^ 

§  246.  In  Massachusetts  it  has  been  held  that  the  resi- 
dence of  the  husband  in  another  of  the  United  States  is  the 
same  as  if  he  were  in  a  State  entirely  foreign,  he  being  then 
beyond  the  jurisdiction  of  the  State  courts ;  ^  and  that  when- 
ever the  husband  has  never  been  in  the  commonwealth,  or 
has  gone  beyond  its  limits,  deserted  his  wife  and  renounced 
his  marital  rights,  her  ability  to  contract  and  sue  is  restored.* 
But  this  view,  though  perhaps  salutary,  is  denied  elsewhere,'^ 
and  seems  an  innovation  on  the  strict  rules  of  the  common 
law. 

If  the  husband  has  abjured  the  realm,  or  if  he  is  "  civilly 
dead,"  as  he  is  termed,  when  by  judicial  sentence  he  has  been 
banished  or  transported ;  or  if  he  has  by  a  religious  profes- 
sion, renounced  civil  life,  the  disability  of  the  wife  is  sus- 
pended   during   that   period,    and    her   ability   to    contract 


'  M'Arllnir  v.  Bloom,  2  Duer,  151. 

"  Kay  V.  Duchcsse  tie  Peinne,  3  Camp.  123. 

'  Abbott  V.  Bailey,  G  Pick.  89.  "  Gregory  v.  Paul,  15  Mass.  31. 

'  Chouteau  v.  Merry,  3  Mo.  254.  In  this  case  the  husband  abandoned  his 
■wife  in  Missouri,  and  removed  to  Arkansas  Territory  in  1821,  and  it  was  held 
that  she  was  not  bound  on  a  note  given  by  her  in  1831  in  Missouri.  The  court 
said:  "Coverture  operates  a  legal  disability  to  contract,  and  all  contracts  of  a 
feme  covert  are  absolutely  void.  The  facts  in  this  case  do  not  bring  it  within  any 
of  the  exceptions.  The  cases  cited  from  the  English  books  arc  where  the  hus- 
bands abjured  the  realm,  or  were  foreigners  residing  abroad.  The  principles 
settled  in  these  cases  do  not  apply.  If  by  a  removal  from  one  State  to  another, 
•or  a  separate  residence  in  different  States,  the  indissoluble  connection  by  Vt'hicli 
the  wife  is  placed  under  the  power  and  protection  of  her  husband  could  be  can- 
celed,- and  the  parties  thereby  relieved  of  their  respective  liabilities  and  dis- 
abilities, there  would  be  little  need  of  troubling  the  legiskturo  or  the  courts  on 
the  subject  of  divorces." 


MARRIED    WOMEN.  211 

restored.^  So,  if  he  is  imprisoned  by  judicial  sentence.'*  And 
if  the  husband  has  been  abroad  and  unheard  of  for  seven 
years,  he  is  presumed  to  be  dead,  and  the  wife's  ability  to 
contract  revives.^ 

§  247.  Second.  When  the  wife  has  a  separate  estate,  it  is 
held  in  England  liable  in  equity  for  all  of  her  debts  contracted 
on  the  faith  of  it.^  There,  where  a  married  woman  borrowed 
money,  promising  to  repay  it  out  of  her  separate  property, 
the  rents  and  profits  thereof  were  appropriated  to  its  pay- 
ment.^ So,  where  a  married  woman  gave  a  note  jointly  with 
her  husband,  and  as  a  security  for  his  debt ;  ^  where  a  married 
woman  accepted  a  bill  drawn  and  indorsed  by  her  daughter ;  "^ 
and  where  a  mari-ied  woman  living  separately  from  her  hus- 
band accepted  a  bill,®  her  separate  property  was  held  liable. 

§  248.  In  the  United  States  the  authorities  on  this  suV)ject 
differ.  In  New  York  it  has  been  held  upon  full  consideration 
that  it  is  essential  in  order  to  charge  the  wife's  separate 
property,  either  (I)  That  the  intention  to  do  so  should  be 
declared  in  the  very  contract  which  is  the  foundation  of  the 
cliarge,  or  (2)  That  the  consideration  should  be  obtained  for 
the  direct  benefit  of  the  estate  itself,''  though  it  is  not  neces- 
sary that  the  bill,  note  or  other  contract  should  specify  the 

'  Hatchett  v.  Baddelcy,  2  W.  Black.  1079:  Story  on  Bills,  §  91. 

'  Ex  'parte  Fianka,  7  Bing.  7G2;  Byles  ou  Bills  (Sharswood's  ed.)  f*G3],  154; 
2  Kent  Com.  136. 

"  Loring  v,  Sleineman,  1  Mctc.  201;  Byles  (Sharswood's  ed.)  [*63],  ld4;  Chitty 
[*22],  29. 

*  Byles  on  Bills  (Sbarswood's  ed.)  [*G2],  153;  Edwards  ou  Bills,  08,  GO;  Chitty 
on  Bills  [*21],  28,  29. 

5  Bulliu  V.  Clarke,  17  Ves.  366.  "  Ilulme  v.  Tenant,  1  Bro.  C.  C.  16. 

'  Bingham  v.  Noyes,  Chitty  on  Bills  [*21],  28. 

*  Stewart  v.  Lord  Kirkwall,  3  Mad.  387. 

"  Yale  V.  Dederer,  22  N.  Y.  450 ;  18  N.  Y.  265  (overrnling  same  case  in  21  Bar!). 
286) ;  followed  in  White  v.  McNett,  33  N.  Y.  371 ;  Ledlie  v.  Vrooman,  41  Barb. 
109;  White  v.  Story,  43  Barb.  124;  Barnett  v.  Lichtenstein,  39  Barb.  194;  Corn 
Exchange  Ins.  Co.  v.  Babcock,  42  N.  Y.  613.  In  New  York  it  is  held  that  if  the 
married  woman  borrows  money  fortlie  express  purpose  of  benefiting  her  separate 
estate,  her  note  for  the  amount  is  good,  though  the  money  be  used  for  another  pur- 
pose.    McVey  v.  Cantrell,  70  K  Y.  295 ;  contra,  Ileugh  v.  Jones,  32  Penn.  St.  432. 


212  PEE  SONS  TARTIALLY  OR  WHOLLY  DISQUALIFIED. 

particular  property  to  be  charged.^  The  general  rule  in  this- 
country,  however,  still  seems  to  be,  that  the  wife's  separate 
property  is  liable  in  equity  for  all  debts  which  she,  by  impli- 
cation, or  expressly  by  writing  or  parol,  charges  thereon, 
because  it  is  right  that  her  debts  should  be  paid.'^  And  as 
the  doctrine  arises  entirely  out  of  equity,  it  seems  to  us 
correct,  as  it  is  the  existence  of  the  intention  to  charge  the 
separate  estate,  and  not  the  peculiar  mode  of  expressing  it 
which  creates  the  equity.^  At  the  present  day  in  New  York, 
contracts  of  a  mari-ied  woman  in  relation  to  her  separate 
estate  can  be  enforced  at  law  or  in  equity,  as  the  case  may 
be,*  and  the  executory  contracts  of  married  women  diV<d  prima 
facie  valid.^  The  intent  to  charge  the  separate  estate  may 
be  inferred  from  circumstances,  and  a  specific  agreement  is 
not  necessary.^  But  as  to  note  of  married  woman  payable  to 
and  indorsed  by  her  husband,  it  has  been  hoidi  prima  facie  a 
nullity,  and  that  evidence  aliunde  was  necessary  to  charge 
her  by  showing  that  it  was  on  her  separate  business  or  for 
the  benefit  of  her  separate  estate."^ 

§  249.  In  Massachusetts,  where  the  statute  confers  upon 
married  women  the  capacity  to  sell  and  convey  their  separate 


•  Corn  Exchange  Ins.  Co.  v.  Bal)cock,  42  N.  Y.  613. 

^  Todd  V.  Lee,  15  Wis.  365;  Grapengcther  v.  Fcjervary,  9  Iowa,  163;  Major 
T.  Symraes,  19  Ind.  117;  Rogers  v.  Ward,  8  Allen,  387;  Pentz  v.  Simeon,  3 
Beasley,  232;  2  Story's  Eq.  Juris.  §§  1398,  1401;  2  Kent  Com,  164;  Edwards  on 
Bills,  70. 

'  Owens  V.  Dickenson,  1  Craig  &  Ph.  48,  Lord  Chancellor  Cottenham  saying: 
"The  separate  property  of  a  married  woman  being  a  creature  of  equity,  it  follows 
that  if  she  has  a  power  to  deal  with  it,  she  has  the  other  powers  incident  to 
property  in  general,  namely:  the  power  of  contracting  debts  to  be  paid  out  of 
it;  and  inasmuch  as  her  creditors  have  not  the  means  at  law  of  compelling  pay- 
ment of  those  debts,  a  court  of  equity  takes  upon  itself  to  give  effect  to  them, 
not  as  personal  liabilities,  but  by  laying  hold  of  the  separate  property,  as  the  only 
means  by  Avhich  they  can  be  satisfied." 

*  Ilier  V.  Staples,  51  N.  Y.  136;  Corn  Exchange  Ins.  Co.  v.  Babcock,  42  N.  Y. 
013. 

'  Willscy  V.  Hutching,  17  N.  Y.  S.  C.  (10  Ilun),  502. 

'  Conlin  v.  Cantrell,  64  N.  Y.  219. 

'  Second  Nat.  Bank  v.  Miller,  62  N.  Y.  039. 


MARRIED    WOMEN.  213 

property,  enter  into  contracts,  and  carry  on  trade,^  it  has 
been  held  that  the  note  of  a  married  woman  given  in  pay- 
ment for  land  conveyed  to  her  sole  and  separate  use,^  or  for 
money  borrowed  to  enable  her  to  pay  for  farming  land  of 
which  she  holds  a  title  bond  to  her  sole  and  separate  use,  is 
valid.^ 

When  a  married  woman  charges  her  separate  estate  with 
a  debt,  all  her  estate  held  at  the  time  of  trial  and  judgment 
is  liable,  as  well  as  that  held  when  the  contract  was  entered 
into."* 

A  promise  made  by  a  widow  to  pay  a  debt  contracted 
"during  coverture  would  be  void,^  unless  she  had  a  separate 
estate,  in  which  case  it  would  be  valid.® 

§  250.  Third.  When  the  wife  is  a  sole  trader^  by  the  cus- 
tom of  London  she  is  liable  on  her  contracts  in  the  city  courts, 
and  though  the  husband  must  be  joined  in  the  action  for  con- 
formity, execution  will  be  against  the  wife  alone.''^  Statutes 
empowering  married  women  to  be  sole  traders  have  been 
passed  in  some  of  the  States  of  the  United  States,  and  when 
so  empowered  they  may  make  bills  or  notes ;  ^  but  unless  so 
■empowered,  a  married  woman  cannot,  without  her  husband's 
consent,  bind  herself  in  trade,  except  under  the  circumstances 
which  are  herein  enumerated.  But,  with  the  husband's  con- 
sent, she  may  carry  on  trade  separately  as  a  regular  merchant, 
and  bind  herself  as  a  party  to  a  negotiable  instrument.^ 

'  The  general  statutes,  c.  108,  §  3,  provide  that  ''a  married  woniaa  may  bar- 
gain, sell  and  convey  her  separate  real  and  personal  property,  enter  into  any 
contracts  in  reference  to  the  same,  carry  on  any  trade  or  business,  and  perform 
any  labor  or  service  on  her  sole  and  separate  account,  and  sue  and  be  sued  in 
all  matters  having  relation  to  her  separate  property,  business,  trade,  services, 
labor  and  earnings,  in  tl)e  same  manner  as  if  she  were  sole." 

=  Stewart  v.  Jenkins,  G  Allen,  300.  '  Chapman  v.  Foster,  6  Allen,  13G. 

'  Todd  v.  Ames,  60  Barb.  4G2. 

'  Lloyd  v.  Lee,  1  Strange,  94 ;  Littlefield  v.  Shee,  2  B.  &  Ad.  84. 

'  Lee  V.  Muggridge,  5  Taunt.  36. 

'  Beard  v.  Webb,  3  B.  &  P.  93;  Byles  on  Bills  (Sharswood's  ed.)  [*G2],  152-3. 

»  Camden  v.  Mulen,  29  Cal.  566. 

°  Todd  V.  Lee,  16  Wis.  480;  Partridge  v,  Stocker,  36  Yt.  108;  Richardson  v. 
Merrill,  32  Vt.  27  ;  Wieman  v.  Anderson,  42  Penn.  St.  311 ;  James  v.  Taylor,  43 
Barb.  530 ;  Schouler's  Dom.  Rel.  245,  246. 


214  PERSONS  PARTIALLY   OR  WHOLLY  DISQUALIFIED. 

§  251.  Fourtli.  As  to  necessaries. — Every  liusband  is 
bound  to  provide  for  Lis  wife,  and  the  common  law  enforces 
this  obligation,  lest  the  wife  may  become  a  burden  to  the 
community.^  And  if  the  husband  fail  to  furnish  her  with 
the  necessaries  of  life,  such  as  food,  raiment,  lodging  and 
medical  attendance,  the  law  presumes  an  authority  in  her  to 
procure  them  on  his  credit,  and  he  will  not  be  permitted  to 
deny  that  authority  was  given.** 

§  252.  Fifth.  When  husband  adoj)ts  tvifts  name. — A  per- 
son may  adopt  whatever  name  he  pleases  in  his  business 
dealings,  and  then  when  he  uses  such  adopted  name  he  will 
be  bound  by  it.^  Therefore,  if  a  husband  sign  his  wife's 
name  to  a  bill  or  note,  he  will  be  considered  as  having 
adopted  it  pro  hac  vice,  and  will  be  bound  accordingly.* 
So,  if  the  wnfe  executes  a  note  for  her  husband,  in  his 
presence,  and  signs  her  own  name  merely,  with  his  knowl- 
edge and  consent,  it  will  bind  him.^  And  in  any  case  wdiere 
the  husband  clearly  authorizes  his  W'ife  to  draw  or  indorse 
bills  or  notes  on  his  account  and  sign  her  name,  and  she  does 
so,  he  will  be  regarded  as  intending  thereby  to  bind  him- 
self, and  will  be  so  held.^  And  if,  after  the  wife  has  signed 
her  name,  the  husband  promises  to  pay  the  bill  or  note,  or 
otherwise  ratifies  the  wife's  act,  it  will  be  presumed  that  she 
had  authority  from  him,  and  he  will  be  estopped  to  deny  it.'^ 
Thus,  where  a  bill  was  addressed  to  "  William  Bi'adwell," 
and  was  accepted  by  "Mary  Brad  well."  his  w^ife,  who  wrote 
her  name  across  it,  and  William  Bradwell,  after  its  dishonor, 
promised  to  pay  it  veiy  shortly,  it  was  held  that  it  was  Wil- 
liam Bradwell's  acceptance,  and  Maule,  J.,  said :    "  He,  in 


'  Schouler's  Domestic  Relations,  76-79,  85 ;  Mudge  v.  Bullock,  83  111.  22. 

'Id. 

'  See  Chapter  XI,  on  Agents  ns  Parties.  *  Id. 

'  Prcstwick  v.  Marshall,  7  Bing.  5Go ;    Mcukins  v.  Ileringlii,  17  Mo.  297. 

•  Cotes  V.  Davis,  1  Camp.  485 ;  Hancock  Bank  v.  Joy,  41  Me.  5G8 ;  see  Miller 
V.  Delamater,  12  Wend.  433. 

'  Cotes  V.  Davis,  1  Camp.  485;  Lindus  v.  Bradwell,  5  C.  B.  583;  Shaw  v. 
Emery,  38  Me.  484;  Mudge  v.  Bullock,  S3  111.  23. 


MARRIED    WOMEN.  215 

effect,  says  that  Lis  wife  was  authorized  by  him  to  accept 
this  particular  bill  in  the  way  she  did."  ^ 

And  where  the  husband  carries  on  business  generally  in 
his  wife's  name,  that  is  conclusive  that  he  adopts  it  and  is 
bound  by  it.^ 

§  253.  Sixth.  When  the  wife  is  agent  of  her  hushand. — 
Marriage  does  not  incapacitate  a  married  woman  from  being 
the  agent  of  her  husband.  The  power  to  act  as  his  attorney 
implies  no  separation  from,  but  is  rather  a  representation  of, 
her  lord.*^  Therefore,  the  husband  will  be  bound  whenever 
she  uses  his  name  by  his  express  or  implied  authority.  Un- 
less the  husband  has  adopted  her  name  as  binding  on  him, 
by  authorizing  its  use,  the  wife  must  sign  the  husband's 
name.^  The  form  may  be  :  "  A.  (husband)  by  B.  (wife)  ; " 
or  "  B.  (wife)  for  C.  (husband)."  But  the  mere  signature  of 
the  husband's  name,  if  by  his  authority,  would  doubtless 
suffice.^ 

The  wife's  authority  must  be  clearly  proved.®  If  she  be 
the  husband's  amanuensis  in  his  business,  because  he  cannot 
write,  a  note  signed  by  her  must  be  proved  to  have  been 
given  on  account  of  his  business  concerns.'^  If  the  husband 
allow  the  wife  to  purchase  goods,  and  to  give  a  note,  he  may 
make  any  defense  that  would  have  been  available  had  he 
made  the  note  himself;  but  against  a  bona  fide  holder  for 
value  he  would  be  defenseless.^  The  wife  cannot  delegate 
authority  granted  her,  but  another  person,  in  her  presence, 
may  write  her  husband's  name  for  her.^ 

§  254.  Husband's  rights  to  tvife's  choses  in  action. — Bills 
and  notes  possessed  by  a  single  woman  before  her  marriage 
are   her   choses   in   action,  and   by  marriage   the   husband 

■  Lindus  v.  Bradwell,  5  C.  B.  5S3.  "  Abbott  v.  McKiulcy,  3  Miles,  220. 

=■  1  Black.  Com.  442. 

*  Miimrcl  v.  Mead,  7  Wend.  08;  Abbott  v.  i\IcKinlcy,  2  Miles,  220. 

'  1  Parsons  N.  &  B.  80.     But  sec  Wood  v.  Goodridge,  6  Cusb.  117. 

'  Coldstone  v.  Tovey,  6  Bing.  N.  C.  98. 

'  Smith  V.  Pedley,  Chitty,  Jr.  on  Bills,  1241. 

•  Reakert  v.  Sauford,  5  Watts  &  S.  164.  »  Lord  v.  Hall,  8  C.  B.  G27. 


21G  PERSONS  PARTIALLY  OR  WHOLLY  DISQUALIFIED. 

becomes  entitled  to  reduce  tbem  into  bis  possession,  and  to 
make  them  Lis  own.^  And  so  if  a  bill  or  note  is  made  pay- 
able to  a  married  woman,  or  becomes  lier  property  after  mar- 
riao-e,  the  right  thereto  vests  in  her  husljand,  and  he  alone  is 
competent  to  indorse  it,^  or  to  receive  payment.^ 

And  the  husband  may,  at  his  election,  indorse  or  nego- 
tiate the  instrmnent,  or  sue  upon  it  alone  in  his  own  name  i"* 
or  he  may  sue  upon  it  in  the  joint  names  of  himself  and  his 
wife;^  or  he  may  allow  her  to  indorse  it  or  negotiate  it  in 
her  own  name.®  In  this  last  case  it  may  be  declared  on, 
either  as  indorsed  by  the  husband,  or  in  the  wife's  name  by 
his  consent ;  and  a  good  title  may  be  thus  acquired  against 
the  husband,  as  well  as  other  parties.'^  It  was  once  held  that 
a  negotiable  instrument  was  a  personal  chattel  in  possession  ; ' 
but  it  is  well  settled  that  it  is  a  chose  in  action.* 

§  255.  If  a  husband  loaning  money,  takes  therefor  a  note 
payable  to  himself  and  wife,  it  imports  a  gift  to  his  wife  in 
the  event  she  survives  him.^*^  And  if,  after  marriage,  a  bill  or 
note  be  executed  to  the  husband  and  wife  as  joint  payees, 
the  legal  interest  survives  to  the  survivor.^^ 


'Richards  v.  Richards,  2  B.  &  Ad.  447;  Garforth  v.  Bradley,  2  Vcs.  675 ; 
Howard  v.  Okes,  3  Wels.  II.  &  G.  13G;  Dean  v.  Richuioud,  5  Peck,  461 ;  Legg 
V,  Legg,  9  Mass.  99;  Chitty  [*22],  30  ;  Story  on  Bills,  §  93. 

'  Id.;  Philliskirk  v.  Pluckwell,  2  Maule  &  S.  399;  Chitty  [*22,  23],  30. 

'  Byles  [*65],  157  ;  1  Parsons  N.  &  B.  89. 

^  Mason  v.  Morgan,  2  Ad.  &  El.  30;  Burrough  v.  Moss,  10  B.  &  C.  558; 
McNcilage  v.  Ilolloway,  1  Barn.  &  Aid.  218;  Gaters  v.  Madcley,  6  Mees.  &  W. 
423;  Arnold  v.  Revonet,  4  J.  B.  Moore,  70;  Sutton  v.  Warren,  10  Mete.  451. 

'  Richards  v.  Richards,  2  B.  &  Ad.  447. 

•  Stevens  v.  Beals,  10  Gush.  291;  Menkins  v.  Ilcringhi,  17  Mo.  297;  Roland 
V.  Logan,  18  Ala.  307. 

■'  Story  on  Bills,  §  92. 

•  McNcilage  v.  Ilolloway,  1  Barn.  &  Aid.  218. 

•  ScarpcUini  v.  Atcheson,  7  Ad.  &  El.  N.  S.  864;  Richards  v.  Richards,  2 
Bam.  &  Ad.  447;  Gaters  v.  Madeley,  6  Mees.  &  W.  423;  Hart  v.  Stephens,  6  Q. 
B.  937;  Needles  v.  Needles,  7  Ohio  St.  432;  Tritt  v.  Colwell,  31  Penn.  St.  228; 
Edwards  on  Bills,  72. 

"  Sandford  v.  Sandford,  45  N.  Y.  723. 

"  Richardson  v.  Daggett,  4  Vt.  336;  Draper  v.  Jackson,  16  Mass.  480;  Byles 
on  Bills  (Sharswood's  ed  )  [''64],  156  ;  see  lie  Gadbury,  32  L.  J.  380. 


MARRIED    WOMEN.  217 

§  256.  It  is  necessary,  to  tlie  perfection  of  the  husband's 
right  of  property  in  the  hills,  notes,  and  other  choses  in 
action  of  his  wife,  that  he  shouhl  reduce  thera  into  his  own 
possession  during  the  marital  relation.  And  if  he  dies 
without  having  done  so,  and  the  wife  surv^ives  him,  the  right 
to  their  sole  possession  revives  to  her,  and  does  not  pass  to 
his  personal  representative,  and  she  may  then  sue  upon  or 
indorse  them.^  If  the  wife  dies,  the  husband  surviving,  her 
personal  representative  will  be  entitled  to  sue  for  them,  but 
the  husband  will  be  entitled  to  the  proceeds,  when  recovered, 
in  right  of  his  survivorship.^  And  the  husband  is  entitled 
to  be  her  personal  representative.'^  It  has  been  held  that  if 
the  husband  gets  actual  possession  of  her  unreduced  choses 
in  action  after  her  death,  although  not  lier  personal  represen- 
tative, they  become  his  property.'*  If  he  dies,  without  hav- 
ing taken  out  letters  of  administration  on  his  wife's  unsettled 
estate,  the  right  to  do  so  passes  to  his  next  of  kin,  and  not 
to  hers.^ 

§  257.  Any  act  of  the  husband  during  marriage  manifest- 
ing a  distinct  purpose  to  make  his  wife's  choses  in  action  his 
own,  operates  as  a  reduction  into  possession,  and  bars  her 
right  of  survivorship  ;  ^  but  mere  intention,  unaccompanied 
by  act,  will  not  suffice.'^  If  the  husband  elects  to  bring  suit 
upon  the  instrument  in  his  own  name,  in  cases  in  which  he  may 
join  his  wife  or  not,  as  he  pleases,^  or  collects  the  proceeds  and 


'  Vance  v.  McLaughlin,  8  Grat.  389;  May  v.  Boisseau,  13  Leigh,  531;  Draper 
V.  Jackson,  IG  Mass.  480;  Hayward  v.  Hayward,  30  Pick.  517;  Gaters  v.  Made- 
ley,  6  Mecs.  &  W.  433;  Richards  v.  Richards,  3  B.  &  Ad.  447;  Philliskirk  v. 
Pluckwell,  3  Maule  &  S.  393;  Byles  [*64],  155. 

«  Betts  V.  Kimpton,  3  Barn.  &  Ad.  373 ;  Story  on  Bills,  §  93 ;  1  Parsons  N.  & 
B.  85. 

'Id. 

*  Whitaker  v.  Whitaker,  6  Johns.  113;  Lee  v.  Wheeler,  4  Ga.  541;  Revel  v. 
Revel,  3  Dev.  &  Bat.  373. 

'  Schouler's  Domestic  Relations,  163. 

•  1  Parsons  N.  &  B.  86.  '  Blount  v.  Bestland,  5  Ves.  Jr.  515. 

^  Oglander  v.  Baston,  1  Vern.  S96;  8  Ves.  Sr.  677;  see  Schouler's  Dom.  Rcl. 
137. 


218  PERSO^^S  P.AJITIALLY  OR  WHOLLY  DISQUALIFIED 

applies  tliem  to  bis  own  use/  it  is  a  reduction  into  possession. 
So,  if  the  husband  assumes  ownership  of  the  instrument, 
places  it  among  his  own  effects,  and  indicates  no  intention  to 
hold  it  in  trust  for  his  wife,  it  would  seem  that  itis  suffi- 
cient." But  the  mere  fact  that  he  takes  it  in  custody  would 
not  be  alone  sufficient,  /><??'  se^  as  it  might  be  in  trust  for  his 
wife.^  Indorsing  or  transferring  the  instrument  is  a  reduc- 
tion into  possession;  ^  but  collecting  interest  or  part  payment 
is  only  a  reduction  pro  tanto^  And  even  collecting  the 
whole  amount,  if  it  were  promptly  re-invested  for  the  wife  in 
otlier  choses  in  action,  would  not  defeat  the  wife's  rights.** 

Nor  would  mere  authority  to  an  agent  to  collect,  not  be- 
ing a  power  coupled  with  an  interest.'''  The  bankruptcy  of 
the  husband  does  not  operate  a  reduction  into  possession.^ 
But,  in  the  United  States,  it  has  been  held  that  an  assign- 
ment under  an  insolvent  law  defeats  the  wife's  right  of  sur- 
vivorship.'' 

§  258.  If  a  single  woman,  who  is  a  party  to  a  bill,  note 
or  other  contract,  marries,  her  husband  becomes  responsible, 
for  by  marriage  he  adopts  her  fortunes  "  for  better  for  worse."  ^* 
And  it  matters  not  that  he  did  not  know,  and  that  his  wife 
had  concealed  from  him  the  existence  of  such  obligations." 
Husband  and  wife  must  be  sued  jointly  on  such  obligations.^'^ 
But  this  liability  ceases  with  the  marital  relation.  If  the 
husband  dies,  the  wife  alone  is  liable,  and  not  his  personal 


'  1  Parsons  N.  &.  B.  86;  see  Schouler,  110. 

"  Sec  Schouler's  Domestic  Rclatious,  119  '  Holmes  v.  Holmes,  28  Vt.  765. 

'  ScarpcUiDi  v.  Atcheson,  7  Q.  B.  864  (o:3  E.  C.  L.  R.);  Tuttle  v.  Fowler,  23 
Comi.  58;  Bylcs  (Sharswood's  ed.)  [*65],  loO;  1  Parsons  N.  &  B.  8G. 

'  Nash  V.  Nash,  2  Mad.  133;  Hart  v.  Stephens,  6  Q.  B.  937. 

°  Stanwood  v.  Stanwood,  17  Mass.  57. 

'  1  Parsons  N.  &  B.  87. 

«  Sherrington  v.  Yates,  13  M.  &  W.  855,  overruling  s.  c.  11  M.  &  W.  42; 
Byles  (Sharswood's  ed.)  [*65],  156. 

"  Glasgow  V.  Sands,  3  Gill.  &  J.  90;  Richwine  v.  Kcirn,  1  Penn.  373. 

'»  1  Black  Com.  443;  2  Kent  Com.  143-146. 

"  Schouler's  Domestic  Relations,  69. 

"  Mitchinson  v.  Hevvson,  7  T.  R.  348. 


PERSONS  UNDER  GUARDIANSHIP  AND  IN  BANKRUPTCY.   219 

representative.^  If  the  wife  dies,  onl}^  her  personal  representa- 
tive is  liable.^  But  the  wife's  choses  in  action  unreduced  to 
possession  by  the  husband  at  the  time  of  her  death  may  be 
followed  in  the  hands  of  the  husband,  when  he  is  her  admin- 
istrator, by  her  creditors,  and  subjected  to  payment  of  her 
debts  contracted  when  a  feme  sole? 


SECTION  V. 

PEESONS    UNDER   GUARDIANSHIP   AND    IN    BANKRUPTCY. 

§  259.  Persons  under  guardianship,  whether  for  infancy^ 
imbecility,  improvidence,  or  otherwise,  cannot  contract,  and 
therefore  cannot  be  parties  to  negotiable  instruments.'^ 

§  2 GO.  All  rights  of  property  belonging  to  a  bankrupt 
pass  by  his  bankruptcy  to  his  assignee.  He  has,  therefore, 
no  power  of  disposition  over  it,  and  cannot  sue  upon  his 
choses  in  action,  or  transfer  or  indorse  them  to  another.^  But 
if,  after  bankruptcy,  a  note  be  made  j)ayable  to  the  bankrupt 
or  order,  and  by  him  transferred,  the  maker  is  estopped  to 
deny  his  right  to  transfer  by  having  made  it  payable  to  him 
or  order.^  If  the  property  in  the  instrument  had  passed  from 
the  bankrupt  before  his  bankruptcy,  and  the  indorsement^ 
which  was  intended,  omitted,  he  or  his  assignee  may  be  com- 
pelled to  indorse  it  afterward."^  A  note  given  by  a  bank- 
rupt after  his  discharge  for  a  debt  existing  prior  to  the  ad- 

'  Woodman  v.  Chapman,  1  Camp.  189;  Curtton  v.  Moore,  2  Jones  Eq.  204; 
Byles  (Sharswood's  ed.)  [*65],  157. 

'  2  Kent  Com.  144 ;  Byles  [*G5],  157. 

'  Heard  v.  Stamford,  3  P.  Wms.  409 ;  Morrow  v.  Whitesides,  10  B.  Monroe, 
411;  1  Parsons  N.  &  B.  86. 

'  Manson  v.  Felton,  13  Pick.  206;  Chew  v.  Bank  of  Baltimore,  14  Md.  299; 
1  Parsons  N.  &  B.  89. 

»  1  Parsons  N.  &  B.  158;  Story  on  Notes,  §  102. 

'  Drayton  t.  Dale,  2  B.  &  C.  293 ;  see  ante,  §  98. 

'  Smith  V.  Pickering,  Peakc,  50;  ex  parte  Mowbray,  1  Jac.  &  W.  428;  Wat- 
kins  V.  Maule,  2  Jac.  &  W.  237;  Hughes  v.  Nelson,  29  N.  J.  (Eq.)  549. 


"220  PERSONS  PARTIALLY   OR   WHOLLY   DISQUALIFIED. 

judication,  upon  condition  that  the  payee  would  dismiss  a 
proceeding  to  set  aside  the  discharge,  is  void ;  and  a  subse- 
quent promise  to  pay  such  a  note  would  be  also  void.^  If  a 
bankrupt  who  is  the  payee  of  a  bill  or  note,  sells  the  same 
without  indorsement  before,  and  indorses  it  after  bankruptcy, 
such  indorsement  will  enable  the  holder  to  bring  action  in 
his  own  name,  for  the  property  in  the  note  passed  by  the 
sale,  and  the  indorsement  is  a  mere  form.^ 

'  Fell  V.  Cook,  44  Iowa,  485. 
'  Ilerscy  v.  Elliott,  67  Me.  527. 


CHAPTER  IX. 

FIDUCIAKIES    AS    PARTIES    TO    BILLS    AND    NOTES. 

§2G1.  (1)  As  to  personal  representatives. — When  a  per- 
son dies,  the  administration  of  affairs  of  his  personal  estate^ 
and  its  distribution  among  those  to  whom  it  descends,  or 
its  appropriation  to  the  payment  of  debts,  devolves  upon  his 
personal  representative.  When  such  representative  is  ap- 
pointed by  the  will  of  the  deceased,  he  is  termed  his  execu- 
tor. When  none  is  named  in  his  will,  or  the  one  named  de- 
clines to  act,  the  appointment  devolves  upon  the  courts,  and 
the  aj^pointee  is  termed  administrator.  The  executor's 
powers  accrue  at  the  date  of  the  testator's  death,  for  it  is 
then  that  his  will  takes  effect.  But  the  administrator's 
powers  accrue  only  from  the  time  of  his  appointment ;  ^  but 
they  relate  back  to  the  date  of  the  decedent's  death.^  If  the 
will  be  admitted  to  probate,  a  payment  to  the  executor  nom- 
inated will  be  valid,  although  it  afterward  transpire  that 
the  will  was  forged.^ 

§  262.  An  administrator  or  executor  cannot  bind  the 
decedent's  estate  by  any  negotiable  instrument ;  he  can  only 
bind  himself  If  he  make,  accept  or  indorse  a  negotiable 
instrument  he  will  bind  himself  personally,  even  if  he  adds 
to  his  own  name  the  designation  of  his  office  as  personal  rep- 
resentative. Thus,  if  he  signs  himself  "A.  B.,  executor  (or 
administrator)  of  C.  D.,"  or  "  A.  B.,  as  executor  of  C.  D.,"  the 
representative  terms  will  be  rejected  as  surplusage.''     And 

»  Wooley  V.  Clark,  5  B.  &  Aid.  744 ;  Rand  v.  Hubbard,  4  Mete.  256 ;  Allen  v. 
Dundas,  3  T.  R.  125;  1  Parsons  N.  &  B.  161. 

"^  Jewett  V.  Smith,  12  Mass.  309 ;  Lawrence  v.  Wright,  23  Pick.  128 ;  Miller  t. 
Reigne,  2  Hill  (S.  G.)  592;  McVaughters  v.  Elder,  2  Brev.  407. 

'  Allen  V.  Dimdiis,  3  T.  R.  125;  Byles  on  Bills  (Sharswood's  ed.)  [*54],  139; 
Thomson  on  Bills,  242;  1  Parsons  N.  &  B.  161. 

*  King  V.  Thorn,  1  Term.  R.  487.     Buller,  J. :  "  It  is  immaterial  whether  they 


"222  FIDUCLVRIES  AS  PARTIES  TO   BILLS  AND   NOTES. 

an  accommodation  indorser,  or  acceptor,  who  pays  the 
amount  of  the  instrument  has  no  claim  against  the  decedent's 
€state.^  But  if  the  bill  or  note  of  the  personal  representative 
be  taken  for  a  debt  of  the  decedent,  the  estate  is  discharged 
from  lial)ility,  and  the  representative  alone  is  bound.^ 

§  2G3.  A  personal  representative  may,  however,  execute 
a  bill  or  note  for  the  debt  of  his  testator,  and  he  will  be  per- 
sonally bound  to  pay  it  even  in  the  hands  of  the  original 
holder ;  for  assets  in  the  hands  of  the  personal  representative 
constitute  a  sufficient  consideration  for  a  promise  by  him  to 
pay  the  testator's  debt,  and  the  promise  being  in  writing,  no 
proof  of  consideration  is  necessary,  even  if  the  instrument 
be  non-negotiable.'^  But  as  between  the  original  parties  the 
personal  representative  may  rebut  the  ^rima  facie  evidence 
of  assets,  and  show  total  or  partial  deficiency ;  and  he  will 
then  be  exonerated  from  liability,  unless  there  was  some 

<the  executors)  indorse  it  (the  bill  of  exchange)  as  executors  or  not.  If  they  in- 
dorse it  at  all  they  are  liable  personally,  and  not  as  executors,  for  their  indorse- 
ment would  not  give  an  action  against  the  effects  of  the  testator.'"  The  bill  had 
been  indorsed  to  the  executors  after  the  decedent's  death. 

Where  two  executors  gave  a  creditor  of  the  testator  a  note  whereby  they  "  as 
•executors  severally  and  jointly  promised  to  pay  on  demand,  with  interest,"  they 
were  held  personally  responsible.  Burrough,  J.,  said :  "  They  could  only  charge 
his  estate  with  the  original  debt,  and  although  the  giving  the  note  in  question 
might  not  have  amounted  to  the  admission  of  assets  in  their  hands  at  the  time, 
still,  by  the  promise  of  the  payment  of  interest  thereon,  they  made  the  debt  their 
own,  as  it  clearly  showed  it  was  to  be  paid  on  a  future  day,  and  amounted  in 
effect  to  a  request  to  the  plaintiff  to  forbear  to  sue  them  on  the  original  de- 
mand." Childs  V.  Monins,  5  Moore,  282 ;  2  Brod.  «&  Bing.  4a0 ;  6  E.  C.  L.  R.  201 ; 
Aspinall  V.  Wake,  10  Bing.  55;  Snead  v.  Coleman,  7  Grat.  305;  Christian  v. 
Morris,  50  Ala.  586 ;  McEldery  v.  Chapman,  2  Porter  (Ala.)  33 ;  Hai-rison  v. 
McClelland,57Ga.531;  Cornthwaite  v.  First  K  B.  57Ind.  2G9;  Erwin  v.  Carroll, 
1  Yerg.  145;  Tryon  v.  Oxley,  3  Iowa,  289;  Sims  v.  Stillwell,  3  IIow.  (Miss.)  17G; 
Carter  v.  Sanders,  2  IIow.  (Miss.)  851 ;  Robertson  v.  Banks,  1  Smedes  &  M.  0G6 ; 
Davis  V.  French,  20  Me.  21 ;  Walker  v.  Patterson,  86  Me.  273 ;  Kirkmaa  v.  Ben- 
ham,  28  Ala.  501 ;  Wisdom  v.  Becker,  52  111.  346 ;  Gregory  v,  Leigh,  33  Tex. 
813;  Edwards  on  Bills,  79,  248;  Story  on  Notes,  §  63;  Story  on  Bills,  §  74 ; 
Thomson  on  Bills,  145,  146. 

'  Kirkman  v.  Benham.  28  Ala.  501. 

'  Erwin  v.  Carroll,  1  Yerg.  145  ;  Wisdom  v.  Becker,  52  111.  346  ;  Cornthwaite 
V.  First  Nat.  Bank,  57  Ind.  269;  Carter  v.  Thomas,  3  Ind.  213. 

'  Snead  v.  Coleman,  7  Grat.  300. 


FIDUCIARIES  AS  PARTIES  TO   BILLS   AND  NOTES.  '21',] 

other  consideration  moving  to  liim  personally.^  And  he 
may,  if  he  desires,  exclude  all  personal  liability  by  restricting 
his  promise  to  pay  "  out  of  the  assets  of  C.  D.,"  or  "  out  of 
the  assets  of  C.  D.,  and  not  otherwise,"  by  such  expression 
or  its  equivalent.^  But  the  instrument  in  that  case,  being 
payable  out  of  a  particular  fund,  would  not  be  negotiable.'' 
The  surrender  of  promissory  notes  made  by  the  decedent  is 
a  sufficient  consideration  for  a  note  made  individually  by  his 
personal  representative.^ 

§  2G4ji  As  to  his  powers  over  negotiahle  instncments  of  the 
deceased. — The  executor  or  administrator  (and  not  the  heir) 
has  a  right  to  the  possession  of  the  bills  and  notes  of  the 
deceased  ;  and  it  is  his  duty  to  present  and  demand  payment 
of  them,  to  give  notice  in  case  of  their  dishonor,  and  make 
protest — in  short,  to  do  respecting  them  what  would  have 
been  the  duty  of  the  decedent  to  do  were  he  alive.^  And  if 
a  bill  or  note  be  indorsed  or  assigned  to  a  dead  man,  whose 
death  is  not  know^n,  it  becomes  the  property  of  his  personal 
representative,  in  like  manner  as  if  he  had  died  after  the 
transfer ;  ^  so,  likewise,  if  the  transfer  were  made  in  good 

'  Bank  of  Troy  v.  Topping,  13  Wend.  273;  Rucker  v.  Wadlington,  5  J.  J. 
Marsh,  238 ;  Steele  v.  McDowell,  9  Smedes  &  M.  193 ;  Byrd  v.  Holloway,  6  Smedea 
«fc  N.  199;  Edwards  on  Bills,  78.  In  Missouri  in  an  action  on  a  note  signed  "  P. 
A.  Executor,"  it  was  held,  1.  Tliat  the  style  executor,  &c.,  should  be  treated  aa 
mere  descriptio  persoim,  especially  as  the  note  was  on  time,  and  carried  interest ; 
2.  That  it  prima  facie  imported  consideration,  but  it  was  competent  for  the  maker 
to  show  that  as  an  individual  contract  it  was  without  consideration  ;  3.  That  in 
such  case  where  consideration  of  the  note  accrued  after  testator's  death,  the  ad- 
ministrator would  in  first  place  be  liable  de  bonis  propriis,  but  would  be  entitled 
to  re-imbursement  out  of  the  assets  of  the  estate.  Rittenhouse  v.  Ammerman,  64 
Mo.  197. 

»  Childs  V.  Monins,  6  E.  C.  L.  H.  201 ;  Snead  v.  Coleman,  7  Grat.  303 ;  Carter 
V.  Saunders,  2  How.  (Miss.)  851 ;  Kirkman  v.  Benham,  28  Ala.  501 ;  Bank  of 
Troy  V.  Topping,  9  Wend.  273;  Story  on  Notes,  §  63;  Story  on  Bills,  §  74 ;  1 
Parsons  N.  &  B.  IGl ;  Edwards  on  Bills,  79. 

'  Ibid. ;  Edwards  on  Bills,  78. 

*  Harrison  v.  McClelland,  57  Ga.  531. 

*  King  V.  Thorn,  1  T.  R.  487  ;  Thomson  on  Bills,  145  ;  Byles  (Sharswood'scd.) 
[*o3],  139. 

"  Murray  v.  East  India  Co.  5  B.  &  Aid.  2C4  (7  E.  C.  L.  R) ;  Morse  v.  Clayton, 
13  Smedes  &M.  373. 


224  FIDUCIARIES  AS  PARTIES  TO  BILLS  AND  NOTES. 

faith  with  knowledge  of  his  death,  as  it  could  be  made  with 
no  other  intention  than  to  place  the  instrument  among  hi& 
assets.^  A  personal  representative  cannot  purchase  in  his 
own  right  a  note  indorsed  by  his  decedent.  He  can  only 
pay  it,  as  the  law  forbids  his  S2:)eculating  on  tlie  su])ject  of 
his  trust.'^ 

§  265.  If  a  bill  or  note  held  by  the  decedent  be  negotia- 
V)le,  the  personal  representative  may  transfer  it  by  indorse- 
ment ;  and  if  non-negotiable,  by  assignment.^  But  the  repre- 
sentative would  be  liable  in  the  event  of  dishonoi^  unless  he 
distinctly  exempted  himself  by  the  terms  of  the  indorse- 
ment."^ If,  however,  such  transfer  be  for  the  private  debt  of 
the  personal  representative,  it  is  a  fraud  on  the  estate,  and  is 
void  as  to  all  parties  with  notice  or  knowledge  of  it,  even  if 
they  paid  full  value.^ 

§  266.  It  seems  to  be  now  settled  that  if  there  be  several 
executors  or  administrators  the  bills  or  notes  executed  to  the 
deceased  in  his  lifetime  may  be  indorsed  by  either  one  of 
them  ;  ^  and  an  assignment  of  a  note  of  the  testator  by  one  of 
several  executors  as  collateral  security  for  a  judgment  against 
the  estate  has  been  held  valid.'^  It  has  been  held  otherwise 
where  the  note  was  made  payable  to  several  executors  for  a 
debt  due  the  estate ;  ^  but  the  better  opinion  seems  to  recog- 
nize no  such  distinction,  and  regarding  the  note  in  either 
case  as  assets,  the  indorsement  by  one  repi-esentative  is  con- 
sidered as  effectual  as  that  of  all.  * 


'  1  Parsons  N.  &  B.  154. 

'  Burton  v.  Slaughter,  26  Grat.  919. 

^  Rowlinson  v.  Stone,  3  Wils.  1 ;  Cryst  v.  Cryst,  1  Smith  (Ind  ),  370  ;  Cahoua 
V.  Moore,  11  Vt.  G04 ;  Morse  v.  Clayton,  13  Smede3»&  M.  373;  Graw  v.  Hannah, 
6  Jones,  Law,  94  ;  Story  on  Notes,  §  133. 

*  Foster  v.  Fuller,  6  Mass.  58 ;  Edwards  on  Bills,  248. 

"  Miller  v.  Williamson,  5  Md.  219;  Scott  v.  Searles,  7  Smedes  &  M.  498  ;  Mil- 
ler V.  Helm,  2  Smedes  &  M.  687;  Makepeace  v.  Moore,  5  Gilm.  474. 

"  Moseley  v.  Graydon,  4  Strob.  7  ;  Dwiglit  v.  Newell,  15  111.  333;  Sanders  v. 
Blaine,  6  J.  J.  Marsh,  446;  Ilertel  v.  Bogert,  9  Paige,  52;  4  Hill,  492;  Edwards 
on  Bills,  79,  80,  248. 

'  Weeler  v.  AVheeler,  9  Cow.  34.  •  Smith  v.  Whiting,  9  Mass.  334. 

°  Bogert  V.  Hertell,  4  Hill,  492;  1  Parsons  N.  &  B.  155,  159. 


FIDUCIARIES   AS  PARTIES'  TO   BILLS  AND  NOTES.  225 

§  2G7.  If  the  paper  be  transferable  by  indorsement 
(whicli  includes  delivery),  the  mere  writing  by  the  deceased 
in  his  lifetime  of  his  name  upon  it  will  be  nugatory  ;  and  the 
personal  representative  cannot  complete  the  transfer  by  de- 
livery. He  must  himself  in  his  full  legal  sense  indorse  the 
paper,  that  is,  write  the  transfer  on  it  and  deliver  it.^  In 
such  a  case  it  has  been  said  respecting  the  holder,  to  whom 
the  executor  delivered  the  note  with  his  testator's  indorse- 
ment upon  it,  but  without  his  own  :  "  lie  failed  to  show  any 
leo;al  title  to  the  note  because  of  the  manner  in  which  it  was 
transferred.  He  also  failed  to  show  any  equitable  title  to  it 
because  of  the  manner  in  w^hich  it  was  transferred."  ^  But  if 
the  paper  were  transferable  by  indorsement,  and  the  deceased 
delivered  it  in  his  lifetime,  for  value,  without  indorsement, 
he  passed  the  equitable  title  to  it ;  and  it  would  be  the  duty 
of  the  personal  representative  (which  equity,  if  appealed  to, 
\vould  compel  liim  to  perform)  to  complete  the  formal  trans- 
fer by  his  indorsement ;  ^  but  he  would  be  entitled  to  add 
words  protecting  himself  from  personal  liability.^ 

§  268.  It  is  settled  now  that  a  bill  or  note  payable  to 
"  A.,  as  executor,"  is  assets  in  his  hands — at  least,  at  his  elec- 
tion ;  ^  and  if  he  declares  uj^on  it  as  payable  to  him  as  executor, 
and  charges  it  to  have  been  made  to  him  in  his  representative 
capacity,  he  may  join  counts  upon  promises  to  his  testator  in 
his  lifetime.*^     In  an    English   case   involving  this  subject, 

'  Clark  V.  Boyd,  2  Ohio,  56;  Clark  v.  Sigourney,  17  Conn,  oil;  Bromage  v. 
Lloyd,  1  Exch.  32;  Michigan  Ins.  Co.  v.  Leavenworth,  30  Vt.  11;  Thomson  on 
Bills  (Wilson's  ed.),  91. 

"  Taylor  v.  Surget,  21  K  Y.  S.  C.  (14  Ilun),  116  (18T8),  Brady,  J. 

•  Malbon  v.  Southard,  36  Me.  U7 ;  Watkins  v.  Maule,  2  Jac.  &  W.  237  ; 
Thomson  on  Bills,  146,  and  Ogilvie  v.  Moss,  Fair  v.  Cranstown,  McDonald  t. 
Rankin,  there  cited. 

*  Thomson  on  Bills,  146 ;  Story  on  Xotcs,  §  120. 

"  Baker  v.  Baker,  4  Bibb,  346;  Hemphill  v.  Hamilton,  6  Eng.  425  ;  IIcnsha:i 
V.  Roberts,  5  East,  150;  1  Parsons  N.  &  B.  1S5. 

*Bogertv.  Hertell,  4  Hill,  503;  Sheets  v.  Pabody,  6  Blackf.  120;  Fry  v. 
Evans,  8  Wend.  530;  King  v.  Thorn,  1  T.  R.  487;  Byles  (Sharswood's  ed.)  142  ; 
but  see  TurnbuU  v.  Freret,  17  Mart.  (La.)  7u3;  1  Parsons  N.  ScB.  155,  156, 
note  n. 

Vol.  L— 15 


226  FIDUCIARIES  AS  TATITIES  TO  BILLS  AND  IS'OTES. 

Graham,  B.,  said :  "  Whenever  the  money,  when  recovered^ 
will  be  assets,  counts  in  each  character  may  be  joined  ;  and 
that  is  a  fair  and  sound  criterion,  and  one  which  is  sufficient 
to  prevent  all  ambiguity  and  doubt ;  it  ought,  therefore,  to 
be  adopted  as  a  never  failing  rule."  ^  If  a  note  be  payable  to 
a  party  as  executor,  and  be  endorsed  by  him  in  his  represen- 
tative capacity,  it  has  been  held  to  be  notice  that  it  was 
assets  in  his  hands.^ 

S  269.  It  was  a  o-eneral  rule  of  the  common  law  that  if  a 
creditor  appointed  his  debtor  executor,  it  discharged  his  lia- 
bility ;  and  it  was  applied  where  the  holder  appointed  the 
maker  of  a  note  or  the  acceptor  of  a  bill  his  executor.^  But 
this  rule  was  subject  to  exception  where  the  assets,  without 
such  bill  or  note,  were  insufficient.*  It  would  be  going  be- 
yond the  purview  of  this  work  to  discuss  this  rule  here,  as  it 
has  been  generally  reversed  in  the  United  States  l')y  statute. 
It  did  not  extend  to  administrators. 

§  270.  In  Edwards  on  Bills  it  is  said : '  "  In  this  State 
(New  York)  the  giving  of  a  note  is  not  payment,  and  con- 
sequently, as  betwx^en  the  original  parties,  the  consideration 
may  be  inquired  into,  and  where  that  fails,  no  recovery  can 
be  had  on  a  note  executed  by  a  trustee  or  administrator  ;  the 
effect  of  his  giving  a  promissory  note  in  his  representative 
character  which  is  not  negotiable  or  not  transferred  is  to  cast 
upon  him  the  burden  of  showing  that  he  had  no  funds  out  of 
which  to  pay.^  If  such  a  note  shows  on  its  face  that  it  is 
made  for  value  received  by  the  heirs  of  the  intestate,  it  does 
not  raise  even  a  presumption  against  the  administrator.^  But 
where  the  note  is    negotiable,  and  contains  an  unqualified 

promise  to  pay,  though  signed  with  the  addition  of  the  words, 

• 

'  Partridge  v.  Court,  5  Price,  412. 
=»  Payne  v.  Flournoy,  29  Ark.  500. 

•  Byles  on  Bills  (Sharswood's  ed.),  MO  ;    Story  on  Notes,  444.     See  Chapter 
XXVIII,  Vol.  II,  on  Payment. 

•  1  Parson3  N.  &  B.  1G2.  '  Page  79. 

•  Bank  of  Troy  v.  Topping,  9  Wend.  273. 
'  Ten  Eyek  v.  Vanderpoel,  8  Johna.  121. 


FIDUCIARIES  AS  PARTIES  TO  BILLS  AKD  NOTES.  227 

"  as  administrator,"  the  note  will  be  valid  in  the  hands  of  a 
bona  fide  holder.  Such  words  are  merely  descriptive  of  the 
person,  and  do  not  limit  the  maker's  liability  on  the  note.^ 

§  271.  (2  and  3)  As  to  guardians  and  trustees. — Guardians 
cannot  bind  their  ward's  estate,  nor  trustees  the  estate  of  their 
cestiiisquG  trust  by  bills  or  notes;  and  hence,  though  they  sign 
themselves  as  guardians  or  trustees,  they  are  personally  bound, 
because  otherwise  the  instrument  would  be  invalid.^  It  is 
true  that  they  may  contract  to  pay  out  of  an  estate ;  but  then 
the  payment  w^ould  be  conditional  on  the  sufficiency  of  the 
estate,  and  the  instrument,  therefore,  not  negotiable.^  If  a 
guardian  take  a  note  payable  to  his  order  as  guardian  for  the 
property  of  his  ward,  and  indorse  it  to  a  hona  fide  party  for 
value,  it  is  a  good  transfer,  the  words,  "as  guardian,"  &c., 
being  mere  descrlptio  fersoiKje^ 

'  King  V.  Thorn,  1  Term  E.  478. 

*  Thatcher  v.  Dinsmore,  5  Mass.  299;  Hills  v.  Banister,  8  Cow.  31 ;  Forster 
V.  Fuller,  6  Mass.  58 ;  Robertson  v.  Banks,  1  Smedes  &  M.  666 ;  Conner  v.  Clark, 
13  Cal.  168;  Story  on  Notes,  §  63;  Story  on  Bills,  §§  74,  75;  1  Parsons  N.  &  B. 
89,  90. 

=■  1  Parsons  N.  &  B.  90;  Story  on  Bills,  §§  74,  75. 

*  Thornton  v.  Rankin,  19  Mo.  193;  see  Fountain  v.  Anderson,  33  Ga.  372. 


CHAPTER  X. 

AGENTS    AS    PAETIES    TO    NEGOTIABLE   INSTRUMENTS. 


SECTION    I. 

COMPETENCY    AKD   AUTHORITY    OP   THE   AGENT.       EXPRESS    AUTHORITT 
AND   GENERAL    PRINCIPLES   OF   LIABILITY. 

§  272.  Every  person  who  becomes  a  party  to  a  negotiable 
instrument  does  not  always  do  so  by  bis  own  manual  act. 
Such  are  the  needs  and  conveniences  of  business,  that  bills, 
notes,  checks,  and  all  other  instruments  of  indebtment,  are 
frequently  signed  by  some  one  authorized,  or  professing  to 
be  authorized,  to  sign  for  another;  and  the  principles  by 
which  the  authority  of  the  agent,  the  liability  of  principal 
and  agent,  and  the  interpretation  of  such  instruments,  are 
governed,  are  of  prime  importance  to  the  commercial  world. 
We  have  seen  already  v>^hat  j^ersons  are  competent  to  become 
parties  to  negotiable  instruments.  All  such  persons  may 
empower  agents  to  act  for  them,  and  bind  them  to  all  in- 
tents and  purposes  as  effectually  as  they  could  bind  them- 
selves. But  it  is  to  be  observed  that  it  is  not  necessary  that 
the  agent  should  be  himself  competent  to  make  a  contract. 
He  is  the  mere  instrument  of  the  contracting  capacity  and 
will,  and  Mr.  Chitty  says :  "  As  this  agency  is  a  mere  minis- 
terial office,  infants,  feme  covert^  persons  attainted,  outlawed, 
excommunicated,  aliens  and  others,  though  incapable  of  con- 
tracting on  their  own  account,  so  as  to  bind  themselves,  may 
be  agents  for  these  purposes."  ^ 

During  the  existence  of  slavery  in  the  United  States  it 

'  Cliitty  on  Bills  (13tb  Am,  ed)   [*2«],  36;   see  Edwards,   95;    Coke's  Little- 
ton, 52  a. 


COMPETENCY  AND  AUTHORITY  OF  AGEisT.  229 

was  held  that  a  slave  might  be  an  agent.^  But  imbeciles, 
lunatics  and  children  of  tender  years,  who  actually  lack  capac- 
ity to  be  intelligent  instruments,  and  have  not  the  power  or 
discretion  to  consent,  could  hardly  be  regarded  as  competent 
to  be  even  the  agents  of  another.- 

§  273.  As  to  the  authority  of  the  agent  to  bind  the  princi- 
pal.— The  first  question  which  propounds  itself  to  a  party 
treating  with  another  who  represents  himself  to  be  an  agent 
and  offers  to  execute  or  indorse  a  negotiable  instrument,  in 
the  name  of  an  alleged  principal  is  this :  Has  this  person 
authority  to  bind  his  alleged  principal  in  this  manner?  The 
inquiry  is  vital.  For  if  there  be  no  such  authority,  express 
or  implied,  the  alleged  principal  is  not  bound;  and  the  only 
remedy  is  against  the  person  falsely  assuming  to  be  agent.^ 
It  is  to  be  observed  too  that  one  may  be  agent  for  another 
in  certain  matters,  but  not  in  other  matters.  It  is  important, 
therefore,  to  see  if  the  transaction  proposed  comes  within  the 
scope  of  the  agent's  authority.  But  again,  the  agent  may 
have  authority  to  bind  the  principal  in  a  certain  way,  and 
yet  not  to  execute  or  indorse  a'  negotiable  instrument.  It  is 
important,  therefore,  to  see  if  he  has  authority  to  act  in  the 
particular  way  wdiich  he  proposes.  And  we  shall  pursue 
these  inquiries  by  considering  the  evidences  of  agency  under 
the  several  heads  of,  (1)  Express  Authority,  (2)  Implied 
Authority,  and  hereafter  we  shall  consider  Ratification. 

§  274.  In  the  first  place,  as  to  the  exjyress  author  it  ij  of  an- 
agent^  it  is  not  necessary  that  it  should  be  granted  in  any 
particular  form,  unless  it  be  authority  to  execute  an  instru- 
ment under  seal,  in  which  case  it  also  must  be  under  seal. 
Otherwise  the  authority  may  be  written,  or  oral ;  and  the 
agent,  to  execute  or  indorse  a  negotiable  instrument,  needs 
nothing  more  than  verbal  authority  so  to  do,'*  though  it  Avas 

'  The  Governor  v.  Daily,  14  Ala.  469.  ""  Thomso.i  on  Bills,  147. 

'  The  Floyd  Acceptances,  7  Wall.  676 ;  Mechanic's  Bank  v.  N.  Y.  &.  X.  H. 
R.  E.  Co.  3  Kern.  631 ;  Andover  Bank  v.  Grafton,  7  N.  H.  289. 
*  Chitty  (13  Am.  ed.)  [*2S],  36. 


230      AGENTS  AS  TAETIES  TO  NEGOTIABLE  INSTRUMENTS. 

once  thought  that  a  formal  power  of  attorney  was  necessaiy.' 
It  is  obvious,  however,  that  it  is  safer  for  one,  dealing  with 
an  alleged  agent,  to  require  production  of  written  authority ; 
or  otherwise  unmistakable  oral  proof  that  authority  had  been 
given.  If  the  authority  is  in  writing,  it  cannot  be  disputed 
by  parol  proof  of  contrary  verbal  instructions  to  the  agent,  or 
otherwise;^  besides  it  proves  itself  whenever  produced,  and 
its  genuineness  is  established. 

§  275.  As  to  joint  agencies. — If  two  or  more  persons  are 
authorized  to  bind  their  principal  by  conjoint  action,  all 
must  unite,  as  it  is  their  aggregate,  and  not  their  sejiarate, 
action  which  the  principal  engages  shall  make  him  liable.^ 
Thus,  where  A.  addresses  a  letter  to  B.,  saying,  "  I  hereby 
authorize  you  and  C.  to  use  my  name  as  indorser,"  and  B., 
without  being  joined  by  C,  alone  signed  A.'s  name  as  in- 
dorser, it  was  held  that  A.  was  not  bound.'*  And  where  a 
number  of  persons  unite  in  a  power  of  attorney,  authorizing 
the  attorney,  "for  us,  and  in  our  names  and  our  behalf,  to 
sign  our  names  as  indorsers,"  upon  bills  and  notes  offered  by 
A.  B.  for  discount,  it  imports  authority  to  sign  their  names 
as  joint  indorsers  only,  and  not  as  several  and  successive  in- 
dorsers.^ 

If  four  directors  of  a  company  are  essential  to  act  for  it, 


'  Jlann  v.  King,  6  Munf.  428. 

'  Thomson  on  Bills,  147,  148;  Marius,  104;  Beawes,  No.  80. 

=  Hartford  Fire  Ins.  Co.  v.  Wilcox,  57  111.  180. 

*  Union  Bank  v.  Beirne,  1  Grat.  220. 

'  Bank  U.  S.  v.  Beirne,  1  Grat.  234,  539.  In  tlic  last  case,  Bank  U.  S.  v. 
Beirne,  1  Grat.  539,  nine  persons  had  united  in  a  jiower  authorizing  their  attor- 
ney to  endorse  their  names  jointly  on  all  bills,  notes,  or  drafts  drawn  by  J.  B.  S. 
to  be  discounted  at  certain  specified  banks  for  the  accommodation  of  J.  B.  S., 
and  the  latter  drew  a  bill  payable  to  the  order  of  one  of  the  principals  in  the 
power,  upon  which  the  attorney  indorsed  the  names  of  all  his  principals;  and 
then  the  note  was  discounted  at  one  of  the  specified  banks  for  the  accommoda- 
tion of  J.  B.  S.  The  bill  being  protested  for  non-payment,  and  action  being 
brought  against  the  indorsers,  it  was  held  that  the  bill  being  made  payable  to 
one  of  the  principals  in  the  power,  the  indorsement  by  the  attorney  was  not  such 
a  joint  indorsement  as  the  power  authorized. 


COMPETENCY   AXD  AUTHORITY  OF  AGENT.  231 

-and  three  only  autliorize  an  agent  to  draw  bills  in  its  name, 
they  will  not  be  binding.^ 

§  276.  So,  authority  to  bind  the  principal  as  a  party  to  a 
negotiable  instrument  is  authority  to  bind  him  separately, 
and  does  not  authorize  the  agent  to  bind  him  conjointly  or 
as  copartner  with  another.^  And  authority  "  for  him  and 
in  his  behalf  to  accept  bills  drawn  on  him  by  his  agents  and 
correspondents,"  has  been  held  to  apply  only  to  the  principal's 
individual,  and  not  to  liis  partnership,  affairs;  and  also  only 
to  authorize  acceptance  of  bills  drawn  by  an  agent  in  that 
capacity,  and  not  to  extend  to  a  bill  drawn  by  a  copartner.^ 

§  277.  Agent  cannot  delegate  authority. — As  the  author- 
ity of  an  agent  is  not  coupled  with  any  interest,  but  he  is  a 
mere  selected  instrument  to  do  certain  things  for  another, 
he  cannot  delegate  his  powers  to  another  unless  authorized 
to  do  so.''  But  if  he  has  power  to  delegate  liis  authority,  he 
may  exercise  it.'^  And  merely  employing  an  amanuensis  to 
-write  the  name,  he  himself  having  determined  upon  the  pro- 
priety of  doing  so,  Avould  be  unobjectionable.'^ 

§  278.  General  and  special  agents. — There  are  some  posi- 
tions of  agency  in  which,  in  the  usual  course  of  business,  the 
agent  draws,  indorses,  or  accepts  negotiable  instruments;  and 
in  all  such  cases  the  principal  will  be  bound  by  the  agent's 
acts,  althougli  positively  against  his  instructions.  For  be- 
tween general  and  special  agents  there  is  a  vital  distinction. 
AVhere  the  agency  is  specially  given  to  do  a  particular  thing, 
the  axrent  is  circumscribed  within  the  limits  of  actual  author- 
ity ;  but  where  the  agency  is  general — as  that  of  a  bank 
■cashier,  for  instance — all  acts  within  the  scope  of  that  general 

>  Du  Cany  v.  Gill,  4  Car.  &  P.  121  ;.Chitty  on  Bills  [=^28],  37. 
'  Stainback  v.  Reed,  11  Grat.  281;  Bryan  v.  Berry,  6  Cal.  394. 
«  Attwood  V.  Munning3,  7  B.  &  C.  278 ;  1  Man.  &  R.  60. 

*  Brewster  V.  Hobart,  15  Pick.  302;  Emerson  v.  Providence  Hat  Manuf.   Co. 
12  Mass.  237;  Shauklaud  v.  Corporation  of  Washington,  5  Pet.  395. 

'  Coles  V.  Trccothick,  9  Vcs.  274. 

•  Lord  V.   Hall,  8  C.  B.  627;  Commercial  Bank  v.  Norton,  1  Hill,  501;  Ed- 
wards on  Bills,  88. 


232     AGE>TTS   AS  PARTIES  TO  NEGOTIABLE  INSTRUMENTS. 

autbority  are  Linding  on  the  principal.  And  if  lie  seeks  to 
avoid  liability,  be  must  show  not  only  a  limitation  of  the 
general  authority,  but  also  that  the  party  dealing  with  the 
agent  had  notice.^ 

§  279.  If  tlie  holder  of  a  bill  place  it  in  the  hands  of  an 
agent  to  be  sold  in  the  market,  and  expressly  directs  him  not 
to  indorse  it,  and  the  agent  disobeys  orders,  and  indorses  his 
principal's  name,  the  principal  will  not  be  bound,  even  to  a 
'bona  fide  holder.^  But  general  authority  to  the  agent  to  get 
the  bill  discounted,  without  restriction  as  to  the  mode,  would 
imply  authority  to  indorse  it  in  the  principal's  name.^  And 
a  subsequent  promise  of  the  principal  to  pay  the  bill  where 
he  had  not  authorized  the  agent  to  indorse,  would  be  nudum 
factum.^ 

§  280.  The  general  principle  that  a  principal  is  bound  by 
act  of  an  agent  acting  within  the  general  scope  of  his  au- 
thority, notwithstanding  it  is  not  in  conformity  to  it,  is  sub- 
ject to  this  limitation :  that  whenever  an  authority  purjiorts 
to  be  derived  from  a  written  instrument,  or  the  ao-ent  sig;ns 
the  paper  w^ith  the  words,  "  by  procuration,"  in  such  a  case 
the  party  dealing  with  him  is  bound  to  take  notice  that  there 
is  a  written  instrument  of  procuration,  and  he  ought  to  call 
for  and  examine  the  instrument  itself,  to  see  whether  it  justi- 
fies the  act  of  the  agent.  Under  such  circumstances,  he  is 
chargeable  with  inquiry  as  to  the  extent  of  the  agent's  au- 
thority; and  if,  without  examining  into  it  when  he  knows  of 
its  existence — and  especially  if  he  has  it  in  his  possession — 
he  ventures  to  deal  with  the  agent,  he  acts  at  his  peril,  and 
must  bear  the  loss  if  the  agent  transcended  his  authority.^ 

'  See  Fenn  v.  Harrison,  3  T.  R.  757;  Edwards  on  Bills,  85,  87. 

"  Fenn  v.  Harrison,  3  T.  R.  757.  "  Ibid.  *  Ibid. 

'Stainback  V.  Bank  of  Virginia,  11  Grat.  259;  Stainback  v.  Read,  11  Grat. 
281 ;  North  River  Bank  v.  Aymar,  3  Hill,  262 ;  Alexander  v.  Mackenzie,  6  C.  B. 
766 ;  Attvvood  v.  Mannings,  7  B.  tSs  C.  278.  Action  ou  acceptance  purporting  to 
be  by  procuration.  Holroyd  J.,  said:  ''  The  word  '  procuration,'  gave  due  notice 
to  the  plaintiffs,  and  thoy  were  bound  to  ascertain,  before  they  took  the  bill,  that 
the  acceptance  was  agreeable  to  the  authority  given."  Edwards  on  Bills,  85 ; 
Story  on  Agency,  §  72. 


COMPETENCY  AND  AUTHORITY  OF  AGENT.  233 

But  no  such  duty  exists  to  make  inquiry  respecting  private 
instructions  to  the  agent  from  his  principal,  whether  written 
or  oral,  for  they  may  well  be  presumed  to  be  of  a  secret  and 
confidential  nature.^ 

§  2S1.  Limitations  of  general  authority. — If  authority  be 
vested  in  the  agent  in  very  general  terms,  but  the  instrument 
enumerates  certain  special  objects  and  acts,  this  specification 
will  be  regarded  as  a  limitation  upon  the  general  words  ;  and 
the  authority  will  be  confined  to  action  within  the  scope  of 
the  enumerated  objects,  unless  there  be  some  phraseology  in 
the  instrument,  or  some  peculiar  circumstance  which  im- 
presses a  different  intention  upon  the  instrument.  Thus  it 
was  held,  in  New  York,  that  a  power  of  attorney  to  collect 
debts,  to  execute  deeds  of  lands,  to  accomplish  a  complete 
adjustment  of  all  concerns  of  the  principal  in  a  particular 
place,  and  to  do  all  other  acts  which  the  principal  could  do  in 
person,  conferred  no  authority  on  the  agent  to  sign  a  note  in 
his  principal's  name,  the  general  words  being  limited  by  the 
matters  specially  mentioned.'^  And  so  in  England,  where 
the  agent  was  authorized  to  manage  certain  real  estate,  with 
general  words  extending  his  powers  to  all  property  of  the 
principal  of  every  description,  and  authorizing  him  "  to  do 
all  lawful  acts  concerning  all  the  principal's  business  and 
affairs  of  what  nature  or  kind  soever,"  it  was  held  that  the 
agent  could  not  indorse  bills  in  his  principal's  name.^ 

§  282.  Perfect  good  faith  is  the  essence  of  agency  ;  and 
an  agent  has  no  right  to  execute  negotiable  paper  in  his 
principal's  name,  or  use  negotiable  paper  belonging  to  his 
principal,  for  his  individual  purposes ;  and  if  the  party  deal- 
inir  with  the  ag^ent  have  notice  that  he  is  thus  actiuo-  in  fraud 
of  his  principal's  rights,  he  cannot  hold  the  principal  liable.* 

'  North  River  Bauk  v.  Ayraar,  3  Hill,  263;  Story  on  Agency,  §  73. 
'  Rossiter  v.  Rossi ter,  8  Wend.  494. 
'  Esdaile  v.  La  Nauze,  1  Younge  *fc  Col.  347. 

*  Stainback  v.  Bank  of  Virginia,   11   Grat.    2C9;    Trcuttell  v.    Barandon,  8 
Taunt.  100;  Ilaynes  v.  Foster,  2  C.  &  M.  237. 


^34     AGENTS   AS  PARTIES  TO  NEGOTIABLE  INSTRUMENTS. 

On  the  contrary,  the  principal  may  recover  paper  belonging 
to  him  so  transferred  by  the  agent  from  the  transferee.^  A 
power  of  attorney  to  draw,  indorse  or  accept  bills  negotiable 
at  a  particular  bank  in  the  principal's  name,  would  be  con- 
strued as  giving  authority  to  act  only  in  the  separate  indi- 
vidual business  of  the  principal ;  and  would  carry  no  au- 
thority to  draw  and  indorse  a  bill  in  his  own  name,  or  in  the 
joint  name  of  himself  and  his  principal.^  If  an  agent  acting 
under  such  authority  drew  a  bill  in  his  own  name,  and 
indorsed  it  in  his  principal's,  and  caused  it  to  be  discounted, 
and  the  proceeds  passed  to  his  individual  credit,  that  cir- 
cumstance would  show  that  he  was  acting  for  his  own 
benefit,  and  the  party  so  discounting  the  bill  could  not  re- 
cover against  the  principal.'^  Agents  cannot  make  contracts 
with  themselves  so  as  to  bind  their  principals.  The  law  will 
not  permit  one  who  acts  in  a  fiduciary  capacity  to  deal  with 
himself  in  his  individual  capacity.'^  Therefore  a  note  made 
by  a  corporation  to  its  trustees  is  against  public  policy  and 
void.^ 

§  283.  So,  where  the  plaintiff'  indorsed  bills  to  A.  B. 
specially  as  follows  :  "  Pay  A.  B.  or  order,  on  account  of 
plaintiff,"  and  A.  B.  pledged  the  bills  with  defendant  for 
his  i)rivate  debt,  it  was  held  that  the  form  of  indorsement 
was  sufficient  notice  that  the  agent  had  no  such  power,® 
Nor  will  a  power  of  attorney  to  draw,  indorse,  or  accept  bills 
authorize  the  agent  to  draw  a  bill  in  the  principal's  name 
upon  any  one  not  having  funds  of  the  principal ;  ^  nor  to 
draw,  accept,  or  indorse  a  bill  for  the  accommodation  of  a 
third  party,  its  true  construction  limiting  the  agent's  author- 


'  Treuttcll  v.  Barandon,  8  Taunt.  100. 

'  Stainback  v.  Bank  of  Virginia,  11  Grat.  231;    Mechanics'  Bank  v.  Schauna- 
burg,  38  Mo.  228;  First  National  Bank  v.  Gay,  63  Mo.  33. 
•stainback  v.  Bank  of  Virginia,  11  Grat.  269. 

*  San  Diego  v.  San  Diego,  &c..  R.  R.  44  Cal  113.     Sec  also  §  1611,  Vol.  2. 
'  Wilbur  V.  Lynde,  49  Cal.  290. 

•  Treuttcll  v.  B:irandon,  8  Taunt.  100;  Bylcs  (Sharswood's  ed.)  [*31],  112. 
'  Stainback  v.  Bank  of  Va.  11  Grat.  269. 


COMPETENCY  AND  AUTHORITY  OF  AGENT.  235 

ity  to  act  for  the  principal,  and  in  his  name  to  draw,  accept 
and  indorse  bills  in  the  usual  course  of  the  principal's  busi- 
ness.^ But  the  fact  that  a  party  was  general  agent  of  a 
firm,  and  had  been  in  the  habit  of  drawing  drafts,  and  mak- 
ing notes  and  indorsements  for  them,  may  go  to  the  jury  to 
show  by  inference  that  he  had  authority  to  bind  his  princi- 
pal by  an  accommodation  acceptance.^  So  may  evidence 
that  a  clerk  had  previously  given  notes  in  similar  transactions 
for  his  principal;^ 

§  284.  If,  however,  an  agent  authorized  generally  to  "  sell, 
indorse  and  assign  notes  "  by  his  principal,  through  a  power 
of  attorney,  borrow  money,  and  offer  his  principal's  notes  as 
security,  indorsed  by  himself,  it  has  been  held  that  the  prin- 
cipal would  be  bound,  although  the  money  was  borrowed  in 
the  agent's  name,  and  used  by  him  in  bis  private  business, 
unless  the  party  dealing  with  the  agent  knew  of  the  intended 
misappropriation  of  the  funds.  And  Lord  Brougham  said: 
"  It  is  said  that  the  indorsement  was  only  to  be  made  for  the 
benefit  of  the  principal,  and  not  for  the  purposes  of  the 
agent.  We  do  not  see  how  this  very  materially  affects  the 
case,  for  it  only  refers  to  the  use  to  be  made  of  the  funds 
obtained  from  the  indorsement,  not  to  the  power;  it  relates 
to  the  purposes  of  the  execution,  not  to  the  power  itself; 
and  though  the  indorsee's  title  must  depend  upon  the  au- 
thority of  the  indorser,  it  cannot  be  made  to  depend  upon 
the  purposes  for  which  the  indorser  performs  his  act  under 
the  power."  ^  So,  the  principal  will  be  bound  in  all  cases 
where  there  is  a  misappropriation  of  funds  obtained  under  a 
power  exercised  by  the  agent  in  conformity  with  his  author- 
ity, unless  the  holder  had  notice.'^     And,  how^ever  much  an 

*  Wallace  V.  Branch  Bank,  1  Ala.  5G5 ;   North  River  Bank  v.  Ayinar,  3  Hill, 
262;  Nichols  v.  State  Bank,  3  Yerg.  107. 

'  Commercial  Bank  v.  Norton,  1  Hill  (N.  Y.),  501. 
'  Valentine  v.  Packer,  5  Penn.  333. 

*  Bank  of  Bengal  v.  McLeod,  7  Moore  P.  C.  35;  Bank  of  Bengal  v.  Fagan, 
7  Moore  P.  C.  61. 

*  North  River  Bank  v.  Aymar,  3  Hill.  2G2. 


236      AGENTS  AS  PARTIES  TO  NEGOTIABLE  INSTRUMENTS. 

agent  may  betray  his  trust,  a  hona  fide  holder  of  the  bill  or 
note,  without  notice,  may  hold  the  principal  liable.^ 

An  agent  may  be  called  as  witness  to  prove  his  agency, 
but  bis  declarations  are  not  admissible  evidence  against  the 
alleged  principal  until  the  fact  of  agency  is  established.^ 

The  principle  that  the  transferrer  of  a  negotiable  instru- 
ment warrants  its  genuineness  extends  to  transfers  by  an 
agent,  unless  he  discloses  his  agency,  and  also  the  name  of 
the  principal.  Otherwise,  if  the  bill  or  note  which  he  trans- 
fers be  forged,  in  which  case  he  will  be  bound.^ 

§  285.  If  a  man  hold  a  bill  or  note  as  agent  of  another, 
and  the  circumstances  be  such  that  the  principal  cannot  re- 
cover, the  infirmity  of  the  principal's  titles  infects  his  also,  and 
he  cannot  recover.''  Thus  M.  &  Co.  remitted  to  the  plaintiff 
in  London  a  Bank  of  England  note  for  £500,  stating  that 
they  would  at  a  future  day  draw  for  the  amount.  The 
plaintiff  presented  it  for  payment,  but  the  bank  detained  it, 
on  the  ground  that  it  had  been  obtained  by  means  of  a 
forged  draft  from  a  previous  holder.  In  a  suit  by  the 
plaintiff  against  the  bank,  it  was  held  that  the  plaintiff  was 
identified  with  his  principals,  and  there  being  no  evidence 
that  they  had  given  full  value,  he  could  not  recover.^ 

§  286.  For  xoliat  acts  'princi][)al  not  hound. — A  principal 
is  not  bound  for  the  criminal  acts  of  his  agent,  unless  he 
participates  in  them,  or  has  been  guilty  of  gross  negligence. 
Thus,  where  a  bank  clerk,  or  cashier,  embezzles  a  special  de- 
posit in  the  bank,  the  bank  is  not  liable,  as  it  is  not  its  acts, 
unless  it  had  complicity  in  the  wrong,  or  was  grossly  negli- 
gent.^ 

It  has  been  held,  that  a  bank  is  not  liable  in  trover  for 

'  Exchange  Bank  v.  Montcitli,  17  Barb.  171. 

"  Nat.  Mechanics'  Bank  v.  Nat.  Bank,  36  Md.  5;  Strecter  v.  Poor,  4  Kan.  412; 
Poore  V.  Magruder,  24  Grat.  200;  1  Phillips  on  Ev.  [*515],  note,  144. 
'  Lyons  v.  Miller,  6  Grat.  440;  Merriam  v.  Walcott,  3  Allen,  258. 
'  Lee  V.  Zagury,  8  Taunt,  1144;  Byles  [*391]. 
'  Solomons  v.  Bank  of  England,  13  E.iat,  235;  1  Rose,  99. 
'  Sturges  V.  Keith,  57  111.  454. 


COMPETENCY  AND  AUTnORITT  OF  AGENT.       237 

bonds  placed  there  on  special  deposit  and  stolen ;  ^  and 
though  there  are  decisions  holding  that  hanks  are  liable  for 
special  deposits,^  it  has  been  held,  and  the  better  opinion  is, 
that  the  receiving  of  such  deposits  is  ^dtra  vires  of  the  ordi- 
nary business  of  banking,  and  that  the  bank  is  not  liable.' 
A  gratuitous  bailee  is  only  bound  in  cases  of  gross  negligence.* 

§  287.  Losses  occasioned  by  fraud  or  failure  of  third  par- 
ties, to  whom  an  agent  has  given  credit,  pursuant  to  the 
regular  and  accustomed  practice  of  trade,  are  not  chargeable 
upon  him.^  And,  therefore,  where  the  receiver  of  Lord  Ply- 
mouth's estate  took  bills  in  the  country  of  persons  who  at 
the  time  were  reputed  to  be  of  credit  and  substance,  in  order 
to  return  the  rents  in  London,  and  the  bills  were  dishonored 
and  the  money  lost,  the  receiver  was  excused.^  And  where 
remittance  is  made  by  post,  according  to  instructions,'^  in  the 
usual  way  of  business,  the  party  making  it  is  not  liable  for 
any  resulting  loss.^ 

A  signature  by  an  agent  with  authority  satisfies  the 
allegation  of  signature  by  the  party's  own  hand.^ 

§  288.  A  general  authority  to  an  agent  is  presumed  to 
continue  until  its  revocation  is  generally  known.  Therefore 
(to  use  the  language  of  Chitty),  after  the  discharge  of  a  clerk 
or  agent  usually  employed  to  draw,  accept,  or  indorse  bills 
or  notes,  the  employer  will  be  bound  by  his  signature,  made 


'  Dearboum  v.  Union  !Ntit.  Bank,  58  Me.  273. 

^  Foster  v.  Essex  Bank,  17  Mass.  479;  see  also  Lancaster  Nat.  Bank  v.  Smith, 
61  Penn.  St.  47;  Scott  v.  Nat.  Bank,  73;  Id.  471. 

=  Wiley  V.  First  Nat,  Bank,  47  Vt.  546;  sec  also  Scott  v.  Crews,  2  Rich.  S. 
C. ;  Erie  Bank  v.  Smith,  Randolph  &  Co.  Sup.  Ct.  Penn.  Leg.  Gazette,  30  Jan'y, 
1871;  First  Nat.  Bank  v.  Ocean  Nat.  Bank,  60  N.  Y.  378;  Scott  v.  Nat.  Bank. 
72  Penn.  St.  471 ;  Whitney  v.  First  Nat.  Bank,  S.  C.  Vermont  Albany  Law 
Journal,  Vol.  18,  No.  24,  Dec.  14,  1878. 

*  Scott  V.  Nat.  Bank,  73  Penn.  St.  471 ;  Foster  v.  Essex  Bank,  17  Mass.  501. 

'  Chitty  on  Bills  [*oC],  49.         '  "  Knight  v.  Lord  Plymouth,  3  Atk.  480. 

'  National  Bank  of  Bellefonte  v.  McManigle,  09  Penn.  St.  150. 

*  Warwick  v.  Noakes,  Peake  N.  P.  08. 

°  Porter  v.  Cumings,  7  Wend.  173;  Pease  v.  Morgan,  7  Johns.  468;  Booth  t. 
Grove,  Moody  &  M.  183;  3  Car.  &  P.  335  ;  Ilelmsley  v.  Loader,  3  Camp.  450; 
Jones  V.  Mars,  2  Camp.  306  (overru'ing  Levy  v.  Wilson,  5  Esp.  180). 


238     AGEXTS  AS  PARTIES  TO  NEGOTIABLE  INSTRUMENTS. 

after  the  determination  of  liis  authority,  until  the  discharge 
be  generally  known.^  And  if  A.  permit  B.  to  draw  bills  in 
his  name,  he  will  be  liable  as  drawer  to  ignorant  indorsees, 
althongli  he  had  no  interest,  nor  knew  of  the  particular  bills 
drawn  in  fraud  of  him  by  B.,  though  he  will  not  be  liable  to 
a  payee,  who  had  knowledge  of  the  impropriety  of  the  trans- 
action.^ When,  therefore,  the  authority  of  such  an  agent  has 
been  determined,  or  he  has  been  discharged  from  his  em- 
ployer, and  there  is  reason  to  apprehend  that  he  will  circu- 
late bills  in  his  employer's  name,  it  is  advisable  for  the  latter 
to  give  notice  of  the  determination  of  the  agent's  authority 
through  the  public  press,  and  also  to  all  his  corresj^ou dents 
individually — notice  in  the  public  press  not  being  in  general 
sufficient  to  affect  a  former  customer,  unless  he  has  had  ex- 
press notice  thereof.^  A  different  rule  applies  as  to  special 
and  limited  agencies.  When  their  authority  terminates  by 
its  own  limitation  the  agents  can  no  longer  bind  their  princi- 
pals. Thus,  where  plaintiff*  being  about  to  leave  home,  de- 
posited a  power  of  attorney  with  his  bank,  authorizing  his 
clerk  to  draw  checks  on  his  account  for  fifteen  days,  and  after 
that  time  the  clerk  continued  to  draw  checks,  and  used  the 
money  for  his  own  purposes,  it  was  held  that  the  loss  should 
fall  on  the  bank,  and  that  the  principal  was  not  bound  after 
the  fifteen  days,  as  to  checks  so  drawn.  The  fact  that  the 
checks  had  been  returned  in  the  principal's  bank  book,  did 
not  bind  him  by  acquiesence,  or  estoppee,  because  the  check 
drawer  was  his  cashier,  and  the  fact  that  he  had  drawn  the 
•checks  after  expiration  of  his  authority  was  not  discovered 
by  the  principal."^ 

Death  operates  as  revocation  of  all  agencies  not  coupled 
with  an  interest  vested  in  the  agent;'"'  but  war  between  the 
countries  of  the  principal  and  the  agent  does  not.® 

'  Chitty  on  Bills  (13  Am.  ecl.).[*32]  43;  Story  on  Agency,  §§  470,  473;  Anon. 
V.  Harrison,  12  ]VIod.  346. 

»  Smith  V.  Stranger,  Peake  Add.  110;  Chitty  [*32],  43.        '  Chitty  [*32],  42. 

*  Manufacturers'  Nat.  Bank  v.  Barnes,  65  111.  69;  see  Weiser  v.  Denison,  10 
N.  Y.  68. 

"  1  Parsons  on  Contracts.  71.  '  See  ante,  Chapter  VIII,  sec.  2. 


IMPLIED  AUTHORITY  OF  AGENT.  231> 

SECTION  ir. 

IMPLIED  AUTHOKITY  OF  AGENT. 

§  289.  Ill  the  second  place  as  to  the  implied  autJiority  of 
an  agent  to  bind  his  principal,  it  may  be  inferred  from  the 
circumstances  of  the  case.  Thus  if  the  principal  stand  by 
and  tacitly  concur  in  the  act  of  the  agent  signing  his  name^ 
he  would  be  as  strictly  bound  as  if  he  had  expressly  author- 
ized the  agent  so  to  do.  So  authority  may  be  implied  from 
the  course  of  business,  and  employment,  or  from  repeated 
recognitions  by  the  principal  of  the  agent's  authority.  The 
circumstances  which  give  rise  to  the  implication  of  authority 
are  for  the  jury  to  consider;  and  the  jury  will  be  warranted 
in  holding  the  principal  liable  if  they  produce  a  strong  and 
reasonable  belief  that  authority  .existed. 

§  290.  The  authority  to  bind  the  principal  in  a  certain 
character  on  a  negotiable  instrument  cannot  be  construed  as 
an  authority  to  make  the  principal  a  party  in  any  other 
character.  Thus  authority  to  draw  a  bill  is  not  of  itself  au- 
thority to  indorse  one  ;  ^  nor  to  accept  one ;  ^  nor  does  author- 
ity to  indorse  imply  authority  to  accept  a  bill ;  ^  nor  to  make 
a  several  or  joint  note.* 

But  under  certain  circumstances  authority  to  bind  the 
principal  in  one  form  might  be  evidence  throwing  light  on 
the  question  of  authority  to  bind  him  in  another.  "  It  may  be 
admitted,"  said  Tindal,  C.  J.,  in  a  case  quoted  elsewhere  in 
the  text,  "  that  an  authority  to  draw  does  not  import  in  it- 
self an  authority  to  indorse  bills ;  but  still  the  evidence  of 
such  authority  to  draw  is  not  to  be  withheld  from  the  jury, 

'  Robinson  v.  Yarrow,  7  Taunt.  455  ;  Murray  v.  East  India  Co.  5  B.  &  Aid. 
204.  Power  to  school  directors  to  issue  bonds  does  not  authorize  issue  of  notes. 
School  District  v.  Sippy,  55  111.  287. 

-  Attwood  V.  Munnings,  7  B.  &  C.  278 ;  Sewanee  Miuiug  Co.  v.  ^McCall,  ?> 
Head,  621. 

'  Attwood  V.  IMunniug,  7  B.  &  C.  278. 

*  Cuyler  v.  Merrifield,  13  N.  Y.  S.  C.  (3  Hun),  559. 


240     AGENTS  AS  PARTIES  TO  NEGOTIABLE  INSTRUMENTS. 

where  tbey  are  to  determine  upon  the  whole  of  the  evidence 
whether  an  authority  to  indorse  existed  or  not."  ^  And  a 
party  may  be  agent  to  transfer  a  bill  or  note,  and  yet  not  to 
l)ind  his  principal  by  an  indorsement.'^ 

§  291.  So  authority  to  execute  certain  notes  will  not  ex- 
tend to  authorize  an  agent  to  renew  them ;  ^  and  if  the  au- 
thority be  to  sign  and  indorse  paper  payable  at  a  particular 
bank,  the  agent  cannot  under  it  sign  or  indorse  paper  paya- 
ble at  any  other  bank  ;"^  nor  will  authority  to  sign  a  note  or 
bill  for  a  particular  purpose  be  valid  in  respect  to  any  other 
purpose.^  And  if  the  authority  specify  the  time  at  which 
the  paper  is  to  be  made  payable — as,  for  instance,  in  six 
months — it  will  not  be  binding  on  the  principal  if  made  pay- 
able at  a  d  liferent  time — as,  for  instance,  in  sixty  days.^  But 
where  a  party  gave  verbal  authority  to  agent  'to  sign  a 
twenty  days'  note,  but  did  not  intend  to  limit  his  authority 
to  that  time,  and  the  note  was  made  payable  at  thirty  days, 
it  was  held  that  the  jury  should  consider  all  the*  circum- 
stances, and  if  they  regarded  the  difference  in  time  as  imma- 
terial, the  pi'incipal  should  be  held  liable.^  And  authority 
to  renew  a  note  at  sixty  or  ninety  days  has  been  held  to  au- 


'  Prescott  V.  Flinn,  9  Bing.  19;  see  also  Commercial  Bank  v.  Norton,  1  Hill 
(N.  Y.)  502. 

=■  Br6wn  v.  Donucll,  49  Me.  421. 

•  Ward  V.  Bank  of  Kentucky,  7  Mon.  93. 

•  Morrison  v.  Taylor,  6  Mon.  82. 

'  Nixon  V.  Palmer,  4  Seld.  389;  Hortons  v.  Townes,  G  Leigh,  59;  Tucker,  P., 
saying:  "  The  authority  was  to  execute  a  note  for  the  purpose  of  raising  money; 
tlie  note  executed  was  not  of  purpose  to  raise  money  for  the  agent,  James 
Townes,  but  to  pay  a  debt  contracted  at  that  time  with  the  plaintiffs  for  grocer- 
ies, with  an  agreement  that  if  it  could  not  be  discounted,  the  plaintiffs  were  to 
hold  the  note  as  their  own  property,  and  as  a  note  binding  on  the  defendants, 
according  to  the  usual  effect  of  such  notes.  Thus,  the  defendants,  who  had  only 
authorized  themselves  to  be  made  debtors  to  one  of  the  banks,  are  made  debtors 
to  an  individual.  Here,  it  must  be  confessed,  is  a  clear  and  obvious  dilference 
in  form,  between  the  aulhority  given  and  the  contract  made.  Is  there  no  differ- 
ence in  substance?     Very  great,  I  apprehend." 

•  Batly  V.  Carswell,  2  Johns.  48;  Edwards  on  Bills,  84. 
"  Adams  v.  Flannagan,  36  Vt,  410, 


IMPLIED  AUTHORITY  OF  AGENT.  211 

thorize  its  renewal  at  eighty  clays,  there  l)eiiig  no  violation 
of  the  object  and  intention  of  the  parties.^ 

§  292.  When  the  authority  to  execute  or  indorse  a  nego- 
tiable instrument  is  sought  to  be  deduced  from  an  agency  to 
do  certain  otlier  acts,  it  must  be  made  to  appear  affirmatively 
that  the  sinninfr  or  indorsement  of  such  an  instrument  was 
within  the  general  objects  and  purposes  of  the  authority 
which  was  actually  conferred.  And  in  interpreting  tlie  au- 
thority of  the  agent  it  is  to  be  strictly  construed.^  Thus  a 
general  authority  to  transact  business  for  the  princij)al,  will 
not  authorize  the  agent  to  bind  him  as  a  party  to  negotiable 
paper,  according  to  many  authorities,  and  the  general  prin- 
ciples of  the  law  of  agency.^  It  has  been  held  that  author- 
ity to  transact  all  business  for  the  principal,  would  empower 
the  agent  to  transfer  a  negotiable  instrument  in  his  princi- 
pal's name;*  but  the  weight  of  authority  is  to  the  contrary.^ 
Authority  to  conduct,  in  one's  place  and  stead,  his  commer- 
cial business,  and  sign  the  principal's  name  whenever  requi- 
site or  expedient  in  the  attorney's  good  discretion,  would, 
however,  be  broad  enough  to  cover  cases  of  drawing  bills  of 
exchange,®  and  so  likewise  authority  to  act  "  as  lawful  cashier 
and  financial  ag-ent."  "^ 

§  293.  Authority  to  collect  debts  and  give  discharges 
carries  no  implication  of  authority  to  indorse  a  negotiable 
note.  According  to  these  principles,  full  authority  to  an 
attorney  to  ask,  demand  and  receive  all  money  that  may  be- 
come due  the  principal,  and  to  "  transact  all  business,"  will 

'  Bank  of  South  Cur.  v.  M' Willie,  4  McCorcl,  488. 

'  Bylcs  on  Bills  (Sharswood's  ed.)  [*33],  108;  Sewanee  Mining  Co.  v.  McCall, 
3  Head,  619. 

'  Sewanee  Mining  Co.  v.  McCall,  3  Head,  619.  Ilcld,  that  authority  to  gen- 
eral agent  to  transact  business,  and  to  draw  on  president  of  company,  did  not 
authorize  liim  to  accept  a  bill,  even  to  avoid  suspension  of  work  of  great  import- 
ance to  principal.     Byles  [*32]  108;  Chitty  on  Bills  [=*=29,  30],  39. 

*  Bailey  v.  Rawley,  1  Swan,  aO").   To  same  effect,  see  Frost  v.  Wood,  3  Conn.  23. 

'  Kilgour  V.  Finlyson,  1  II.  Bl.  155;  Hogg  v.  Snaith,  1  Taunt.  347;  Hay  v. 
Goldsmidt,  2  J.  P.  Smith,  79;  Esdaile  v.  La  Nauze,  1  Younge  &  C.  394. 

»  Dollfiis  V.  Frosch,  1  Denio,  308. 

'  Edwards  v.  Thomas,  60  Mo.  482.  Indorsement  under  such  authority  held  valid. 
Vol.  I.— 16 


242     AGENTS  AS  PARTIES  TO  NEGOTIABLE  INSTRUMENTS. 

not  authorize  the  attorney  to  indorse  bills  received  in  pay- 
ment.^ So  authority  to  demand  and  receive  all  moneys  due 
on  any  account,  to  use  all  means  for  their  recovery,  to  appoint 
attorneys  to  bring  actions,  and  "  to  do  all  other  husiness,^'^ 
would  not  authorize  the  agent  to  indorse  a  bill,  for  the 
words  italicised  would  be  construed  with  reference  to  the 
former,  as  meaning  all  business  pertaining  thereto. 


2 


§  294.  An  agent  who  is  authorized  to  advance  a  sum  of 
money  to  a  person  would  exceed  his  authority  by  giving  a 
note  for  the  amount  in  his  principal's  name.^  And  an  agent 
to  make  purchases  of  goods  or  supplies,  and  pay  for  them,* 
or  to  buy  and  sell  goods  for  a  trading  company,^  is  not  there- 
by authorized  to  give  a  note  or  accept  a  bill  for  the  amount ; 
nor  could  an  agent,  to  make  sales,  indorse  his  principal's 
name  on  the  purcbaser's  bill  to  be  discounted  to  raise  funds 
for  payment ;  ®  nor  could  authority  to  accept  bills,  which 
would  be  a  pledge  of  the  principal's  credit,  be  inferred  fi'om 
payment  by  the  agent  of  unaccepted  drafts  on  former  occa- 
sions.''' The  position  of  an  ordinary  merchant's  clerk  is  not 
one  which  implies  authority  to  bind  the  employer  by  signing 
a  bill  or  note  in  his  name;^  nor  does  the  position  of  agent 
to  attend  and  manage  a  grocery  and  provision  store,^  nor 
that  of  an  agent  employed  in  the  manufacture  of  cariiages  ;  ^^ 
nor  does  that  of  an  attorney  at  law,  to  whom  a  note  is  sent 
for  collection,  authorize  him  to  transfer  it  to  a  third  person ;  ^^ 
nor  does  that  of  a  collecting  agent,  who  takes  checks  in  pay- 
ment, authorize  him  to  indorse  them  to  the  bank  on  which 
they  are  drawn  ;  ^^  nor  that  of  manager  of  a  farm  through 

'  Hogg  V.  Snaith,  1  Taunt.  347.  =■  Hay  v.  Goldsmidt,  2  J.  P.  Smith,  79. 

»  Webber  v.  William's  College,  23  Pick.  302. 

*  Brown  v.  Parker,  7  Allen,  339 ;  Taber  v.  Cannon,  8  Mote.  456 ;  Webber  v. 
William's  College,  23  Pick.  302 ;  Gould  v.  Norfolk  Lead  Co.  9  Cush.  338. 

'  Emerson  v.  Providence  Hat  Man.  Co.  12  Mass. 

'  Bank  of  Hamburg  v.  Johnson,  3  Rich.  42. 

'  Gould  V.  Norfolk  Lead  Go.  9  Cush.  338. 

«  Terry  v.  Fargo,  10  Johns.  114.  "  Smith  v.  Gibson,  6  Blackf.  3G9. 

'"  Paige  V.  Stone,  10  Mete.  160. 
"  Russell  V.  Drummond,  G  Ind.  210. 
"  Graham  v.  U.  S.  Saving  Inst.  46  Mo.  187. 


IMPLIED  AUTHORITY   OF  AGEKT.  243 

whose  hands  all  payments  and  receipts  pass,  authorize  him 
to  sign  a  negotiable  instrument  in  his  principal's  name.^ 

§  295.  Masters  of  ships  ^  and  steamboats,^  and  super- 
cargoes,* cannot  bind  their  principals  by  drawing  a  bill  upon 
them  and  accepting  it  in  their  name,  without  special  author- 
ity to  do  so. 

§  29G.  If  a  person  has  upon  a  former  occasion,  in  the 
principal's  absence,  usually  accepted  bills  for  him,  and  the 
lattei",  on  his  return,  approved  thereof,  he  would  be  bound 
in  a  similar  situation  on  a  second  absence  from  home,"^'  and 
where  it  was  proved  that  the  defendant  had  been  accustomed 
to  assume  the  liability  as  indorser  on  notes  on  which  his 
name  had  been  indorsed  by  his  son,  and  that  he  did  not  deny 
the  particular  indorsement  until  his  son  had  absconded,  but 
impliedly  admitted  his  lijibility,  it  was  held  that  these 
acts,  unexplained,  established  his  liability  as  indorser.^  Al- 
though an  authority  to  draw  does  not  import  in  itself  an 
authority  to  indorse,  it  has  been  held  that  a  jury  was  war- 
ranted in  inferring  a  general  authority  of  a  clerk  to  indorse 
his  employers'  names  upon  evidence  that  he  had  been  accus- 
tomed to  draw  checks  for  them — in  one  instance  had  been 
authorized  to  indorse — and  in  two  instances  that  they  had 
received  the  money  obtained  upon  his  indorsements  of 
their  names.^  So  where  a  drawee  liad  previously  paid  several 
bills  accepted  in  his  name  by  a  third  person,  witL  whom  he 
had  connections  in  trade,  he  would  be  liable  to  an  indorsee, 
although  the  bill  accepted  in  like  manner  had  been  so  ac- 
cepted without  his  authority.^  And  it  has  been  held  that 
if  a  person  usually  subscribes  a  negotiable  instrument  w^ith 

'  Davidson  v.  Stanley,  2  Man.  &  G.  721. 

"  Bowen  v.  Stoddard,  10  Mete.  375. 

'  May  V.  Kelly,  27  Ala.  497.  *  Scott  v.  :M'Lellan,  2  Greeul.  1C9. 

•  Beawes'  pi.  86;  Cbitty  on  Bills  (13  Am.  ed.)  [*31],  41. 

•  Abed  V.  Seymour,  13  N.  Y.  S.  C.  (6  Hun),  6oG. 

'  Prcscott  V.  Flinn,  2  Moore  &  S.  18  ;  9  Bing.  19. 

'  Barber  v.  Giugell,  3  Esp.  60.     See  Strob  t.  HiucLman,  37  Mich.  490,  \\lierG 
the  caaes  are  reviewed  by  Cooley,  J. 


244      AGEI^TS  AS   PARTIES  TO  NEGOTIABLE   INSTRUMENTS. 

the  name  of  another,  proof  of  his  having  done  so  in  many 
instances  is  sufficient  to  charge  the  party  whose  name  is  sub- 
scribed, without  producing  any  power  of  attorney,  or  other 
proof  of  agency.^ 

§  297.  But  when  it  is  sought  to  bind  the  principal  on 
the  ground  of  prior  similar  transactions,  or  recognition  of 
such  acts  by  the  principal,  it  must  be  shown  that  the  bill  or 
note  was  taken  upon  the  faith  of  them ;  ^  and  therefore  the 
holder  of  a  bill  purporting  to  be,  but  not  in  fact  accej^ted 
by  the  person  to  whom  it  is  addressed,  cannot  recover  against 
the  apparent  acceptor  by  proving  a  fact  subsequently  dis- 
covered, that  on  a  former  occasion  the  defendant  had  given 
a  general  authority  to  the  person  who  accepted  in  his  name 
to  accept  bills  for  him.  Unless  it  can  be  shown  that  the 
previous  authority  had  never  been  revoked,  or  that  the  bill 
was  taken  on  the  faith  of  such  authority,  the  holder  cannot 
hold  the  principal  liable.^ 

SECTION  III. 

BOW    AGENT     SHOULD     SIGN  ;     AND     HOW     INSTRUMENT     CONSTRUED     AND 
parties'    liabilities   DETERMINED. 

§  298.  Proper  method  of  signature  hij  agent. — The  best 
mode  for  an  ao;ent  to  sio-n  or  indorse  a  bill  or  note  for  his 
principal,  so  that  it  may  clearly  appear  that  he  is  "  the  mere 
scribe  "  who  applies  the  executive  hand  as  the  instrument  of 
another,  is  as  follows :  "  A.  B.,  by  his  attorney  or  agent,  C. 
D."  This  style  is  unequivocal,  being  clearly  intended  to 
bind  the  principal  only.  "  A.  B.  by  C.  D."  is  equally  so — 
and  in  one  way  or  the  other  the  instrument  should  be  always 
executed.'^     Very  frequently  the  form  is  adopted  :  "  C.  D.  for 

'  Neal  V.  Irving,  1  Esp.  61;  Haughton  v.  Ewbank,  4  Camp.  188. 

'■'  St.  John  V.  Redmoud,  9  Porter,  428;  Edwards  on  Bills,  89;  Tliomson  on 
Bills,  148. 

^  Cash  V.  Taylor,  8  Law  J.  2G2;  Chitty  on  Bills  (13  Am.  cd.)  [*32].  41. 

*  Bradlee  v.  Boston  Glass  Co.  4G  Pick,  347;  Edwards  on  Bills,  83.  See  on 
this  subject  Chapter  on  Private  Corporations,  and  §  398. 


HOW  AGENT   SHOULD  SIGN.  245 

A.  B.,"  or  "  C.  D.,  agent  for  A.  B.,"  and  tbis  form  is  now 
generally  regarded  as  sufficient  to  indicate  that  the  agent  acts 
ministerially  only  and  without  intent  to  bind  himself.^  And 
this-  is,  we  think,  the  correct  view,  whether  the  phrase  l)e 
used  in  the  body  of  the  instrument,  or  so  signed  at  its  foot ; 
though  the  cases  are  by  no  means  harmonious,  and  "  C.  D, 
for  A.  B.,"  or  the  like  words,  are  regarded  by  some  as  indi- 
cating that  C.  D.  was  the  promisor  at  the  request  of,  or  for 
the  benefit  of,  A.  B.^  And  there  are  cases  which  hold  that 
if  used  in  the  body  of  the  instrument,  the  words  will  be  con- 
strued as  binding  the  agent ;  while  if  at  the  foot,  the  prin- 
cipal.^    This  distinction  is  very  refined. 

'  See  American  Leading  Cases,  vol..  I,  625,  6']4;  Story  on  Agency,  §§  274, 
278;  1  Parsons  N.  &  B.  91 ;  Story  on  Notes,  §  08;  Edwards,  83;  Bank  of 
Genesee  v.  Patchin  Bank,  19  N.  Y.  315;  Long  v.  Colburn,  11  Mass.  97; 
Tiller  v.  Spradley,  39  Ga.  35;  Raney  v.  Winter,  37  Ala.  277;  Dubois  v.  Dela- 
ware, &c.  Canal  Co.  4  Wend.  285.  In  Early  v.  Wilkinson  &  Hunt,  9  Grat.  68, 
the  promissory  note  sued  on  was  signed  "  Robert  H.  Early  [per  Sam'l  H.  Early]." 
"The  note  in  this  case,"  said  Moncure,  J.,  "is  in  the  perfect  form  of  a  negotia- 
ble promissory  note  of  Robert  H.  Early,  except  that  under  his  signature  are  the 
words  '  [per  Sam'l  H.  Early],'  in  brackets.  Without  the  addition  of  these  words, 
it  is  certain  that  R.  H.  Early  would  alone  have  been  bound  on  the  note,  even 
tliougli  he  has  given  it  as  the  known  agent  of  Samuel  H.  Early.  On  the  other 
hand,  it  may  be  said,  that  if  these  words  had  been  added  without  being  inclosed 
in  brackets,  and  R.  H.  Early  had  authority  to  sign  the  note  for  Samuel  H.Early, 
the  latter  would  alone  have  been  bound  by  the  note,  though  the  mode  of  execut- 
ing the  note  by  procuration  would  not,  in  that  case,  have  been  strictly  formal. 
The  question,  then,  depends  alone  upon  the  import  of  the  brackets;  and  though 
it  may  seem  strange  that  we  should  give  so  much  import  to  a  circumstance  ap- 
parently so  slight,  yet  we  are  of  opinion  that  it  is  sufficient  to  turn  the  scale,  and 
indicate  an  intention  on  the  part  of  Robert  H.  Early  not  to  do  a  mere  ministerial 
act  in  giving  effect  and  authenticity  to  the  jiromise  of  another,  but  to  indicate 
the  capacity  or  trust  in  which  he  acted,  or  the  person  for  whose  account  the 
promise  was  made.  *  *  *  jf  Robert  H.  Early  had  intended  to  bind  Samuel 
H.  Early,  and  not  himself,  he  would  have  given  more  prominence  to  the  name  of 
the  latter,  which  then  would  have  been  the  important  name.  He  would  not  have 
inclosed  it  in  brackets,  so  that  it  miglit  be  taken  from  the  note  without  injuring 
the  sense  of  tlie  balance.  He  would  rather  have  inclosed  his  own  name  in  brack- 
ets, as  the  name  of  the  mere  agent  by  whom  it  was  signed.  They  were  worse 
than  useless  on  the  supposition  that  S.  H.  Early  was  intended  to  be  bound." 

^  1  Parsons  N.  &  B.  91 ;  Tannant  v.  Rocky  Mountain  Nat'l  Bank,  1  Col.  278. 

'  Barlow  v.  Congregational  S'jc'y,  8  Allen,  463 ;  Bradlee  v.  Boston  Glass  Co. 
16  Pick.  347;  Tanner  v.  Christian,  4  El.  &  Bi.  591  ;  Penkwil  v.  Council,  5  Exch. 
381. 


24G     AGENTS  AS   PARTIES  TO  NEGOTIABLE   INSTRUMENTS. 

§  200.  It  is  competent  and  proper  also  for  the  ai^ent  to 
sign  simply  tlie  principal's  name,  and  to  show  his  authority 
to  do  so  by  extraneous  evidence ;  ^  for,  as  said  by  the  United 
States  Supreme  Court,  per  Johnson,  J. :  "  It  is  by  no  means 
true  that  the  acts  of  agents  derive  their  validity  from  profess- 
ino;  on  the  face  of  them  to  have  been  done  in  the  exercise  of 
their  agency."  ^  But  this  style  is  not  favored,  as  it  increases 
the  difficulties  of  proof,  and  at  one  time  was  questioned.^ 

In  England,  it  is  not  unusual  for  an  agent  to  sign  "C.  D., 
by  procuration  of  A.  B.,"  A.  B.  being  the  principal ;  but  this 
is  ambiguous,  as  it  might  import  that  A.  B.  was  the  agent 
signing  by  procuration  for  C.  D.,  and  it  is  advisable  not  to 
adopt  this  style.* 

The  words  "per  procuration"  are  an  express  intimation 
of  a  special  and  limited  authority.  And  a  person  who  takes 
a  bill  or  note  so  drawn,  accepted  or  indorsed  is  bound  to  in- 
quire into  the  extent  of  the  authority.^ 

§  300.  General  principles  of  construction  of  the  instru- 
ment^ and  of  liahilitij  of  the  parties. — It  is  a  general  principle 
of  commercial  law,  that  a  negotiable  instrument  must  wear 
no  mask,  but  must  reveal  its  character  upon  its  face.  And 
it  extends  to  the  liability  of  parties  thereto,  who  must  ap- 
pear as  distinctly  as  the  terms  of  the  instrument  itself,  in 
order  to  be  bound  by  those  terms.  The  following  rules  are 
deductions  from  this  general  principle :  First^  That  when  the 
names  of  both  principal  and  agent  appear  upon  the  instru- 
ment, it  is  to  be  taken  to  l)e  the  bill  or  note  of  the  signer, 
unless  there  are  distinct  indications  that  lie  signed  in  a  mere 

'  First  Nat.  Bank  v.  Gay,  63  Mo.  33 ;  Cravens  v.  Gillilan,  63  Mo,  28 ;  Morse  r. 
Green,  13  N.  II.  32;  Haven  v.  Hobbs,  1  Vt.  238;  Brigham  v.  Peters,  1  Gray,  139; 
Woodbury  v.  ]\loulton,  47  N.  H.  11;  Davidson  v.  Stanley,  2  Man.  &  G.  721; 
Llewellyn  v.  Winckworth,  13  M,  &  W.  598;  Neal  v.  Irving,  1  Esp.  Gl;  Barber 
V.  Gingell,  3  Esp.  60;  Chitty  on  Bills  (13th  Am.  ed.)  [*3B]    44. 

=  Mechanics'  Bank  v.  Bank  of  Columbia,  5  Wheat.  336. 

»  1  Parsons  N.  &  B.  91,  02.  *  1  Parsons  N.  &  B.  91,  93. 

6  Alexander  v.  McKenzie,  6  C.  B.  766  (60  E.  C.  L.  R.) ;  Attwood  v.  Munnings, 
7  B.  &  C.  278  (14  E.  C.  L.  R);  Byles  (Sharswood's  ed.)  [*3o],  110;  Thomson  on 
Bills,  153. 


HOW  AGENT  SHOULD  SIGN.  247 

ministerial  character,  intending  to  bind  anotlier.  The  actual 
signer  will  be  bound,  "  unless,"  as  said  by  Lord  Ellenbor- 
ougli,  "  he  states  upon  the  face  of  the  bill  that  he  subscribes 
it  for  another ;  unless  he  says  plainly  '  I  am  the  mere  scribe.' "  ^ 
It  is  true  that  it  is  a  question  as  to  the  intention  of  the  party 
signing  the  instrument ;  but  that  intention  must,  as  a  gen- 
eral rule,  bo  collected  from  the  instrument  itself.  Chief 
Justice  Shaw,  in  a  well  known  case,  has  said :  ^  "As  the 
forms  of  words  in  which  contracts  may  be  made  and  exe- 
cuted are  almost  infinitely  various,  the  test  question  is, 
whether  the  person  signing  professes  and  intends  to  bind 
himself,  and  adds  the  name  of  another  to  indicate  the  capacity 
in  which  he  acts,  or  the  person  for  whose  account  the  prom- 
ise is  made;  or  whether  the  words  referring  to  a  principal 
are  intended  to  indicate  that  he  does  a  mere  ministerial  act 
in  giving  effect  and  authenticity  to  the  act  and  contract  of 
another.  Does  the  person  signing  apply  the  executive  hand 
as  the  instrument  of  amother,  or  the  promising  and  engaging 
mind  of  a  contracting  party  ?  " 

§  301.  As  to  indorsements  hy  agents. — If  a  bill  be  payable 
to  A.  B.,  describing  him  as  "  agent,"  it  is  generally  considered 
mere  descviptio  personoe^  and  if  he  should  indorse  it  in  like 
manner,  we  should  say  he  was  personally  liable.  And  we 
can  see  no  difference  between  such  a  case  and  those  in  which 
it  is  held  that  where  the  maker  of  a  negotiable  note  adds  the 
word  "  agent,"  he,  and  he  alone  is  bound,  the  term  being  re- 
garded as  descriptive  merely.*  If  the  indorsement  restricted 
the  negotiability  of  the  instrument,  it  might  be  different,  for 
it  might  then  be  considered  as  standing  on  the  footing  of  a 
non-negotiable  instrument  in  respect  to  him.^  In  Georgia 
where  a  bill  payable  to  "  S.  C,  agent "  was  similarly  indorsed, 

>  Leadbetter  v.  Farrow,  5  M.  &  S.  345 ;  Sowerby  v.  Butcher,  3  C.  &  M.  368. 
This  is  the  general  principle. 

"  Brdcllce  v,  Boston  Glass  Co.  IG  Pick.  3-17;  see  also  Early  v.  Wilkinson,  9 
Grat.  68. 

'  Toledo  Agricultural  Works  r.  Ileisser,  51  Mo.  123. 

*  See  'post,  %  305.  '  See  post,  §  303. 


248     AGEXTS  AS  PARTIES  TO  NEGOTIABLE  INSTRUMENTS. 

and  then  discounted  at  the  indorser's  instance  for  tlie  benefit 
of  bis  principal,  parol  evidence  was  admitted  to  charge  him ;  ^ 
but  this  is  a  departure  from  the  general  principle  of  the  law 
merchant. 

§  302.  A  peculiar  case  was  decided  in  New  York.  The 
note  was  payable  to  "  Israel  Horsefield  or  order  "  simply.  It 
was  indorsed  "  Israel  Horsefield,  agent,"  and  by  him  delivered 
for  a  debt  due  by  a  company  of  which  he  was  agent.  It  was 
held  that  the  form  of  the  indorsement,  under  the  circum- 
stances (which  might  be  shown),  indicated  to  the  plaintiff 
that  it  was  merely  intended  by  the  payee  to  transfer  title  to 
the  paper,  without  recourse,  though  as  to  a  third  party  it 
might  be  different.^  Chief  Justice  Savage  dissented.^  The 
case  has  been  quoted  as  holding  that  such  an  indorsement  is 
equivalent  to  an  indorsement  without  recourse,  and  it  has 
been  so  construed  by  the  courts  ;  ^  but  we  think  that  it  only 
determines  that  under  the  peculiar  circumstances  it  had  that 
effect.  In  the  absence  of  evidence  as  to  the  circumstances  of 
the  transaction,  it  has  been  held  in  New  York  that  a  draft 
drawn  on  "  D.  Agt.  C.  B.  Co.,"  and  accepted  in  like  manner, 
would  not  bind  the  company.^ 

§  303.  Second.  That  no  party  can  he  charged  as  principal 
vpon  a  negotiaUe  instrument  unless  his  name  is  thereon  disclosed, 
— ^The  reason  of  this  rule  is  that  each  party  who  takes  a 
negotiable  instrument  makes  his  contracts  with  the  parties 

'  Merchants'  Bank  v.  Central  Bank,  1  Kelly,  429.  Nisbet,  J. :  "A  party  can- 
not be  discharged  wlio  is  apparently  liable  on  the  contract,  but  a  new  party  may 
be  introduced  by  parol." 

'  Mott  V.  Hicks,  1  Cow.  533,  Woodworth,  J. 

'  Mott  V.  Hicks,  1  Cow.  540.  "Horsefield,  it  is  true,"  he  said,  "signed  the 
indorsement  '  Israel  Horsefield,  agent.'  But  why  agent  ?  Agent  for  whom  ?  He 
is  the  payee  of  the  note  individually,  and  it  does  not  appear,  except  from  his 
own  testimony,  that  he  was  agent  for  the  company.  They  cannot  be  sued  upon 
this  indorsement;  and  no  judgment  could  be  rendered  against  Horsefield  which, 
■would  bind  their  property.  lie  is  therefore  liable  personally,  or  there  is  no  lia- 
bility attached  to  this  indorsement." 

*  Hicks  V.  Hinde,  9  Barb.  531 ;  Babcock  v.  Beman,  1  Kern.  200 ;  1  Parsons 
N.  &  B.  96. 

*  Haight  V.  Naylor,  5  Daly  219. 


HOW  AGEKT   SHOULD   SIGN.  249 

^vlio  appear  on  its  face  to  be  bound  for  its  payment ;  it  is  "  a 
courier  ^vithout  luggage,"  whose  countenence  is  its  passport; 
and  in  suits  upon  negotiable  instruments,  no  evidence  is  ad- 
missible to  charge  any  person  as  a  principal  party  thereto, 
unless  his  name  in  some  way  is  disclosed  upon  the  instru- 
ment itself;^  although  upon  other  written  contracts,  not  ne- 
gotiable, it  is  often  competent  to  show  that,  although  signed 
in  the  name  of  the  agent  only,  they  were  executed  in  the 
business  of  the  princij^al,  and  with  the  intent  that  he  should 
be  bound.  And  in  such  cases  he  is  bound  upon  them  accord- 
ingly.^ The  rule  excluding  parol  evidence  to  charge  an  un- 
named principal  as  a  party  to  negotiable  paper  is  derived 
from  the  nature  of  such  paper,  which  being  made  for  the 
purpose  of  being  transferred  from  hand   to   hand,  and   of 

'  Brown  v.  Baker,  7  Allen,  339;  Slawson  v.  Loriug,  5  Allen,  340  ;  Pentz  v. 
Stanton,  10  Wend.  271;  Hyde  v.  Page,  9  Barb.  150;  Arnold  v.  Stackpole,  11 
Mass.  27;  Bass  v.  O'Brien,  12  Gray,  477  ;  Arnold  v.  Sprague,  34  Vt.  409;  Thurs- 
ton V.  Munn,  1  Greene  (Iowa),  231 ;  Kenyon  v.  Williams,  19  Ind.  45  ;  Williams  v. 
Robbins,  10  Gray  77;  Pease  v.  Pease,  35  Conn.  131;  Byles  (Sharswood's  ed.) 
[*37],  116  ;  Story  on  Bills,  §  76.  This  view  does  not  obtain  now  in  New  York. 
In  Green  v.  Skeel,  9  N.  Y.  S.  C.  (2  Hun),  486,  the  indorsee  sued  indorser  of  a  note 
made  by  William  Skeel.  The  word  "agent"  had  been  added  to  his  name. 
The  Court  said,  per  Mullin  P.,  J.  :  "It  is  diiBcult  to  reconcile  the  cases  so  as  to 
ascertain  with  certainty  when  a  principal  is  bound  by  a  writing  executed  by  a 
person  who  signs  the  same  as  agent.  But  it  seems  to  be  pretty  well  settled,  that 
when  the  person  signing  his  name  with  the  word  'agent'  added,  is  in  fact,  the 
agent  of  the  principal,  and  the  writing  is  executed  in  the  course  of  the  business 
of  such  agency,  the  principal  is  bound  by  a  contract  signed  with  the  agent's  name 
with  the  word  '  agent '  added.  This  case  is  at  war  with  the  ruling  in  De  W^itt 
V.  Walton,  5  Sclden  571 ;  but  that  case  has  not  been  followed,  if  it  is  to  be  under- 
stood as  deciding  that  the  principal  is  not  bound  in  any  case.by  a  writing  signed 
by  the  agent  in  his  own  name  with  the  word  'agent'  added."  See  post  §  305, 
notes.  In  May  v.  Hewitt,  33  Ala.  161,  where  a  bill  signed  C.  D.,  clerk,  was  drawn 
by  the  owners  of  steamboat  Messenger,  and  was  accepted  by  "B.  Bell,  captain," 
parol  evidence  was  admitted  to  show  who  was  bound  by  the  acceptance. 

-  Lerncd  v.  Johns.  9  Allen,  419.  In  this  case  the  contract  was  signed  B.  by 
C,  and  parol  evidence  was  admitted  to  show  that  B.  was  only  agent  of  A.,  al- 
though there  was  no  intimation  of  it  on  the  contract,  Hoar,  J.,  saying:  "The 
doctrine  is  well  settled  in  England,  that  when  a  written  contract,  not  under  seal, 
is  made  by  or  with  an  agent,  the  principal,  although  undisclosed,  may  sue  or  be 
sued  upon  it,  except  in  the  case  of  commercial  paper."  Kenworth  v.  Schofield, 
2  B.  &  C.  945  ;  Iliggins  v.  Senior,  8  M.  &  W.  834  ;  see  also  Williams  v.  Bacon, 
2  Gray,  387;  Dykers  v.  Townseud,  25  N.  Y.  57. 


250     AGENTS  AS  PARTIES  TO  NEGOTIABLE  INSTRUMENTS. 

giving  to  every  successive  holder  as  strong  a  claim  upon  the 
original  party  as  the  payee  hirasell:'  has,  must  indicate  on  its 
face  who  is  bound  for  its  payment ;  for  any  additional  liabil- 
ity not  expressed  in  the  paper  would  not  be  negotiable.^ 

§  304.  TJiird.  It  is  not  absolutely  necessary  that  the  prin- 
cipaVs  peculiar  name  should  he  used  j  hut  he  may^  by  adop- 
tion^ use  that  of  his  agent ^  or  his  agent,  hy  his  authority,  may 
use  his  own  name  for  his  priiicipaVs. — Individuals,  as  well  as 
corporations,  may  sometimes  be  held  liable  upon  negotiable 
and  otlier  contracts,  executed  and  entered  into  under  a  name 
or  style  different  from  that  which  usually  belongs  to  and  is 
used  by  them,  and  in  which  their  own  proper  names  or  sig- 
natures do  not  appear  at  all.  But  such  liability  exists  only 
where  it  is  affirmatively  and  satisfactorily  proved  that  the 
name  or  sio-nature  thus  used  is  one  which  has  been  assumed 
and  sanctioned  as  indicative  of  their  contracts,  and  has  been, 
with  their  knowledge  and  consent,  adopted  as  a  substitute 
for  their  own  names  and  signatures  in  signing  bills  and 
notes,  or  executing:  other  written  contracts.  In  such  cases 
the  adopted  name  is  in  law  equivalent  to  the  actual  name  of 
the  party .^ 

§  305.  Fourth.  If  the  agent  sign  a  note  ivith  his  own 
name  and  discloses  no  principal,  he  is  personally  hound. — The 
party  so  signing  must  have  intended  to  bind  somebody  upon 
the  instrument,  and  no  promisor  but  himself  thereon  appear- 
ing, it  must  be  construed  as  his  note  or  as  a  nullity.^  And 
though  he  term  himself  "  agent,"  such  suffix  to  his  name  will 
be  regarded  as  a  mere  descriptio  personce,  or  as  an  earmark  of 
the  transaction,  and  may  be  rejected  as  surplusage.^ 

'  See  article  in  Albany  Law  Journal,  Vol.  13,  No.  19,  May  6,  1876,  p.  323. 

"  Brown  v,  Parker,  7  Allen,  337 ;  see  also  Bank  of  Rochester  v.  Mintent,  1 
Den.  405 ;  Bartlett  v.  Tucker,  104  Mass.  338 ;  and  see  especially  Minor  v. 
Mechanics'  Bank  of  Alexandria,  1  Peters,  46,  and  Chapter  XIIT,  on  Corporationp, 
section,  lU. 

=  Arnold  v.  Stackpole,  11  Mass.  27;  Sharpe  v.  Bellis,  61  Penn  St.  71  ;  Bed- 
ford Com.  Ins.  Co.  v.  Covell,  8  Mete.  442;  1  Parsons  N.  &  B.  93;  Story  on  Notes 
§  68 ;  see  Lyons  v.  Miller,  6  Grat.  440 ;  Poole  v.  Rice,  9  W.  Va.  73. 

*  Toledo  Iron  Works  v.  Iloisser,  51  Mo.  128;  Collins  v.   Buckeye  State  Ins. 


now  AGENT   SHOULD  SIGN.  251 

And  tln3  principle  applies  although  it  could  be  proved 
that  the  payee  knew  of  the  agency  when  the  note  was  made, 
and  it  was  understood  that  the  principal,  and  not  the  agent, 
should  be  bound,  for  such  evidence  would  vary  the  terms  of 
the  written  uote.^  But  under  such  circumstances,  if  the  note 
were  not  paid  the  principal  might  be  sued  upon  the  original 
consideration."^  However,  if  the  payee,  with  full  knowledge 
of  the  agency  and  of  the  principal's  liability,  and  relying 
solely  on  the  agent's  credit,  took  his  individual  note,  the  prin- 
cipal cannot  be  resorted  to  at  all.^  In  a  late  case  in  New 
York  the  note  was  signed  simply,  "  J.  S.  M.  Agent."  It  was 
alleged  to  have  been  given  for  goods  sold  by  the  defendant, 
a  lady,  probably  the  agent's  wife,  and  recovery  against  the 
alleged  principal  was  sustained.**  This  decision  is  in  conflict 
with  the  general  current  of  authority.^ 

§  306.  Fifth.  If  the  agent  exceed  his  authority  in  signing 
his  principaVs  name^  or  his  oion  professedly  as  binding  his 
principal^  who  is  named^  he  is  not  hound  as  a  painty  to  the 
paper  itnelf^  hut  only  in  an  action  (f  tort  for  falsely  assuming 
authority  to  hind  another. — Upon  this  proposition  the  author- 
ities are  not  uniform,  but  the  weight  of  reason,  if  not  of 
authority,  is,  we  think,  clearly  in  its  favor,  both  in  England 
and  in  the  United  States.  Where  simply  the  principal's 
name  is  signed,  without  any  profession  of  agency,  it  is  patent 

Co.  17  Ohio  St.  215;  Arnold  v.  Sprague.  31  Vt.  409;  Graham  v.  Campbell,  58 
Ga.  258  ;  Hall  v.  Bradbury,  40  Conn.  32  ;  Williams  v.  Robbing,  16  Gray,  77  ; 
see  post  §  398,  419;  Anderson  v.  Shoup,  1  Ohio,  N.  S.  123;  Kenyon  v.  William?!, 
19  Ind.  45. 

*  1  Parsons  N.  &  B.  93;  Story  on  Notes.  §  68. 

'  Pentz  V.  Stanton,  10  Wond.  271,  the  Court  saying:  "It  was  a  question  for 
the  jury  to  decide  whether  the  goods  were  sold  exclusively  upon  the  credit  of 
West  (the  agent)  and  of  the  bill,  or  not."  Query,  see  Paige  v.  Stone,  10  Mete.  ICP. 

*  Hyde  V.  Page,  9  Barb.  151  (1850) ;  Paige  v.  Stone,  10  Mete.  109. 

*  Moore  v.  McClure,  15  K  Y.  S.  C.  (8  Ilun),  55S.  Talcott,  J.:  "The  fact 
that  the  name  of  the  principal  docs  not  appear  on  tlie  face  of  the  note  is  not, 
under  the  modern  decisions  in  this  State,  at  all  conclusive.  If  it  was  intended  to 
be  given  in  the  business  of  the  principal,  was  in  fact  so  given,  and  with  due 
authority,  it  is  binding  on  the  principal,  and  all  this  is  matter  of  evidence,  all 
covered  by  the  averment  that  it  is  the  note  of  the  principal."  Pec  ante,  %  303, 
note.  ■*  See  ante,  §  303. 


252     AGENTS  AS  PARTIES  TO  NEGOTIABLE  INSTRUMENTS. 

that  there  is  nothing  in  the  instrument  which  could  possibly 
import  a  liability  upon  the  agent/  but  where  both  the 
agent's  and  the  principal's  names  appear,  there  is  more 
room  for  division  of  opinion.  By  some  authorities  it  is  con- 
tended that  as  both  names  are  on  the  paper,  and  the  princi- 
pal's is  not  rightfully  there,  the  agent  should  be  bound.'^ 

§  307.  But,  on  the  other  hand,  it  is  answered,  that  while 
the  agent's  name  is  on  the  paper,  it  is  there  in  a  form  which 
expressly  negatives  any  obligation  upon  him,  and  professes 
to  assert  the  obligation  of  another.  And  it  is  only  for  such 
wrongful  profession  that  an  action  may  be  maintained. 
This  is  the  philosophical  and  correct  view,  as  we  think. 
The  agent  cannot  be  estopped  to  deny  personal  obligation 
as  a  party  to  the  instrument,  since  he  never  held  himself  out 
as  such.^     So,  if  a  party  sign  a  fictitious  name,  and  it  is  not 

'  Wilson  V.  Barthrop,  2  M.  &  W.  863. 

''  Edwards  on  Bills,  80,  90 ;  Chitty  ^35],  47 ;  Pitman  v.  Kintner,  5  Blackf. 
251 ;  McClure  v.  Benuett,  1  Blackf.  189;  Byars  v.  Doore,  20  Mo.  284;  see  also 
note  to  Thomas  v.  Hewes,  3  C.  «&  M.  530.  In  Ormsby  v.  Kendall,  3  Ark.  338, 
the  note  began,  "  Steamer  Tecumseh  and  owners  promise,"  and  was  signed  ''F.  C. 
Kendall."  Held,  he  was  bound  unless  he  had  authority  to  bind  ow^ners.  In  Du- 
seobury  v.  Ellis,  3  Johns.  Cas.  70,  the  note  began,  "  I  promise,"  and  was  signed 
"  For  P.  S.— G.  D.  attorney."  Held,  G.  D.  was  bound,  the  Court  saying :  "  If  a  per- 
son, under  pretense  of  authority  from  another,  executes  a  note  in  his  name,  he  i^ 
Ijound;  and  the  name  of  the  person  for  whom  he  assumed  to  act  will  be  rejected 
as  surplusage."  In  Rossiter  v.  Rossiter,  8  Wend.  494,  where  the  agent,  exceeding 
his  authority,  signed  a  note  "  II.  R.  P.,  by  his  attorney,  W.  S.  Rossiter,"  he  was 
held  bound.  To  same  effect  is  Palmer  v.  Stephens,  1  Den.  480.  "  These  cases," 
it  is  said  in  American  Leading  Cases,  vol.  i.  [*637],  "  may  fairly  be  considered  as 
overruling  Ballon  v.  Talbot,  16  Mass.  461."  But  that  case  seems  to  stand  quite 
firm  as  a  precedent,  notwithstanding. 

'  Bartlett  v.  Tucker,  104  Mass.  338  (1870);  Draper  v.  Mass.  Steam,  &c.  Co.  5 
Allen,  338  ;  Abbey  v.  Chase,  6  Cush.  54;  Jefts  v.  York,  10  Cush.  392;  Ballou  v. 
Talbot,  16  Mass.  461 ;  Sheffield  v.  Larue,  16  Minn.  388  ;  Hall  v.  Crandall,  29  Cal. 
572;  Duncan  v.  Nells,  32  111.  542;  McHenry  v.  Duffield,  17  Blackf.  41 ;  Johnson 
V.  Smith,  21  Conn.  627;  Taylor  v.  Shelton,  30  Conn.  123  (agent  can  only  be 
bound  on  instrument  where  there  are  apt  words  to  express  his  liability) ;  Hopkins 
V.  Nchafy,  11  Sergt.  &  R.  129;  Polhiil  v.  Walter,  3  B.  &  Add.  114,  special  ac- 
tion sustained ;  Jenkins  v.  Hutchinson,  18  L.  J.  Q.  B.  276  (1849),  Lord  Denman, 
C.  J.,  said :  ''  In  the  absence  of  any  direct  authority,  we  think  that  a  party  who 
executes  an  instrument  in  the  name  of  another,  whose  name  he  puts  to  the  in- 
strument, and  adds  his  own  name  only  as  agent  for  that  other,  cannot  be  treated 


HOW  AGENT   SHOULD   SIGN.  253 

one  wbicli  be  adopts  as  liis,  lie  is  only  liable,  in  a  special 
action  on  the  case.^  It  results  from  these  principles  that  if 
the  agent  had  no  authority  to  bind  the  principal,  and  there 
are  no  apt  words  to  charge  him  personally,  the  instrument  is 
void.^ 

§  308.  Still  there  are  some  cases  in  which  the  authority 
of  the  agent  to  bind  the  principal  may  enter  into  the  inquiry 
as  to  the  agent's  liability;  for  if  there  be  an  ambiguity  in 
the  phraseology  of  the  note,  so  that  it  cannot  be  definitely 
determined  from  its  face  whether  it  be  that  of  principal  or 
agent,  in  that  case,  as  the  principal  could  not  be  bound,  an 
intention  of  the  agent  to  bind  himself  might  be  inferred.  If 
the  principal  ratify  the  agent's  act,  an  action  against  the 
agent  in  tort  cannot  be  maintained,  his  previous  want  of 
authority  being  thereby  entirely  cured.^ 

as  a  party  to  that  instrument,  and  be  sued  upon  it,  unless  it  be  shown  that  he 
was  the  real  principal."  1  Parsons  N.  &  B.  131,  122;  Chitty  on  Bills  (I3th  Am. 
ed.)  [*35],  47 ;  Thomson  on  Bills,  155.  The  contrary  doctrine  that  once  prevailed 
in  New  York  (see  note,  ante)  is  now  doubted;  see  White  v.  Madison,  26  N.  Y. 
IIG;  Walker  v.  Bank,  5  Seld.  583. 

'Bartlett  v.  Tucker,  104  Mass.  339,  Gray,  J.:  "In  Long  v.  Colburn,  11 
Mass.  97,  it  was  held  that  upon  a  promissory  note  beginning,  '  For  value  re- 
ceived, I  promise  to  pay,'  and  signed  '  Pro  William  Gill,  J.  S.  Colburn,'  no  action 
would  lie  against  Colburn;  and  the  Court  said:  'The  plaintiffs  remedy  is 
against  Gill,  if  Colburn  had  authority  to  make  the  promise  for  him;  and  if  he 
had  not,  a  special  action  on  the  case  might  make  Colburn  answerable.'  In  Ballou 
V.  Talbot,  16  Mass.  461,  the  same  point  was  adjudged;  and  it  was  held  that  upon 
a  note  signed  '  Joseph  Talbot,  2d,  agent  for  David  Perry,'  no  action  would  lie 
agaiust  Talbot,  although  the  jury  found  that  he  was  not  authorized  to  sign  the 
note  as  agent  for  Perry.  So  where  a  note,  purporting  on  its  face  to  be  the  note 
of  the  pastor  and  deacons  of  the  First  Freewill  Baptist  Church  in  Lowell,  was 
signed  '  S.  13.  York,  agent  for  the  First  Freewill  Baptist  Church  in  Lowell,'  it 
was  held  that  no  action  could  be  maintained  on  the  note  against  York.  Jefts  v. 
York,  4Cush.  371." 

"  See  McClure  v.  Bennett,  1  Blackf.  190;  Taft  v.  Brewster,  0  Johns.  334. 

'Sheffield  v.  Larue,  16  Minn.  388;  but  see  contra,  Rossiter  v.  Rossiter,  8 
Wend.  494. 


254     AGENTS  AS  PAKTIES  TO  NEGOTIABLE  INSTRUMENTS. 


SECTION  IV. 

LIABILITY    OF   AGENT   "WHO   DRAWS     ON     ACCOUNT     OF    HIS    PKIXCIPAL,    OR 

IND0KSE8   TO    Iini. 

§  309.  In  respect  to  bills  of  exchange  drawn  or  indorsed 
by  a  party  as  agent,  there  are  three  cases  in  which  an  inter- 
esting question  as  to  the  drawer's  or  indorser's  liability  arises. 
First.  When  the  drawer,  who  is  known  to  be  agent  of  the 
drawee,  draws  in  favor  of  the  drawee's  creditor — whether  or 
not  he  is  liable  to  such  creditor.  Second.  When  an  agent,  sell- 
ing goods  for  the  owner,  draws  on  the  buyer  for  the  amount 
— whether  or  not  he  is  liable  to  the  owner.  And  Third. 
Whether  or  not  an  agent,  to  whom  a  bill  or  note  is  made 
payable,  is  liable  on  an  indorsement  thereof  to  his  principal. 

§  310.  As  to  the  first  question,  it  is  said  by  Story,  in  his 
treatise  on  Agency,  "  if  an  agent  should,  in  his  own  name, 
draw  a  bill  of  exchange  on  his  principal  for  the  debt  of  the 
latter,  he  would  be  personally  responsible  as  drawer  in  case 
of  the  dishonor  of  the  bill,  although  upon  the  face  of  it  the 
bill  w\ns  drawn  on  account  of  his  principal."  ^ 

And  it  is  stated  in  the  American  Leading  Cases  to  be  the 
general  rule,  that  "  whenever  an  agent  puts  his  name  to  a 
negotiable  instrument  as  a  party  to  it,  he  is  legally  liable  to 
to  the  promisee  and  to  indorsees  upon  it."  ^ 

§  311.  The  English  cases  clearly  bear  out  these  views.* 
But  the  weight  of  authority  in  the  United  States  is  other- 


'  Story  on  Agency,  §  269.  '  Vol.  I.  [*G35]. 

»  Leadbetter  v.  Farrow,  5  M.  &  S.  345  (181C).  Agent  of  a  country  bank  to 
whom  plaintiff  sent  a  sum  of  money  in  order  to  procure  a  bill  on  London,  drew 
in  his  own  name  upon  the  London  firm,  Eeld^  defendant  was  liable  as  drawer, 
though  plaintiff  knew  he  was  agent. 

Perhaps  this  case  is  distinguishable  from  the  American  cases  in  this,  that  the 
])laintiflF  wanted  a  bill  drawn  on  London.  That  was  the  very  object  of  his  nego- 
tiation.    But  no  Buch  distiuction  seems  to  have  been  taken. 


LIABILITY   OF   AGENT.  255 

wise/  though  tlie  cases  are  not  uniform,^  If  the  drawer  signs 
himself  "  A.  B.,  agent,"  and  the  payee  takes  the  bill  so 
drawn  on  his  principal  debtor,  to  whom  he  has  given  credit, 
and  to  whom  he  looks  for  payment,  it  has  been  said  there  is 
really  no  valuable  consideration  for  his  ability.^  But  the 
debt  of  another  is  a  valuable  consideration,  and  if  the  agent 
intended  to  beJ  bound  upon  the  draft,  no  other  consideration 
would  be  necessaty.  Bills  are  constantly  drawn  for  accom- 
modation, and  the  transaction  might  be  construed  as  intended 
to  be  of  this   character.      We  think,  however,  that  a  bill 

• 

•  Krumbaar  v.  Ludeling.  3  Martin  (old  series),  [*G40],  p.  700.  The  apjent  drew 
on  liis  principal  for  a  debt  due  the  payee,  without  describing  himself  as  agent. 
The  Court  said,  per  Mathews,  J. :  "The  attempt  of  Ludeling  to  show  that  he  acted 
merely  as  agent  for  the  Amelungs,  in  drawing  the  bill  on  which  this  suit  is  com- 
menced, can  be  considered  properly  in  no  other  light  than  an  offer  of  evidence  to 
show  a  want  of  consideration  in  the  written  agreement,  and  that,  for  this  reason, 
he  is  not  bound  to  fulfill  any  obligation  which  might  otherwise  have  resulted  from 
it.  There  is  no  doubt  of  the  peisoual  liability  of  the  drawer  of  a  bill  of  exchange, 
■who  signs  it  without  expressing  his  agency,  when  it  passes  into  the  hands  of 
third  persons  having  no  knowledge  of  the  circumstances  under  which  it  was 
drawn,  and  between  whom  and  the  drawer  the  law  will  not  allow  the  considera- 
tion to  be  inquired  into.  The  appellee  having  signed,  without  expressing  for 
whom  he  signed,  is  clearly  liable  on  the  face  of  it ;  but  he  is  at  liberty  to  show  a 
want  of  consideration,  and  any  circumstances  of  fraud  or  violation  of  good  faith 
on  the  part  of  the  appellant,  which  may  be  sufficient  to  exonerate  him  from  this 
apparent  liability,  the  suit  against  him  being  brought  by  a  person  "  with  whom 
he  was  immediately  concerned  in  the  negotiation  of  the  instrument." 

Wolfe  V.  Jewett,  10  La.  O.  S.  G14  (1835);  Lincoln  v.  Smith,  11  La.  O.  S.  11 
(1837).     In  these  cases  there  was  no  intimation  of  agency  on  the  face  of  the  bill. 

Ilicks  V.  Ilinde,  9  Barb.  5'38  (1850).  In  this  case  the  drawer  signed  the  bill 
"  John  Ilinde,  agent."  Held,  not  bound,  Paige,  J.,  saying:  "  This  case  may  be 
distinguished  from  the  case  of  Pentz  v.  Stanton.  In  that  case  the  name  of  the 
principal  was  not  disclosed  to  the  vendor  by  the  agent  at  the  time  of  the  pur- 
chase of  the  goods  and  giving  of  the  draft  for  the  price  of  the  goods.  The  non- 
disclosure of  the  principal  made  the  agent  liable  for  the  goods.  And  being  so 
liable,  it  was  proper  he  should  be  held  personally  liable  on  the  draft." 

-  Mayhew  v.  Prince,  11  Mass.  55  (1814),  Parker,  J. :  "  The  agency  under  which 
he  acted  is  a  matter  between  him  and  his  employer,  but  cannot  protect  him  from 
the  claim  of  the  payees  of  the  bill,  who  have  a  right  to  consider  him  as  an  inde- 
pendent drawer,  notwithstanding  they  may  have  known,  either  from  the  terms 
of  the  bills  themselves,  or  from  extraneous  evidence,  that  the  defendant  was  act- 
ing as  servant  to  one  of  the  house  on  which  the  bill  was  drawn  "  To  same  effect 
see  Newhall  v.  Dunlop,  14  Me.  180  (1837). 

'  See  1  Parsons  N.  &  B.  94. 


25G      AGENTS   AS  PARTIES  TO  NEGOTIABLE   INSTRUMENTS. 

drawn  by  "A.  B.,  agent,"  might  well  ])e  distinguished  from 
a  note  so  signed  ;  for  the  language  is  not  inconsistent  with 
the  idea  that  the  drawer  signs  as  agent  of  the  drawee  w^hose 
name  is  disclosed  upon  tlie  face  of  the  instrument  ;^  while  in 
a  note  none  but  the  maker's  name  is  disclosed,  therefore, 
parol  evidence  might  well  be  admitted  to  show  the  real  cir- 
cumstances of  the  case,  from  which  might  be  inferred  the 
understanding  of  the  parties.  When  there  is  no  intimation  of 
a"-ency  accompanying  the  drawer's  name,  the  case  presented 
is  more  difficult.  This  view,  however,  may  be  presented 
when  the  buyer  has  parted  \\'ith  his  goods  upon  faith  of  the 
principal's  credit,  but  dealing  with  his  agent,  he  then  has 
funds  in  the  principal's  hands ;  and  it  is  his  draft  that  the 
principal  would  honor,  provided  he  knew  the  fact  that  he 
was  indebted  to  the  drawer. 

The  asrent's  draft  serves  as  a  voucher  of  that  fact.  And 
although  if  there  be  no  evidence  to  contradict  the  presump- 
tion that  the  agent  intended  to  go  security  for  his  principal 
in  the  form  pursued,  he  might  w^ell  be  held  liable  as  drawer, 
there  may  be  circumstances  which  would  render  it  unjust  so 
to  hold  him.  Thus,  suppose  he  was  requested  by  the  creditor 
to  draw  on  his  principal  for  the  amount  wdiich,  according  to 
agreement,  only  the  principal  owed ;  in  that  case,  it  seems  to 
us,  he  would  be  a  drawer  for  the  accommodation  of  the  cred- 
itor ;  and  if  this  be  wdiat  is  meant  by  the  authority  which 
calls  him  a  draw^er  "  without  consideration,"  it  would  seem 
clearly  correct,  though  not  so  in  any  other  light.  We  con- 
clude, therefore,  that  presumi)tively  the  agent  drawing  on  his 
principal  is  bound  to  the  creditor ;  but  if  there  were  an  ex- 
press understanding  that  he  was  not  to  be  bound,  or  circum- 
stances from  which  it  might  be  inferred  that  such  was  the 
understanding,  he  would  be  regarded  as  having  drawn  for 
the  creditor's  accommodation — not,  indeed,  to  enable  him  to 
raise  money,  necessarily,  but  to  enable  him,  in  the  most  suc- 
cinct fonn,  to  vouch  to  his  debtor  the  amount  and  authen- 
ticity of  the  debt,  and  call  for  payment  at  the  same  time. 

'  Ilicks  V.  Hiude,  9  Barb.  529. 


LIABILITY  OF  AGENT.  257 

§  312.  As  to  the  second  question,  whether  or  not  the 
drawer  of  a  bill  on  a  purchaser  of  goods  from  him  as  agent, 
in  favor  of  his  principal,  is  liable  to  him  (the  principal)  upon 
the  bill,  the  authorities  are  divided.  In  England,  his  liability 
is  affirmed,^  but  not  without  meeting  with  dissent  and  criti- 
cism from  high  authoiity.^  In  the  United  States,  the  contrary 
doctrine  has  found  favor  with  the  courts,^  though  in  turn  re- 
ceiving criticism  from  discriminating  authors.'* 

§  313.  The  whole  question  seems  to  us  to  turn  on  the  in- 
quiry whether  or  not  the  agent,  by  customary  course  of  deal- 
ing, or  express  authority,  was  authorized  by  the  principal  to 
draw  bills  on  the  purchaser  in  his  favor.  If  so,  he  should  be 
considered  as  really  using  his  own  name  as  the  principal's, 
and  the  latter  could  not  hold  him  liable,  as  there  would  be 
no  consideration,  but,  instead,  a  trust  reposed.  If,  on  the 
other  hand,  there  was  no  such  express  or  implied  authority, 
the  ao-ent  should  be  reo-arded  as  assumino;  in  the  form  of 
drawer  to  assure  the  debt. 

"  Le  Fevre  v.  Lloyd,  5  Taunt.  749  (1813),  A  broker  being  employed  to  sell 
goods,  sold  them  for  a  bill  at  two  months,  in  accordance  with  instructions,  and 
himself  drew  a  bill  on  the  buyer  for  the  amount,  and  was  held  liable.  The  Court 
said :  *'  The  broker,  by  giving  this  bill,  put  an  end  to  all  doubt." 

'  1  Parsons  N.  &  B.  104;  Clntty  on  Bills,  9th  ed.  p.  34,  citing  ex  parte  Robin- 
son, 1  Buck,  113;  Kodson  v.  Dilworth,  oPrice,  5G4.  Chitty  says:  "  These  decis- 
ions, subjecting  an  agent  to  personal  liability  as  regards  third  persons  ignorant 
of  the  circumstances  under  which  the  agent  became  a  party,  are  consistent  with 
the  other  principles  of  law  applicable  to  these  instruments.  But  it  seems  ques- 
tionable whether  even  at  law  it  is  correct  to  allow  an  employer  to  recover  from 
his  agent  under  such  circumstances,  because,  in  general,  between  original  parties 
it  may  be  shown,  as  a  good  defense  at  law,  tliat  the  bill  was  drawn,  accepted,  or 
indorsed  for  the  plaintiff's  accommodation,  or  for  a  purpose  or  consideration 
which  has  failed  or  been  satisfied;  and  to  allow  such  a  principal  to  recover  at  law 
against  his  agent,  is  only  to  compel  the  latter  to  resort  to  a  court  of  equity  for 
relief,  which  might  just  as  well  be  afforded  at  law,  and  a  court  of  equity  will 
certainly  afford  relief.'' 

^  Jones  V.  Lathrop,  44  Ga.  398  (1871),  the  court  saying  the  bills  were  not 
drawn  "in  favor  of  the  plaintiff  for  any  valuable  consideration  received  by  the 
drawers  from  him  therefor."  Roberts  v.  xVustin,  5  Whart.  313  (1839) ;  Mechanics' 
Bank  v.  Earp.  4  Rawie,  890  (1834). 

*  1  American  Leading  Cases  [*635],  where  it  is  said :  "  The  case  of  Roberts  v. 
Austin,  5  Whart.  313,  is  believed  to  have  been  an  oversight  on  the  part  of  the 
leai'ned  court  in  which  it  was  decided." 
Vol.  I.— 17 


258     AGE>TS  AS  PARTIES  TO   NEGOTIABLE  INSTRUMENTS. 

§  314.  As  to  the  third  question,  whether  or  not  an  agent 
taking  a  bill  payable  to  his  own  order,  and  indorsing  it  to 
his  principal,  is  liable  thereon,  is  the  subject  of  opposing 
opinions.  In  England,  it  has  been  held  that  an  agent,  pur- 
chasing bills  for  his  piincipal  and  indorsing  them  to  his  prin- 
cipal, is  liable  on  his  indorsement,  unless  it  be  qualified  by 
appropriate  words,  however  small  the  commission  he  gets  upon 
the  purchase,  the  Court  of  Common  Pleas  saying  he  might 
have  specially  indorsed  the  bills  sans  recours^  but  did  not  do 
it.^  Clearly,  if  the  agent  indorse  for  the  principal's  accommo- 
dation,- or  merely  indorse  according  to  the  principal's  instruc- 
tions, in  order  to  remit  him  money  which  he  has  collected,  he 
is  not  bound.^  In  the  case  of  a  factor  who  sells  goods  on  ac- 
count of  his  principal  under  a  del  credere  commission — by 
which  is  meant  an  agreement  to  guarantee  in  consideration  of 
a  premium — it  has  been  held  in  Pennsylvania  that  the  agent, 
under  such  a  commission,  guarantees  only  the  solvency  of  the 
debtor,  and  is  not  bound  as  a  party  to  the  bill  which  he  in- 
dorses to  his  principal  by  way  of  remitting  the  money .^  But 
this  view  of  the  liability  of  a  factor  under  a  del  credere  com- 
mission is  against  the  view  which  has  obtained  in  England 
and  in  the  United  States,  which  is  to  the  effect  that  such  a 
factor  is  liable  to  his  principal  for  the  amount  of  the  debt 
immediately  on  its  falling  due,"'''  and  is.  therefore,  bound  on 
his  indorsement  of  a  bill  which  he  remits  in  discharge  thereof.* 

•  Gonpy  V.  Harden,  7  Taunt.  159  (1816). 

'  See  Chitty  [*34],  46;  ex  parte  Robinson,  Buck's  Cases.  113  (1817). 
'Warwick  v.  Noakes.  Peake's  N.  P.  68   (1781);  Lewis  v.   Brehme,    33  Md. 
431  (1870);  Kimball  v.  Bittner,  63  Penu.  St.  205. 

*  Sharp  V.  Emmett,  5  Whart.  290  (1839);  followed  in  Bycrs  v.  Harris,  9  Ileis- 
kell,  653. 

"  McKenzie  v.  Scott,  6  Bro.  P.  C.  280  (1796) ;  Morris  v.  Cleasley,  4  Maulo  & 
S.  566  (1816).  takes  a  different  view  as  to  the  factor's  liability;  and  so  also  do 
the  cases  of  Thompson  v.  Perkins,  3  Mason  C.  C.  R.  232  (1823),  before  Story,  J., 
Peele  v.  Northcotc,  7  Taunt.  48.  But  the  weight  of  authority  is  in  accordance 
with  McKcnzic  v.  Scott;  and  sustaining  the  text  are  the  cases  of  Wolf  v.  Koppel, 
5  mil,  558;  2  Dcnio,  368;  Sherwood  v.  Stone,  14  N.  Y.  267  (1856);  Swan  v. 
Nesmith,  7  Pick.  220;  Lewis  v.  Brehme,  33  Md.  412  (1870);  Wickham  v.  Wick- 
ham,  2  Kay  &  Johns.  475 ;  Centourier  v.  Hastie,  8  Exch.  39. 

"  LewisV.'.Brehmc,  33  Md.  412  (1870);  McKenzio  v.  Scott,  6  Bro.  P.  C.  280. 
(1796) ;  Cbitty  on  Bills  (13th  Am.  ed.),  [*34],  46. 


RATIFICATION  BY  miNCIPAL  OF  UNAUTHORIZED  ACTS.   259 

§  315.  When  there  is  no  del  credere  commission  under 
which  the  agent  sells  goods,  the  question  whether  he,  ijpso 
facto,  binds  himself  by  indorsing  a  bill  or  note  taken  paya- 
ble to  himself  in  payment  is  more  difficult.  High  authority  has 
considered  him  bound.^  If  he  takes  the  bill  without  authority 
to  do  so  he  acts  at  his  peril.  But  if  he  is  authorized  to  give 
credit,  and  takes  a  bill  or  note  payable  at  its  termination  to 
his  own  order,  and  acts  without  negligence  in  the  matter,  it 
seems  unreasonable  to  hold  him;  for  his  own  name  as  the 
payee  might  well  be  regarded  as  being  used  simply  in  the 
place  of,  and  as  his  principal's.  To  exonerate  himself  from 
liability,  however,  the  circumstances  from  which  an  intention 
not  to  be  bound  might  be  inferred,  should  be  shown.  There 
is  really  no  consideration  for  his  liability  when  he  has  made 
the  indorsement  witliout  commission  or  compensation,  and 
without  departing  from  express  or  implied  instructions ;  and 
in  such  cases  no  intention  to  bind  himself  could  be  inferred.^ 


SECTION  y. 

EATIFIOATION   BY   PKINCIPAI.    OF    UNAUTHORIZED    ACT3. 

§  316.  When  the  party  ostensibly  the  principal,  and  who 
is  competent  to  make  the  contract,  with  a  full  knowledge  of 
all  the  circumstances,  deliberately  ratifies  the  lawful  acts, 
doings,  or  omissions  of  another  assuming  to  act  as  his  agent, 
he  will  be  bound  thereby  to  all  intents  and  purposes,  to  the 
full  extent  of  such  acts,  doings,  or  omissions,  as  if  they  had 
been  originally  done  by  his  authority.^     But  this  very  state- 

'  Story  on  Agency,  §  157. 

'  Lewis  V.  Brehrac,  33  Md.  433,  Alvey,  J.:  "For,  in  such  a  case,  although 
he  is  a  known  agent,  the  making,  or  accepting,  or  indorsing  of  the  instrument, 
is  treated  as  an  admission  that  it  is  his  personal  act,  not  only  in  respect  to  third 
persons,  but  also  in  respect  to  his  principal." 

'  Trustees  of  Schools  v.  McCormick,  41  111.  323.  The  act  must  have  been 
done  in  the  principal's  name,  or  as  his  act.  Ellison  v.  Jackson  Water  Co.  13 
Cal.  550. 


200      AGENTS  AS  PARTIES  TO  NEGOTIABLE   INSTRUMENTS. 

ment  of  the  rule  implies  its  limitations:  (1)  The  i^arty  must 
Lave  capacity  to  make  the  contract.  (2)  He  must  ratify  it 
with  a  full  knowledge  of  the  facts  attending  it.  (3)  The 
contract  must  have  been  originally  lawful.  The  true  rule  is 
that  he  wlio  may  authorize  in  the  beginning  may  ratify  in 
the  end.^ 

§  317.  A  corporation,  as  well  as  an  individual,  may  ratify 
its  agent's  acts ;  ^  and  the  ratification  may  be  by  express  con- 
sent, or  by  acts  and  conduct  of  the  principal  inconsistent 
with  any  other  hypothesis  than  that  he  approved  and  in- 
tended to  adopt  what  had  been  done  in  his  name.^ 

§  318.  Firstly.   The   party  must   have  capacity  to  liave 
made  the  contract  in  the   particular  mode  adopted.      If  a 
contract  can  only  be  made  in  a  prescribed  mode,  it  cannot 
be  ratified  in  disregard  of  that  mode  by  any   subsequent 
action  of  the  impelled  principal.     Ratification  is  equivalent 
to  a  previous  authority ;  it  operates  upon  the  contract  in  the 
same  manner  as  though   the  authority  to  make  the  contract 
had  originally  existed.*   The  power  to  ratify,  therefore,  neces- 
sarily supposes  tlie  power  to  make  the  contract  in  the  first 
instance ;  and  the  power  to  ratify  in  a  given  mode  supposes 
the  power  to  contract  in  the  same  way.^      Therefore,  where 
the  charter  of  a  city  authorizes  a  sale  of  city  property  only 
at   public   auction,  a  sale  not  thus  made  is  from  its  very 
nature  incapable  of  ratification,  because  it  could  not  have 
been  otherwise  made  originally.     So,  where  the  charter  au- 
thorizes a  contract  for  work  to   be  given  only  to  tbe  lowest 

'  First  National  Bank  v.  Gay,  63  Mo.  33. 

MIoyt  V.  Thompson,  19  N.  Y.  218;  Supervisors  v.  Schenck,  5  Wall.  782; 
Peterson  v.  Mayor  of  N.  Y.  17  N.  Y.  453 ;  Johnson  v.  Stark  Co.  24  111.  90 ; 
Keithsbury  v.  Frick,  34  111.  421;  Knox  County  v.  Aspinwall,  21  How.  544; 
Trundy  v.  Farrar,  32  Me.  225. 

'  Supervisors  v.  Schenck,  5  Wall.  782;  Knox  County  v.  Aspinwall,  21  How. 
544;  Bissel  v.  Jeffcrsonville,  24  How.  299;  Moran  v.  Miami  Co.,  2  Blackf.  725. 

*  Paul  V.  Berry,  78  111.  158  ;  Eadie  v.  Ashbaugh,  44  Iowa,  521 ;  Darst  v.  Gale„ 
£3  111.  137. 

"  Ainsworth  v.  Creke,  L.  R.  4  C.  P.  483;  Bird  v.  Brown,  4  Exch.  786. 


RATIFICATION  BY  TRINCIPAL  OF  UNAUTHORIZED  ACTS.   2GL 

bidder,  after  notice  of  the  contemplated  work  in  tbe  public 
journals,  a  contract  made  in  any  other  way — tliat  is,  given  to 
any  other  person  than  such  lowest  bidder — cannot  be  sub- 
sequently affirmed.  Were  this  not  so,  the  corporate  author- 
ities would  bo  able  to  do  retroactively  what  they  are  prohib- 
ited from  doing  originally.^ 

§  319.  Secondly.  The  principal  will  not  be  bound  unless 
he  knew  the  facts  attending  the  transaction.^  Thus,  ordi- 
narily, payment  or  part  payment  of  a  bill  or  note  is  a  ratifi- 
cation of  its  terms;  but  where  a  note  had  been  altered 
without  knowledge  of  the  surety,  and  he  being  ignorant  of 
the  alteration,  made  a  payment  upon  it,  it  was  held  not  a 
ratification.^  If  the  principal  ratifies  in  ignorance  of  material 
facts,  and  on  learning  them  desires  to  disavow  the  contract, 
he  can  only  do  so  by  relinquishing  the  proceeds,  and  restor- 
ing the  party  who  dealt  with  his  supposed  agent  to  as  good 
a  situation  as  he  was  before.* 

§  320.  Thirdly.  The  contract  must  have  been  originally 
lawful.  This  principle  is  plain,  for  ratification  being  equiv- 
alent to  an  original  authority,  and  possessing  no  greater 
or  other  virtue,  can  only  apply  retrospectively  to  validate 
those  things  which  original  authority  would  have  vali- 
dated. 

§  321.  But  a  party  cannot  ratify  a  contract  so  far  as  it  is 
to  his  interest,  and  repudiate  it  as  to  the  rest.  Ratification 
is  an  intes-ral  act.  And  therefore  where  an  attornev  com- 
promised  a  debt  for  his  principal,  who,  with  full  knowledge, 
retained  the  amount  paid  on  such  compromise,  the  principal 

*  Zollman  v.  San  Francisco.  20  Cal.  102  ;  Field,  J.,  McCracken  v.  San  Fran- 
cisco, IG  Cal.  591 ;  Erady  v.  The  Mayor,  16  How.  Pr.  R.  432. 

^  School  District  v.  Thompson,  5  Minn.  280;  First  Nat.  Bank  v.  Parsons,  19 
Minn.  183;  Nixon  v.  Palmer,  4  Seld.  398;  Fletcher  v.  Dysart,  9  B.  Mon.  413; 
Miller  V.  Board  of  Education,  44  Cal.  166;  Supervisors  v.  Schenck,  5  Wall, 
■782. 

'  Benedict  v.  Miner,  58  111.  19. 

*  Culver  V.  Ashley,  19  Peck,  30;  Eadie  v.  Ashbaugh,  44  Iowa,  521. 


2G2      AGENTS  AS  PARTIES  TO   NEGOTIAliLE  INSTRUMENTS. 

was  held  bound  by  all  the  terms  of  the  compromise.^  Where 
one  assumes  without  authority  to  act  for  another,  if  that 
other  wishes  to  avail  himself  of  the  acts  of  the  agent  he  must 
adopt  the  whole  or  none.^ 

§  322.  Retaining  proceeds  of  a  note  is  ratification  of  the 
means  by  which  they  were  obtained  ;  and  when  a  wife  signed 
her  husband's  name  without  authority,  but  he  took  the  money 
raised,  he  was  held  bound.^  So,  if  a  principal  receives  from 
his  agent  the  notes  of  third  parties  for  property  sold,  he 
waives  the  right  to  hold  the  creditor  of  the  agent  liable  for 
the  value  of  the  property .''  Mere  silence  when  informed 
that  another  has  used  one's  name,  and  an  attempt  to  get  in- 
demnity against  loss,  has  been  held,  under  the  circumstances, 
not  to  amount  to  ratification.^  Long  silence,  however,  coupled 
with  circumstances,  may  frequently  operate  as  ratification.^ 
Where  an  agent  fraudulently  sells  property,  and  embezzles 
the  proceeds,  the  principal  by  accepting  compensation  from 
the  agent  ratifies  the  sale,  and  estops  himself  from  recourse 
against  the  purchaser."^ 

*  Henderson  v.  Cummings,  44  Cal.  325 ;  see  1  Parsons  on  Contracts,  52. 

'  Eadie  v.  Ashbaugh,  44  Iowa,  521 ;  Davenport  Sav.  Fund  Assn.  v.  N.  A. 
Fire  Ins.  Co.  16  Iowa,  74  ;  Benedict  v.  Smith,  10  Paige,  127. 
'  National  Bank  v.  Fassett,  42  Vt.  432. 

*  Trustees  of  Schools  v.  McCormack,  41  111.  323. 

'  Ilortons  V.  Townes,  6  Leigh,  47.  Brockenburgh,  J.,  saying:  "  There  was  no 
evidence  of  any  assent  given,  or  any  actual  ratification  of  tiie  attorney  by  the 
principals,  but  the  ratification  is  inferred  from  their  silence.  That  is  too  equiv- 
ocal a  circumstance  from  which  to  form  such  a  conclusion ;  and  the  subsequent 
conduct  of  the  defendants  in  standing  a  suit  shows  that  they  did  not  understand 
their  failure  to  object  as  an  actual  ratification." 

*  Wardrop  v.  Dunlop,  8  N.  Y.  S.  C.  (1  Hun),  325. 
'  Ogden  V.  Marchaud,  29  I. a.  61. 


CHAPTER  XL 

BANKS    AND   OTHER   AGENTS   FOE   NEGOTIATION    OR   COLLECTION. 

§  323.  AYiTH  regard  to  tlie  duties  of  agents  in  respect  to 
bills  aud  notes,  it  is  said  by  Cbitty,  upon  tbe  autbority  of 
Beawes,  tbat  an  agent  employed  in  negotiating  bills  of  ex. 
cbange  is  bound  :  first,  To  endeavor  to  procure  acceptance ; 
secondly,  On  refusal,  to  protest  for  non-acceptance  ;  tbirdly ; 
To  advise  the  remitter  of  the  receipt,  acceptance,  or  protest- 
ing; and,  fourthly,  To  advise  any  third  person  that  is  con- 
cerned, and  all  this  without  delay .^  This  seems  to  be  a  con- 
cise and  accurate  statement  of  the  general  principle,  and  we 
sball  endeavor  to  follow  into  its  various  ramifications. 


SECTION  I. 

BANKS    AS    COLLECTING    AGENTS. WHAT    CONSTITFTES    AGENCY    AND    OF 

WHOM    THEY    ARE    AGENTS. 

§  324.  The  business  of  collecting  commercial  paper  is  a 
part  of  the  regular  business  of  banking  ;  and  it  is  not  neces- 
sary that  the  charter  of  the  bank  should  specifically  confer 
the  power  to  engage  in  it  upon  the  bank,  as  it  is  plainly 
within  the  powers  implied  by  the  creation  of  such  an  insti- 
tution.^ Nor  is  it  necessary  for  the  bank  to  enter  into  any 
special  contract  with  a  person  who  deposits  paper  in  it  for 
collection,  in  order  to  invest  it  with  all  the  rights,  duties  and 
liabilities  of  a  collecting  agent.  Frequently  the  banks 
charge  a  commission  for  collections  to  be  made  in  distant 
places.     But  the  advantages  arising  from  business  associa- 

'  Chitty  on  Bills  [*36],  48;  Beawes  lex  Mercatoria,  41 ;  West  Br  .inch  Bank  v. 
Fulmer,  3  Barr,  399. 

'  Tyson  v.  State  Bank,  6  Blackf.  225. 


204  AGEKTS  FOR  NEGOTIATION   OK  COLLECTION. 

tion,  and  the  possible  or  probable  temporary  use  of  the 
money,  are  a  sufficient  consideration  for  the  undertaking  to 
collect  it.^  And  although  the  party  bound  to  make  pay- 
ment resides  in  a  distant  place,  or  the  paper  is  payable  at  a 
bank  in  a  distant  place,  no  special  directions  or  contract  for 
its  transmission  are  necessary,  it  being  assumed  that  there  is 
a  tacit  understanding,  arising  from  the  obvious  circumstances, 
that  such  transmission  is  expected  by  the  depositor,  and 
undertaken  by  the  bank.^ 

§  325.  JEffect  of  maldng  jpa'per  jjayahle  at  a  hank. — A 
bank  at  which  negotiable  paper  is  made  payable,  and  at 
which  it  is  deposited  for  collection,  is  the  agent  of  the  holder 
or  depositor  to  receive  the  money  at  its  maturity,  and  in  no 
respect  the  agent  of  the  parties  liable  for  its  payment ;  and 
though  payment  be  not  made  at  maturity,  the  bank  has  im- 
plied authority  to  receive  the  money  at  any  time  thereafter, 
and  while  the  paper  remains  at  the  bank.^  Payment  may, 
therefore,  be  safely  made  to  the  bank  by  the  debtor,  unless 
he  receives  actual  notice  not  to  do  so.*  The  designation  of 
the  bank  as  place  of  payment,  imports  a  stipulation  that  the 
holder  will  have  the  paper  at  the  bank  at  maturity  to  sur- 
render up,  and  that  the  maker  or  acceptor  will  then  j^ay  it ; 
and  if  it  be  not  then  lodged  there,  and  the  payor  himself  or 
his  agent  is  there,  with  necessary  funds  to  meet  it,  he  so  far 
satisfies  the  contract  that  he  cannot  be  made  responsible  for 
any  future  damages,  either  as  costs  of  suit  or  interest,  for 
delay.^ 

§  326.  But  the  mere  fact  that  a  bill  or  note  is  made 
payable  at  a  bank  does  not  of  itself  confer  any  agency  upon 
the  bank,  either  of  the  payee  or  of  the  payor.     In  order  to 


>  Halls  V.  Bank  of  the  State,  3  Kich.  36G;  Bank  of  Utica  v.  M'Kinster,  11 
Wend.  475  ;  Bank  of  Utica  v.  Sniedes,  3  Cow.  662. 

""  Fabens  v.  Mercantile  Bank,  23  Pick.  330 ;  Bank  of  Washington  v.  Triplett, 
1  Peters,  25. 

'  Alley  V.  Eogers,  10  Grat.  383;  Marine  Bank  v.  Fulton  Bank,  2  Wall.  253; 
Ward  V.  Smith,  7  Wall.  447;  Morse  on  Banking,  323. 

*  Id.  '  Ward  V.  Smith,  7  Wall.  447. 


BANKS  AS  COLLECTING  AGENTS.  2(;r> 

make  the  bank  the  payee's  agent  to  receive  the  money,  the 
paper  must  be  indorsed  to,  or  lodged  with  it,  for  collection, 
or  it  must  have  received  authority  from  the  payee  to  collect 
the  amount  due ;  ^  and  without  such  circumstances  or  such 
authority  any  amount  which  the  bank  receives  to  apply  in 
payment,  it  will  be  deemed  to  have  taken  as  the  agent  of 
the  payor.^     And,  in  like  manner,  it  has  been  held  that  the 
bank  is  not,  by  the  paper  being  made  there  payable,  consti- 
tuted the  agent  of  the  payor  to  make  payment ;  nor  does  the 
receipt  of  such  a  note  by  the  payee  amount  to  an  agreement 
that  the  maker   may  make  a  deposit    at    the  bank  of  the 
amount  of  the  note,  and  thus  discharge  his  obligation,  and 
that  the  money  so  deposited  is  at  the  risk  of  the  holder  of 
the  note.     The  bank  has  no  right  to  pay  out  the  money  of 
its  dejjositor,  nor  can  his  money  be  taken  to  pay  his  note 
there  payable,  except  by  means  of  his  verbal  order  or  assent, 
or  his  check  or   draft.     And  where  no  such  order,  assent, 
check  or  draft  lias  been  given,  the  money  remains  at  his  risk, 
and  he  is  liable  to  the  holder."^     A  different  view  is  taken 


'  Caklwoll  V.  Evans,  5  Bush  (Ky.)  380 ;  Balme  v.  Wambaugli,  16  Minn.  120. 

»  Ward  V.  Smith,  7  Wall.  447 ;  Pease  v.  Warren,  39  Mich.  9  (1874) ;  Cooley, 
J.:  "  It  cannot  be  pretended  that  making  a  note  payable  at  a  bank  can  make 
the  bank  the  agent  of  the  payee  to  receive  payment,  unless  the  officers  are  dis- 
posed to  accept  the  agency;  and  in  this  case  the  refusal  was  distinct  and  em- 
phatic." 

"National  Bank  v.  Smith,  13  N.  Y.  S.  C.  (5  Hun),  183;  GG  K  Y.  272; 
Wood  V.  Merchants'  Saving,  «S;c.  Co.  41  111.  2G7.  In  this  case  the  note  was 
payable  "  at  the  banking  house  of  J.  G.  Conrad,  Chicago."  It  was  there  presented 
at  maturity,  and  marked  "  Good.  C.  W.  Dunlop,  Teller."  At  the  time  tiic  maker 
had  funds  on  deposit,  but  had  given  no  authority  to  or  order  on  the  banker  to 
pay  the  note.  The  next  day  Conrad  failed,  and  made  an  assignment  for  the 
benefit  of  creditors.  The  court  held  that  the  maker  was  still  bound;  and 
Breese,  J.,  concluding  his  opinion,  said  :  "  To  sum  up  all  on  this  point  in  a  few 
words,  the  fact  that  the  note  was  made  payable  at  Conrad's  bank,  did  not  au- 
thorize that  bank  to  pay  the  note  witliout  being  so  ordered  by  the  maker,  ver- 
bally, or  by  check  or  draft  or  other  writing.  The  holder  of  the  note  could  not, 
therefore,  draw  the  funds  except  on  the  order  of  the  maker,  and  the  money  in 
the  bank  belonging  to  him  remained  at  his  risk. 

"  It  would  be  going  too  far  to  hold  that  the  mere  certification  of  a  note  by 
the  bank  at  which  it  was  payal^lc,  that  it  was  '  good,'  should  operate  to  release 
the  maker,  and  be  held  equivalent  to  an  actual  payment  of  the  money.     We 


266  AGENTS  FOR  NEGOTIATION  OR  COLLECTION. 

by  some  text  writers  and  cases.^  The  question  may  be  af- 
fected by  a  course  of  dealing  from  wbich  an  implied  under- 
standing miglit  be  inferred.  If  the  bank  make  a  special 
ao-reement  to  apply  tlie  deposit  to  checks,^  or  if  instructed  to 
do  so,^  it  cannot  tlien  make  other  application  of  it,  even  to  a 
debt  due  itself^  Where  an  agent  deposits  in  bank  the  pro- 
ceeds of  property  sold  by  him  for  his  principal,  under  instruc- 
tions thus  to  keep  it,  a  trust  is  impressed  upon  the  deposit  in 
favor  of  the  principal,  and  his  right  thereto  is  not  affected  by 
the  fact  that  the  agent  at  the  same  time  deposited  other 
moneys  of  his  own ;  nor  is  it  affected  by  the  fact  that  the 
agent,  instead  of  depositing  the  identical  moneys  received  by 
him  on  account  of  his  principal,  substitutes  other  moneys 
therefor.^  If  the  bank  be  the  owner  of  a  bill  or  note  thus 
payable,  and  have  funds  of  the  payer  on  deposit,  it  may 
claim  the  bill  or  note  as  offset  in  a  suit  for  the  deposit ;  '^  and 
such  plea  may  be  available  in  equity  under  some  circum- 
stances, the  insolvency  of  the  payer  for  instance,  before  the 
maturity  of  the  bill  or  note.'' 


think  the  better  rule  is  to  consider  nothing  as  an  actual  payment  -which  is  not 
really  such,  unless  there  be  an  express  agreement  that  something  short  of  a  pay- 
ment shall  be  taken  in  lieu  of  it."  See  on  this  subject  the  Albany  Law  Journal, 
June  29,  1873,  p.  500. 

'  In  Byles  on  Bills  [*19],  91,  it  is  said:  "If  the  funds  in  the  banker's  hands 
have  been  applied  to  the  payment  of  the  customer's  acceptance,  made  payable  at 
the  banker's,  though  without  any  further  authority,  that  is  a  defense  (to  the 
banker)  to  an  action  (brought  by  the  customer)  for  dishonoring  the  (customer's; 
check."  See  also,  to  same  effect,  Byles  [*188],  319;  Edwards  on  Bills,  160, 
where  it  is  said  that  if  a  note  is  made  negotiable  at  a  bank,  "the  maker  author- 
izes the  bank  to  pay  it  out  of  his  funds  on  deposit,  or  by  advancing  the  amount 
to  his  credit."  Mandeville  v.  Union  Bank,  9  Cranch,  11.  In  this  latter  case  the 
note  was  negotiable  at  the  bank.  See  ante,  §  167 ;  Kcymcr  v.  Laurie,  18  L.  J.  Q. 
B.  218  (1849),  Patteson,  J.:  "The  plaintifif,  by  making  the  acceptance  payable 
at  the  defendants'  (banking  house),  clearly  authorized  them  to  pay  it."  See  also, 
Thatcher  v.  Bank,  5  Sandf  121. 

'  Wilson  v.  Dawson,  52  Ind.  513. 

^  Egerton  v.  Fulton  Nat.  Bank,  43  How.  Pr.  216. 

*Id. 

"  Van  Alen  v.  American  Nat.  Bank,  52  N.  Y,  4.  See  Overseers  of  the  Poor 
v.  Bank  of  Va.  2  Grat.  547. 

*  Ford  v.  Thornton,  3  Leigh.  G95.  '  Ford  v.  Thornton,  3  Leigh.  695. 


RIGHTS  AJ^D  DUTIES  OF  COLLECTING  AGENTS  207 

SECTION  II. 

RIGHTS    AND    DUTIES    OF   BANKS    OR    OTHER    COLLECTING    AGENTS. 

§  327.  It  is  tlie  duty  of  the  bank  as  soon  as  the  bill,  note 
or  check  is  placed  in  its  hands  for  collection,  to  take  the  ap- 
propriate steps  necessary  to  its  prompt  payment  or  prompt 
acceptance,  by  making  presentment  for  acceptance  without 
delay,  and  presentment  for  payment  at  maturity.  And  if  the 
instrument  be  not  duly  accepted  or  paid,  the  bank  niust  take 
all  necessary  steps  to  fix  the  liability  of  the  drawer,  if  it  be 
a  foreign  bill,  by  placing  it  in  the  hands  of  a  notary  for  pro- 
test, and  by  giving  due  notice  of  its  dishonor  to  the  party 
who  indorsed  the  instrument  to  it  for  collection,  whether  it 
be  a  bill  or  note,  inland  or  foreign.  If  the  bank  fail  in  any 
of  these  duties,  it  becomes  immediately  liable  in  damages  to 
the  holder.^  And  it  will  be  no  defense  that  it  was  unaccus- 
tomed to  undertake  collections,  and  that  its  error  arose  from 
want  of  familiarity  with  the  ordinary  course  of  proceedings.^ 
Nor  that  it  acted  in  accordance  with  its  own  best  views  of 
the  requirements  of  law,  as  where  it  presented  a  bill  without 
allowincf  sfrace,  conceivino-  it  to  be  a  check.^ 

§  328.  The  theory  of  this  rule  is,  that  the  receipt  by  the 
bank  of  negotiable  paper,  deposited  for  collection,  forms  an 
implied  undertaking  to  make  the  demands  and  protests,  and 
give  the  notices  required  by  law  or  mercantile  usage,  for  the 
perfect  protection  of  the  holder's  rights  against  all  previous 
parties,  for  which  undei'taking  the  use  of  the  funds  thus  tem- 
porarily obtained,  or  of  the  average  balances  thereof,  for  the 
purposes  of  discount  or  exchange,  forms  a  valuable  consider- 
ation.*    And   so  valuable   frequently  is  this  consideration, 

'  West  Branch  Bank  v.  Fulmer,  3  Barr,  399,  Gibson  C.  J.;  Merchants'  Nat. 
Bank  v.  Stafford  Nat.  Bank,  44  Couu.  507 ;  Beawes  Lex  Meixatoria,  41.  See 
Bird  V.  La.  State  Bank.  93  U.  S.  97. 

"  Ivory  V.  Bank  of  State,  36  Mo.  475. 

"•  Georgia  Nat.  Bank  v.   Henderson,  46  Ga.  493  (1870). 

*  Allen  V.  Merchants'  Bank,  22  Wend.  215,  Verplanck,  Senator. 


2G8  AGENTS  FOR  NEGOTIATION  OR  COLLECTION. 

that  collections  constitute  a  most  lucrative  branch  of  the 
business  of  banking,  and  are  often  so  desirable  as  a  means  of 
acquiring  exchange  which  is  above  par,  that  the  allowance  of 
a,  small  premium  by  the  collecting  bank  for  the  privilege  of 
makino;  such  collections  is  not  unusual.^ 

§  329.  The  measure  of  damages  which  the  holder  is  en- 
titled to  recover  of  the  bank,  or  other  collecting  agent,  who 
has  been  guilty  of  negligence  or  default  in  respect  to  it,  is 
the  actual  loss  wliich  has  been  suffered.^  That  loss  is  prima 
facie  the  amount  of  the  bill  or  note  placed  in  its  or  his 
hands;  but  evidence  is  admissible  to  reduce  it  to  a  nominal 
sum.^ 

§  330.  Dut}j  of  collecting  hanlk  to  'present  for  acceptance. 
— Elsewhere  in  this  volume,  it  will  be  seen  that  bills  pay- 
able upon  a  certain  day — say,  for  instance,  thirty  days  after 
date — need  not  be  presented  for  acceptance,  but  only  for 
payment  at  maturity.  If  such  a  bill,  however,  be  placed  in 
the  hands  of  a  bank  or  other  agent  for  collection,  the  prin- 
ciple which  exonerates  the  holder  as  between  him  and  the 
■drawer  and  indorsers  from  making  presentment  for  accept- 
ance, does  not  apply  as  between  the  collecting  agent  and 
himself.  While  the  holder  is  not  himself  bound  to  make 
such  presentment,  it  is  his  interest  that  it  shall  be  done ;  and 
as  has  been  well  said  respecting  a  bill  placed  in  an  agent's 
hands:  "it  is  the  duty  of  a  ftiithful  agent  to  do  for  his  prin- 
cipal whatever  the  principal  himself  would  probably  have 
done  if  he  was  a  discreet  and  prudent  man.  Even  where  the 
principal  is  habitually  negligent  in  attending  to  his  own  in- 
terests, it  forms  no  excuse  for  similar  negligence  on  the  part 
of  his  agent."  ^     Therefore   it  has  been  considered  that  an 

•  Reeves  v.  State  Bank  of  Ohio,  8  Ohio  St.  480. 

»  Bank  of  Washington  v.  Triplett,  1  Pet.  25;  Tyson  v.  State  Bank,  6  Blackf. 
225 ;  Merchants'  Bank  v.  Stafford  Bank,  44  Conn.  567. 

'  Van  Wart  v.  Woolley,  5  Dow.  &  R.  374;  Allen  v.  Suydam,  20  Wend.  321 ; 
Boriip  V.  Nininger,  5  Minn.  523. 

^  Allen  V.  Suydam,  20  Wend.  331.  See  Chapter  XVII,  on  Presentment  for 
Acceptance,  and  authorities  quoted. 

Allen  V.  Suydam,  20  Wend.  831  (1838),  confirming  s.  c.  17  Wend.  3G8,  Ver- 


EIGHTS  AND  DUTIES  OF  COLLECTING  AGENTS.  2GD 

agent  would  be  lial)le  to  the  owner  tor  any  damages  result- 
ing from  the  non-presentment  of  sucli  a  bill. 


planck,  Senator,  said  :  "  Tile  principle  is  familiar  that  an  agent  for  pay  is  bound 
tp  use  such  means,  care,  skill  and  precaution  as  are  adequate  to  the  due  execu- 
tion of  his  trust.     He  must  use  the  ordinary  diligence  of  a  skillful  and  prudent 
man  in  such  aflairs.      Now  an  early  presentment  for  acceptance  is  an  obvious 
precaution,  which  a  prudent  man  of  business  would  take  to  insure  collection  of 
a  questionable  draft.     By  this  neglect  or  delay,  the  payees  were  prevented  from 
making  those  demands  and  taking  such  immediate  measures  as  to  the  drawer, 
on  receipt  of  notice  of  non-acceptance,  as  might  possibly  have  secured  the  payees 
in  some  way  or  other.     At  the  lute  period  at  which  they  did  receive  such  notice, 
they  preferred  looking  to  the  responsibility  of  tlieir  agents.     These  must  be  held 
responsible  for  the  consequences  of  their  negligence  to  the  amount  of  the  damage 
so  caused.     Nor  is  it  a  sufficient  defense  of  the  agents,  that  the  bill  would  not 
have  been  accepted  if  immediately  presented,  because  the  drawer  had  directed 
that  it  should  not  be,  nor  that  it  was  uncertain  whether  the  funds  in  the  hands 
of  the  drawees  were  sufficient  or  not  to  meet  the  draft  at  the  day  fixed  for  pay- 
ment.    At  and  after  the  time  when  the  draft  should  have  been  presented,  the 
drawer  was  in  business  at  New  York,  struggling  for  and  obtaining  credit,  and 
having  the  command  of  funds  which  he  applied  to  pay  other  drafts  presented 
subseciuently  to  the  date,  when  with  due  diligence  notice  of  the  non-acceptance 
of  this  bill  would  have  been  received.     Whatever  might   have  been  his  first  in- 
tention, it  was  not  for  a  court  and  jury  to  assume  the  broad  presumption  that  an 
immediate  demand,  upon  return  of  the  draft,  with  such  other  legal  measures  as 
the  state  of  business  between  the  parties  or  other  circumstances  might  render 
advisable,  would  not  have  led  to  the  ultimate  payment.     As  a  mere  conjectural 
inference  from  the  character  and  course  of  business  of  Eastabrook,  as  incident- 
ally presented  in  the  evidence,  I  should  think  the  probability  rather  the  other 
way,  and  that  immediate  and  urgent  measures  might,  perhaps,  have  prevented 
loss.     His  death  and  the  consequent  insolvency  of  his  estate,  have  left  all  this 
mere  matter  of  conjecture;  but  it  is  quite  immaterial  as  to  the  question  of  the 
agent's  duty  and  the  right  of  oction  against  him,   though  were  it  distinctly  in 
evidence  either  way,  it  might  aflfect  the  measure  of  damages. 

"  Thus  far,  then,  I  think  the  law  quite  clear  as  to  the  rights  of  holders  of  bills 
and  the  duties  of  collecting  agents,  but  I  have  had  more  hesitation  as  to  the  rule 
of  damages.  Is  the  plaintiff"  in  similar  cases  to  be  obliged  to  make  out  in  evi- 
dence the  precise  actual  amount  of  the  damage  he  sustained,  and  thus  give  to  the 
party  in  fault  all  the  numerous  and  great  advantages  of  doubt,  uncertainty  and 
difficulty  in  the  proof  ?  Or  are  we  to  apply  to  these  cases  the  doctrine  of  laches 
in  commercial  paper,  as  between  the  holder  and  other  parties,  and  consider  the 
agent  as  having  made  the  paper  his  own  by  his  neglect  ?  Contradictory  as  these 
rules  are,  they  have  yet  each  their  sliare  of  authority,  and  are  just  and  wise  when 
applied  to  other  questions;  but  I  am  not  satisfied  with  the  equity  in  the  commer- 
cial policy  of  either,  when  applied  to  a  collecting  agency,  and  I  have  sought  in 
the  decisions  for  some  safer  and  more  equitable  doctrine  on  that  head. 

"Considering  the  subject  in  regard  to  commercial  policy,  there  is,  on  one 
side,  the  vast  amount  of  paper  daily  collected  through  our  banks,  the  great  pub- 


270  AGENTS  FOR  NEGOTIATION   OR  COLLECTION. 

§  331.  How  collecting  hanh  should  give  notice  of  dis- 
honor.— Sometimes  a  bank  bolding  indorsed  paper  for  collec- 
tion sends  notice  in  the  event  of  its  dishonor  to  the  indorser 
from  whom  it  was  received.  Sometimes  it  sends  notices  not 
only  to  him,  l)ut  also  to  the  drawer  and  to  all  the  indorsers, 
addressed  to  their  post-offices,  or  delivered  at  their  places  of 
business,  respectively.  Sometimes  it  encloses  notices  for  all 
the  parties  entitled  thereto  under  one  envelope  in  com^^any 
with  notice  to  tlie  last  indorser,  that  he  may  thus  be  conven- 
iently supplied  with  the  means  of  transmitting  notice  to  the 
successive  indorsers,  and  to  the  drawer,  antecedent  to  him,  if 
such  there  be.  But  liow  far  the  duty  of  the  bank  extends 
in  this  regard,  and  what  it  must  do  to  discharge  itself  of  lia- 
bility is  a  question  upon  which  opinion  has  divided.  The 
weight  of  authority,  however,  is  strongly  to  the  effect,  and 

lie  necessity  for  giving  every  facility  and  inducement  to  such  collections,  the 
serious  drawback  on  those  facilities  and  inducements  that  would  be  occasioned, 
and  the  opportunity  of  fraud  afforded,  if  worthless  paper  deposited  for  collection 
can,  whenever  parties  are  discharged  by  the  blunder  of  a  clerk,  be  saddled  irrev- 
ocably on  responsible  agents,  and  "made  their  own  "  absolutely,  and  without 
allowing  any  defense  or  mitigation  of  damages.  On  the  other  hand,  the  policy 
of  holding  such  agents  to  strict  accountability  is  equally  clear.  Our  whole  system 
of  negotiable  paper  and  its  responsibilities,  formed,  as  it  is,  by  long  experience, 
and  admirably  adjusted  to  the  varied  uses  of  commerce,  rests  upon  the  single 
principle  of  strict  punctuality  in  demands,  presentments  and  notices,  as  well  as 
in  payments.  Now,  the  policy  and  necessity  of  tliat  punctuality  apply  with  the 
same  force  to  the  agent  of  such  paper  that  they  do  to  the  principal.  I  can,  there- 
fore, find  no  sounder  rule  of  damages,  nor  one  better  protecting  and  reconciling 
all  these  claims  of  policy  and  justice,  than  that  pointed  out  by  the  decisions  in  a 
large  class  of  cases  of  agency,  and  by  the  analogy  of  the  measure  of  damages  in 
trover.  In  those  cases  the  presumption  is,  in  the  fust  instance,  to  the  full  nomi- 
nal amount  of  the  loss,  as  it  appears  on  the  face  of  the  transaction  against  the 
agent  Avanting  in  diligence,  or  the  party  guilty  of  the  tortious  conversion.  Thus, 
where  an  agent  or  factor  neglects  to  insure  for  his  principal,  according  to  order, 
he  is  held  responsible  for  the  default  prima  facie,  to  the  total  amount  which  he 
ought  to  have  covered  by  insurance.  But,  at  the  same  time,  he  is  allowed  to  put 
himself  in  the  place  of  the  underwriter,  and  to  prove  fraud,  deviation,  or  any 
other  defense  which  would  have  been  good,  had  the  insurance  been  made,  or 
which  would  go  to  show  that  nothing  at  all,  or  how  much,  was  actually  lost  by 
the  neglect.  Delancy  v.  Stoddart,  1  T.  R.  23;  Wallace  v.  Tellfair,  2  Id.  188; 
Webster  v.  De  Tastat,  7  Id.  757.  In  the  courts  of  this  State,  Rundle  v.  Moore,  3 
Johns.  Cas.  36.  And  in  the  courts  of  the  United  States,  Morris  v.  Summeril,  2 
Wash,  R.  203.     See  also  1  Phil,  on  Ins.  521,  and  the  cases  there  cited." 


RIGHTS   AND   DUTIES   OF   COLLECTING   AGENTS.  271 

the  law  may  be  assumed  to  be,  that  it  is  only  necessary  for 
the  bank  to  notify  its  immediate  predecessor,  that  is,  the  party 
from  whom  it  received  the  paper,  no  matter  what  may  be 
the  nature  of  the  title  or  interest  of  that  party  to  or  in  it.^ 
But  special  circumstances  may  vary  this  general  jorinciple. 
Thus  an  agreement  between  the  bank  and  its  principal  may 
vary  it.*^  So  also  may  a  usage  of  the  collecting  bank.^  And 
a  local  usage,  as  in  the  city  of  New  York,  for  the  collecting 
bank  to  notify  all  parties  entitled  to  notice  would  undoubt- 
edly be  respected  and  enforced/ 

§  332.  Li  respect  to  a  cliech  pvt  in  haiih  for  collection 
from  another  bank  located  in  the  same  place,  the  collecting 
bank  may  present  it  for  payment  at  any  time  before  the  close 
of  banking  hours  on  the  business  day  next  following  that  on 
which  it  comes  into  possession  of  the  check.^  The  holder  of 
the  check,  ^vhether  he  be  the  payee,  or  an  indorsee,  is  obliged 
to  present  it  within  a  like  time  from  the  day  of  its  date,  in 
order  to  escape  all  contingency  of  loss ;  and  if  on  the  day 
after  it  is  drawn  he  places  it  in  another  bank  for  collection, 
instead  of  presenting  it  at  the  counter  of  the  drawee  bank 
for  payment,  he  takes  the  peril  of  loss  upon  himself  without 
recourse  against  the  drawer,  should  the  drawee  bank  fail  in 
the  mean  time ;  and  without  recourse  against  the  collecting 
bank  by  reason  of  its  not  presenting  the  check  until  a  day 
later.^ 


'  Phipps  V.  Milbury  Bank,  8  Mete.  79;  Bank  U.  S.  v.  Godd<ard,  5  Mason,  3G6; 
State  Bank  v.  Bank  of  the  Capitol,  41  Barb.  343;  Spencer  v.  Ballon,  18  N.  Y. 
327 ;  Mead  v.  Engs,  5  Cow.  303 ;  Howard  v.  Ives,  1  Hill,  263 ;  Farmers'  Bank  t. 
Vail,  21  N.  Y.  485;  Bank  of  Mobile  v.  Huggins,  3  Ala.  K  S.  206;  Branch  Bank 
V.  Knox,  Id. 

"  State  Bank  v.  Bank  of  the  Capitol,  41  Barb.  343,  where  notiflcation  to  a 
part  only  of  the  indorsers  was  held  evidence  going  to  show  an  agreement  to  no- 
tify all. 

^  Morse  on  Banking,  340. 

*  Sniedes  v.  Bank  of  Utica,  30  Johns,  372;  3  Cow.  662. 

'  Boddington  v.  Schlencker,  4  B.  &  Ad.  752;  1  Nev.  &  M.  540;  Alexander  v. 
Burchfield,  Car.  «i  M.  75;  3  Scott  N.  R.  555;  7  Man.  &  G.  1061;  Moule  v. 
Brown,  4  Bing.  K  C.  260;  5  Scott,  694;  Hare  v.  Henty,  10  C.  B.  N.  S.  65;  Rick- 
ford  v.  Ridge,  2  Camp.  537.     See  Vol.  II,  Chapter  XLIX,  on  Checks. 

•  Morse  on  Banking,  324;  Moule  v.  Brown,  4  Bing.  N.  C.  266  (33  E.  C.  L.  R.~) 


272  AGENTS  FOK  NEGOTIATION  OR  COLLECTION. 

§  333.  Whe?i  collecting  hank  hound  to  pay  amount. — The 
collecting  bank  is  not  boiuul  to  pay  the  amount  of  a  bill, 
note  or  check  placed  in  its  hands  for  collection  to  the  holder, 
until  such  amount  is  received,  or  would  be  received  but  for 
the  default  of  itself  or  some  agent  for  whose  act  it  is  respon- 
sible. It  is  frequently  the  case  that  for  the  accommodation 
of  customers  they  are  permitted  to  draw  before,  and  in  antici- 
pation of  the  reception  of  such  amounts.  But  this  habit  is 
mere  favor,  and,  though  long  continued,  gives  the  customer 
no  right  to  demand  that  it  be  done  in  any  particular  case.^ 
And  although  a  bank,  according  to  its  custom,  put  to  its  cus- 
tomer's credit  the  amount  of  a  bill  deposited  for  collection^ 
deducting  the  proper  discount,  and  he  was  thereafter  entitled 
to  draw  upon  it,  it  has  been  held  in  England  that  upon  a 
subsequent  failure  of  the  bank  before  collection,  the  customer 
could  recover  the  bills  specifically,  no  title  to  the  bank  hav- 
ing passed ;  or  that  he  could  recover  the  amount  from  the 
assio-nees  if  the  collection  had  been  made.'^ 

o 

§  334.  As  soon  as  the  bank  collects  the  money,  it  becomes 
the  debtor  of  the  depositor  of  the  instrument  for  collection — 
especially  if  it  places  the  amount  with  its  other  funds,  and 
uses  it  as  its  own,  although  it  be  credited  on  the  account  of 
such  depositor,*^  and  although  instructed  to  hold  it  subject  to 
his  order,  which  the  very  deposit  itself  would  imply.*  And 
if  it  receive,  by  the  depositor's  instructions,  the  amount  of 
the  instrument  in  sj)ecific  bank  bills,  which  are  at  the  time 
depreciated,  any  subsequent  depreciation  will  be  at  the  risk 
of  the  bank  if  it  uses  them  as  its  own,  instead  of  holding 
them  as  a  bailment.^  But  the  depreciation  of  the  currency 
of  payment  at  the  time  of  payment  would  be  the  depositor's 
loss.^ 

'  Scott  V.  Ocean  Bank,  23  N.  Y.  289;  Morse  on  Banking,  365. 
^  Giles  V.  Perkins,  9  East,  13. 

=  Marine  Bank  v.  Fulton  Bank,  2  Wall.  253;  Bank  U.  S.  v.   Bank  of  Ga.  10 
Wheat  333;  Wallace  v.  McConnell,  13  Pet.  136;  Levy  v.  Bank  U.  S.  4  Dall.  234. 

*  Marine  Bank  v.  Fulton  Bank,  2  Wall.  253. 
''Id. 

*  Marine  Bank  v.  Fulton  Bank,  supra  ;  Morse  on  Banking,  3G9. 


RIGHTS  A^D  DUTIES  OF  COLLECTING  AGENTS.  27;> 

§  335.  Carrency  to  he  Collected. — Without  special  au- 
thority, a  bank  or^other  agent  for  collection  can  only  receive 
payment  of  the  debt  due  the  principal  in  the  legal  currency 
of  the  country,  or  in  bills  which  pass  as  money  at  their  \)^v 
value  by  the  common  consent  of  the  community;  and  such 
bank  or  agent  will  not  be  authorized  by  the  circumstance 
that  they  were  the  principal  currency  in  which  the  ordinary 
transactions  of  business  were  conducted  to  receive  depreciated 
bank  bills  or  other  depreciated  bills  issued  as  a  circulating 
medium.^  Clearly  an  agent  for  collection  would  have  no  im- 
plied authority  to  receive  payment  in  goods ;  and  the  party 
bound  for  payment  is  chargeable  with  notice  of  the  agent's 
authority.-^  The  collecting  agent  has  no  right  to  accept  certi- 
fication of  a  check,  instead  of  payment.  By  doing  so  he 
assumes  the  risk  of  payment,  and  becomes  liable  to  the  owner 
for  the  amount  of  the  check  with  interest  from  the  day  of 
certification.  The  law  presumes  damages  to  the  owner  of 
the  check  in  such  a  case,  and  it  is  unnecessary  to  prove  them.^ 


'  Ward  V.  Smith,  7  Wall.  447;  Alley  v.  Rogers,  19  Grat.  366  (18G9),  in  which 
case  Moncure,  J.,  said :  "  In  regard  to  notes  deposited  in  a  bank  for  collection 
during  the  war,  when  Confederate  money  was  the  only  currency,  they  might 
properly  have  been  paid  in  such  money,  at  least  without  notice  that  other  money 
was  demanded.  To  have  made  such  a  deposit  without  such  a  notice  could  have 
been  for  no  other  purpose  and  with  no  other  expectation  than  to  get  Confederate 
money.  In  regard  to  notes  payable  at  bank  before  the  war,  deposited  for  collec- 
tion and  protested  for  non-payment,  but  neglected  to  be  withdrawn  from  bank 
by  the  owner  residing  in  this  State,  it  might  be  very  questionable  whether,  after 
the  lapse  of  two  or  three  years,  the  bank  would  have  authority  to  receive  payment 
of  such  notes  in  a  currency  which  came  into  existence  after  the  protest  of  the 
note,  and  which,  at  the  time  of  such  payment,  had  depreciated  in  value  as  twelve 
to  one  compared  with  specie,  in  which  payment  might  legally  be  demanded ;  or 
whether  the  debtor,  having  notice  of  the  facts,  could  make  a  valid  payment  of 
the  note  in  such  a  currency  and  under  such  circumstances."  But  in  this  case  the 
notes  were  payable  to  a  resident  of  the  State  of  Kentucky,  who  had  deposited 
them  at  the  bank  before  the  war,  and  it  was  held  that  to  receive  payment  in  Con- 
federate currency  under  these  circumstances  was  not  authorized  in  the  bank,  and 
did  not  release  the  debtor. 

"  Mudgett  V.  Day,  13  Cal.  139. 

'  Esses  Co.  Nat.  Bank  v.  Bank  of  Montreal.  7  Bissell,  193. 
Vol.  I.— 18 


274  AGENTS  FOR  NEGOTIATION  OR  COLLECTION. 

SECTION  III. 

THE    MA>'NER   OF    PLACING    COMMERCIAL    PAPER    IN    BANK    FOR    COLLEC- 
TION,   AND   THE    RIGHTS    OF   THE   COLLECTING   BANK. 

§  330.  As  to  the  manner  of  placing  a  bill,  note  or  check 
in  bank  for  collection,  it  is  always  better  to  indorse  it  spe- 
cially to  the  bank,  with  the  restrictive  words,  "  for  collection," 
superadded.  Those  Avords  evince  a  clear  indication  that  the 
indorser  does  not  intend  to  bind  himself  by  his  indorsement, 
or  to  part  with  his  legal  title  to  the  proceeds  of  collection. 
They  prevent  the  danger  which  would  arise  from  the  loss  or 
misappropriation  of  the  paper  if  it  were  indorsed  in  blank. 
And  by  showing  that  the  indorser  only  constitutes  the  bank 
his  agent  for  collection,  it  forestalls  any  difficulty  in  account- 
ing between  subsequent  banks.^ 

§  337.  Miglits  between  Banks. — The  importance  of  this 
precaution  is  often  exhibited  where  one  bank  claims  a  lien 
upon  the  securities,  really  or  ostensibly  another's,  for  balances 
or  advancements.  As  a  general  rule,  a  bank  has  a  general 
lien  on  all  securities  in  its  hands  belonging  to  a  customer  for 
the  general  balance  due  from  the  latter  ;'^  and  if  the  bank  A., 
which  receives  a  note  indorsed  in  blank  by  the  holder  H.  for 
collection,  transmits  it  to  bank  B.,  which  has  a  general 
balance  against  bank  A.,  the  question  arises  whether  or  not 
it  may  apply  the  proceeds  of  the  note  to  the  discharge  of 
such  balance  as  against  H.,  its  actual  holder  and  owner. 
Clearly,  if  the  bank  B.  knew  the  fact  that  the  bank  A.  was 
not  the  real  owner  of  the  note,  it  could  not  do  so ;  ^  and  we 
think  that  the  question  simply  resolves  itself  into  the  inquiry 
whether  or  not  the  bank  B.  can  be  regarded  as  a  hona  fide 

'  Sweeney  v.  Easter,  1  Wall.  173  (1863);  Cecil  Bank  v.  Farmers'  Bank,  22 
Md.  148. 

'  Davis  V.  Bowslior,  5  T.  R.  488;  Bank  of  Metropolis  v.  New  England  Bank, 
1  How.  239;  Van  Aniee  v.  Bank  of  Troy,  8  Barb.  315. 

^  Van  Anice  v.  Bank  of'lroy,  8  Barb.  315  (1850);  Bank  of  Metropolis  v.  New 
England  Bank,  6  IIow.  227  (1848). 


PLACING  COMMERCIAL  PAPER  IN  BANK  FOR  COLLECTION.   275 

holder  of  tlis  note  without  notice  of  any  defect  of  title — or 
at  least  is  to  be  decided  by  exactly  the  same  principles  that 
apply  to  the  rights  of  such  a  holder. 

§  338.  The  United  States  Supreme  Court  has  stated  the 
doctrine  with  admirable  clearness,  that  if  the  B.  bank,  act- 
ually in  possession  of  the  proceeds  of  collection,  had  regarded 
and  treated  the  A.  bank  as  the  owner  of  the  paper  trans- 
mitted, it  would  be  entitled  to  retain  such  proceeds  as  against 
the  I'eal  owners,  provided  tliat  upon  the  credit  of  such  remit- 
tances, made  or  anticipated  in  the  usual  course  of  dealing 
between  them,  balances  had  been  suffered  to  remain  in  the 
hands  of  the  A.  bank  to  be  met  by  the  proceeds  of  such 
pa2")er.^  In  other  words,  that  the  B.  bank  could  retain  the 
funds  whenever  they  could  be  regarded  applied  by  agree- 
ment to  the  j^ayment  of  the  pre-existing  debt;  and  that  the 
paper  being  received  under  a  blank  indorsement  would  be 
evidence  of  title  in  the  A.  bank,  and  its  transmission  to  the 
B.  bank  as  evidence  of  application  to  such  debt,  when  the 
course  of  dealino;  between  the  two  authorized  such  inference. 

§  339.  In  New  York  the  opposite  doctrine  is  followed, 
but  mainly  upon  the  ground  peculiar  to  the  decisions  of  that 
State,  that  receiving  negotiable  paper  in  payment  of,  or  as 
security  for,  an  antecedent  debt,  is  not  such  a  valuable  con- 
sideration as  to  constitute  the  holder  a  holder  for  value ;  and 
that  the  case  is  not  altered  by  a  long  course  of  dealings  be- 
tween the  parties,  by  which  the  bank  claiming  to  retain  the 
proceeds  has  been  in  the  habit  of  receiving  payment  of  bal- 
ances due  in  notes,  or  has  omitted  to  collect  a  balance  by 
reason  of  an  expectation  or  promise  of  payment  of  it  in 
notes,  or  in  consequence  of  the  omission  to  collect  it  after 
taking  such  a  note  in  payment.^     And  it  is  there  held  that 

'  Bank  of  Metropolis  v.  New  England  Bank,  (J  How.  237  (1848),  Tanej',  C.  J., 
explaining  and  confirming  same  case  in  1  How.  234  (1843). 

•'  McBride  v.  Farmers'  Bank,  2G  N.  Y.  454  (1863),  Balcom  J. ;  Van  Amec  v. 
Bank  of  Troy,  8  Barb.  323  (1850),  Hand,  J.;  Commercial  Bank  of  Clyde  v.  Ma- 
rine Bank,  1  Abb.  405  (1867),  Court  of  Appeals  decisions;  Lindauer  v.  Fourth 
Nat.  Bank,  55  Barb.  75  (1869) ;  Dod  v.  Fourth  Nat.  Bank,  59  Barb.  2Qo  (1871). 


276  AGENTS  FOR  NEGOTIATION   OR  COLLECTION. 

it  is  only  where,  by  express  contracts  or  well  established 
course  of  dealing,  the  correspondent  becomes  responsible  for 
the  collection,  and  cannot  seek  reimbursement  for  advances,, 
in  case  of  non-payment  of  the  paper,  that  he  can  retain  it  or 
the  proceeds  of  collection,  as  against  the  real  owner,  the  mere 
giving  credit  for  the  amount  not  being  sufficient.^  And  in 
Connecticut,  it  has  been  denied  altogether  that  the  custom 
of  transmitting  bills  for  collection  from  one  bank  to  another^ 
and  crediting  in  account  the  avails  to  over-balances  due,  can 
affect  the  claims  of  the  actual  owner,  on  the  ground  that  a 
usage  between  the  banks  could  not  deprive  a  third  person  of 
his  rights.^ 

§  340.  But  the  views  of  the  United  States  Supreme  Court 
seem  to  us  to  embody  the  true  logic  of  the  question.  The 
bank  transmitting  the  paper  indorsed  in  blank  is  ostensibly 
its  owner.  It  has  agreed,  by  implied  contract  arising  from 
usage,  that  the  avails  shall  be  applied  to  balances  against  it, 
"With  this  understanding,  its  correspondent  undertakes  the 
collection  and  applies  the  avails.  And  then,  when  this  con- 
tract has  been  executed,  it  would  seem  to  be  in  contravention 
of  the  universally  recognized  principles  which  control  the 
negotiation  of  commercial  paper,  to  permit  a  third  party,  who 
had  declared  by  his  form  of  indorsement  that  he  had  ])arted 
with  title,  to  come  in  and  assert  it.  If  he  chooses  not  to  adopt 
the  well-known  form  of  indorsement — "  for  collection  " — he 
should  not  be  permitted  to  deny,  against  the  bank  which  has. 
collected  the  paper,  the  legal  effect  of  that  form  of  indorse- 
ment which  he  chose  to  adopt.^ 

'  Dickerson  v.  Wason,  47  N.  Y.  439  (1872) ;  reversing  54  Barb.  2C0  (18G9) ; 
Dod  V.  Fourth  Nat.  Bank,  59  Barb.  275  (1871). 

"  Lawrence  v.  Stonington  Bank,  G  Conn.  529,  Ilosmer,  C.  J.  (1827). 

'  In  Bank  of  Washington  v.  Triplett,  1  Pet.  30  (1828),  Marshall,  C.  J.,  used 
language  which  militates  against  this  view.  But  the  cases  referred  to  supra  are 
8\ibscqueut,  and  may  be  regarded  as  overruling  the  above  case  pro  tanto.  He 
said:  ''The  custom  to  indorse  a  bill  put  in  bank  for  collection  is  universal;  and 
the  Bank  of  Washington  had  no  more  reason  to  suppose  that  Triplett  &  Nealcs 
(the  payees  and  indorsers)  had  ceased  to  be  the  real  holders  from  their  indorse- 
ment, than  for  supposing  that  the  cashier  of  the  Bank  of  Washington  had  become 


now   FAR   BANK   LIABLE   FOR   DEFAULT   OF   NOTARY.      2/7 

SECTION  lY. 

HOW    FAR   BANK    LIABLE    FOR   DEFAULT   OF   NOTARY,    SUBAGENT    OR    COR- 
RESPONDENT   BANK. 

§  341.  What  is  the  extent  of  the  duty  and  responsibility 
of  the  collecting  bank  in  taking  the  steps  necessary  to  collec- 
tion, or  fixing  the  parties'  liabilities,  is  a  question  of  difficulty. 
How  far  it  is  liable  for  the  neglect  or  default  of  the  notary 
which  it  employs  to  perform  notarial  functions  ?  or  of  the 
subagent  or  corresponding  bank  to  which  it  may  confide  the 
paper?  Thus,  suppose  A.,  residing  in  Richmond,  Virginia, 
holds  a  note  payable  in  New  York,  and  deposits  it  in  "  The 
State  Bank  "  at  Richmond  for  collection,  the  bank  in  Rich- 
mond forwards  it  to  the  "  First  National -Bank  "  in  New  York 
city,  which  is  its  correspondent,  and  the  latter  places  it  in  the 
hands  of  a  notary  public,  to  make  demand  and  protest,  and 
to  forward  notice  to  the  indorsers.  The  question  arises,  then, 
■whether  the  "  State  Bank  "  of  Richmond  has  fully  discharged 
its  duty,  and  absolved  itself  from  all  farther  liability  by  the 
due  transmission  of  the  note  in  its  course  for  collection. 

There  are  sev^eral  classes  of  cases  in  which  the  courts 
have  pronounced  different  views  of  this  question. 

The  first  class  maintains  the  absolute  liability  of  the  bank 
for  any  negligence  or  default  of  the  notary,  agent  or  corre- 
spondent, as  well  as  of  its  own  immediate  serv^ants,  regarding 
it,  by  the  act  of  undertaking  the  collection,  as  obligating  itself 
to  see  that  every  proper  measure  is  taken,  and  not  inquiring 
whether  it  has  itself  been  guilty  of  any  negligence  or  not,  or 
whether  the  parties  reside  at  the  place  of  its  location  or  not. 
This  doctrine  has  become  firmly  established  in  the  jurispru- 
dence of  New  York,  the  leading  case  of  Allen  v.  Merchants' 
Bank,  decided  by  the  Court  of  Errors,  having  been  followed 
by  numerous  others,  and.  the  question  being  considered  there 
as  res  adjudicata} 

the  real  holder  by  the  indorsement  to  him."  The  view  that  the  indorsement  in 
Llanl:  puts  the  bank  on  inquiry  is  also  taken  in  Van  Amee  v.  Bank  of  Troy,  8 
Barb.  322. 

'  Allen  V.  Merchants'  Bank,  22  Wend.  215,  overruUng  s.  c.  15  Wend.  4S2 ; 


278  AGEKTS  FOR  NEGOTIATION   OR  COLLECTION. 

The  second  class  of  cases  requires  the  bank  to  prove  that 
it  exercised  due  care  and  diligence  in  selecting  a  competent 
and  trustworthy  notary,  agent  or  correspondent.  This  much 
is  perfectly  agreed,  but  these  cases  hold  it  sufficient,  and  ex- 
onerate the  bank  from  all  liability  beyond  making  such  a 
selection. 

There  is  implied  authority,  in  the  deposit  for  collection, 
to  employ  a  subagent,  as  they  hold,  and  such  subagent  is 
really  the  agent  of  the  holder,  and  not  of  the  l)ank,  which  is 
only  bound  to  act  judiciously  in  selecting  him.^ 

A  third  class  of  cases  holds  that  where  a  bank  receives  a 
bill  or  note  for  collection  against  a  drawer  or  maker,  resident 
at  the  place  of  the  bafik,  or  where  the  bank  undertakes  for  its 
collection  by  their  own  officers,  there  can  be  no  doubt  that  it 
would  be  liable  for  any  loss  that  might  result  from  neglect. 
But  they  consider  that  where  such  an  instrument  is  received 
for  collection  at  a  point  distant  from  the  location  of  the  bank, 
the  bank  discharges  its  duty  by  sending  it  in  due  season  to  a 
competent,  reliable  agent,  with  proper  instructions.^ 


Walker  V.  Bank  of  N.  Y.  5  Seld.  582;  Ayrault  v.  Pacific  Bank,  47  N.  Y.  573» 
Allen,  J.,  saying:  ''A  bank  receiving  a  bill  or  promissory  note  for  collection, 
"wlicther  payable  at  its  counter  or  elsewhere,  is  liable  for  any  neglect  of  duty 
occurring  in  its  collection  by  which  any  of  the  parties  are  discharged,  whether 
of  the  officers  and  immediate  servants,  or  other  agents  of  the  bank,  or  its  corre- 
spondents, or  agents  employed  by  such  correspondents.  If  the  bank  employs  a 
notary  to  present  a  promissory  note  for  payment,  and  give  the  proper  notices  to 
charge  the  parties,  the  notary  is  the  agent  of  the  bank,  and  not  of  the  depositor 
or  owner  of  the  paper,  A  notary  is  not  necessarily  employed,  as  the  service  can 
be  performed  by  any  clerk  or  other  servant  of  the  bank.  This  general  liability 
may  be  varied  by  express  contract  or  by  implication  arising  from  general  usage." 
Montgomery  County  Bank  v.  Albany  City  Bank,  3  Seld.  459  (1852);  Commercial 
Bank  of  Penn.  v.  Union  Bank,  1  Kern.  211  (1854);  Donner  v.  Madison  County 
Bank,  G  Hill,  G48;  Reeves  v.  State  Bank,  8  Ohio  St.  465;  Hyde  v.  First  Nat. 
Bank,  7  Bissell,  15G. 

'  Stacy  V.  Dane  County  Bank,  12  Wis.  629;  Bellemire  v.  Bank  U.  S.  4  Whart. 
105;  Baldwin  v.  Bank  of  La.  1  La.  Ann.  R.  13;  Hyde  v.  Planters'  Bank,  17  La. 
566;  Frazier  v.  Gas  Bank,  2  Rob.  206;  Warren  Bank  v.  Suffolk  Bank,  10  Cush. 
582;  see  also  Jackson  v.  Union  Bank,  6  Har.  &  J.  140,  which  is  an  interesting 
case;  1  Parsons  N.  &  B.  480. 

^  Dorchester,  &c.  Bank  v.  New  England  Bank,  1  Cush.  186;  Fabens  v.  Mer- 
cantile Bank,  23  Pick.  330.    'ihe  Court  saying:     "  It  is  well  settled  that  when  a 


HOW  FAR  BANK  LIABLE  FOR  DEFAULT  OF  NOTARY.      279 

§  342.  Tlie  cases  whicli  hold  tlie  bank  absolutely  liable 
for  any  laches  or  negligence,  whereby  the  holder  of  the 
paper  suffers  loss,  commend  themselves  to  our  approbation. 
Any  other  rule  opens  the  door  to  carelessness  in  the  conduct 
of  banking  business,  which  should  be  conducted  with  every 
safeguard  to  the  customer  who  intrusts  his  interests  to  the 
keeping  of  such  agents.  If  they  are  averse  to  dealing  with 
distant  and  imknown  parties,  they  should  decline  under- 
taking the  collection  or  handling  of  the  paper ;  and  if  they 
assume  it,  they  shoukl  do  so  for  sufficient  compensation,  and 
be  held  responsible.  If  unwilling  to  take  charge  of  the 
collection  under  this  implied  understanding,  they  should 
insist  on  a  special  contract,  or  refuse  it.  General  usage 
might  vary  this  liability,  but  the  mere  practice  of  banks 
for  their  own  convenience  would  raise  no  implication  of  such 
usage.^ 

§  3i3.  In  a  number  of  cases  where  a  notary  public  was 
employed  to  make  demand  and  protest,  or  give  notice,  stress 
has  been  laid  upon  the  circumstance  that  such  an  officer  is 
an  agent  provided  by  law,  and  holding  a  governmental  com- 
mission to  perform  these  functions,  and  that  the  bank  has 
a  right  prima  facie  to  repose  a  confidence  in  his  official 
character,  which  it  could  not,  save  upon  its  own  responsibil- 
ity, repose  in  an  unofficial  employee.^  Professor  Parsons, 
taking  this  view,  compares  the  notary  to  the  "  mail  service."  ^ 

note  is  deposited  with  a  bank  for  collection,  which  is  payable  at  another  place, 
the  whole  duty  of  tlic  bank  so  receiving::  the  note,  in  the  first  instance,  is  season- 
ably to  transmit  the  same  to  a  suitable  bank  or  other  agent  at  the  place  of  pay- 
ment. And  as  a  part  of  tiie  same  ck)ctrine,  it  is  well  settled  that,  if  tlie  acceptor 
of  a  bill  or  promisor  of  a  note  has  his  residence  in  another  place,  it  shall  be  pre- 
sumed to  have  been  intended  and  understood  between  the  depositor  for  collec- 
tion and  the  bank  that  it  was  to  be  transmitted  to  the  place  of  the  residence  of 
the  promisor."  East  Haddam  Bank  v.  SaviU,  12  Conn.  303  ;  Etna  Ins.  Co.  v. 
Alton  City  Bank,  12  Conn.  303;  Daly  v.  Butchers'  &  Drovers'  Bank,  5G  Mo.  9-4. 

'  Ayrault  v.  Pacific  Bank,  47  N.  Y.  570. 

"  Baldwin  v.  Bank  of  La.  1  La.  Ann  K.  13;  Bellmire  v.  Bank  U.  S.  4  Wiiart. 
105;  Bank  of  Mobile  v.  Huggins,  3  Ala.  206;  Tiernan  v.  Commercial  Bank.  7 
How.  (Miss.)  618;  Agricultural  Bank  \\  Commercial  Bank,  7  S.  &  M.  592;  Stacy 
V.  Dane  County  Bank,  12  Wis.  629. 

=  1  Parsons  N.  &  B.  480. 


280  AGENTS  FOR  NEGOTIATION  OR  COLLECTION. 

Thus,  in  Mississippi,  it  has  been  lield  that  a  notary  was  to 
be  regarded  frima  facie  as  a  competent  and  suitable  person 
to  intrust  with  such  duties  ;  but  if  the  plaintiff  proved  that 
he  was  not  a  competent  and  faithful  person,  by  reason  of  his 
intemperate  hal)its  when  the  note  was  delivered  to  liim,  tlie 
bank  which  committed  it  to  him  was  liable  for  any  negli- 
gence or  default  on  his  part  from  which  damage  resulted.^ 
But,  in  a  subsequent  case,  it  was  held,  in  the  same  State, 
that  it  was  not  sufficient  proof  of  a  notary's  unfitness  to 
show  that  he  was  a  man  of  habitually  dissipated  character, 
but  that  it  must  be  shown  "that  he  was  drunk  at  the  time 
he  took  the  note."  ^ 

But  if  the  notary  is  so  employed  by  the  bank  as  to  be- 
come its  own  officer,  like  its  cashier  or  teller,  the  bank  is 
liable  for  all  his  defimlts,  because  he  is  placed  on  the  same 
footing  as  its  regular  bank  officials,  and  acts  in  discharge  of 
certain  allotted  functions.  Thus,  in  Missouri,  where  any 
private  individual  is  allowed  to  perform  all  notarial  du- 
ties, and  a  bank  appointed  a  person  to  be  its  notary  for  one 
year,  and  required  a  bond  from  him,  it  was  held  that  he  was 
an  officer  of  the  bank,  for  whose  defaults  in  the  line  of  his 
employment  the  bank  was  liable.^ 

SECTION  V. 

KEMEDY    OF    THE    HOLDEE    AGAINST    COLLECTING-    AGENT. 

§  344.  The  authorities  differ  greatly  as  to  the  remedy  of 
the  holder  and  owner  of  a  bill  or  note,  when  one  of  a  series 
of  banks  through  which  it  passes  in  the  course  of  collection, 
or  the  notary  employed  to  make  presentment  or  protest,  has 
committed  a  default  wliereby  loss  has  ensued.  One  class  of 
cases  holds  that  only  the  first  bank  which  receiyed  the  paper 
for  collection  is  liable  to  the  holder,  the  contract  for  collec- 

'  Agricultural  Bank  v.  Commercial  Bank,  7  IIow.  (Miss.)  648. 

'  Bowling  V.  Arthur,  o4  Miss.  41. 

'  Gerhardt  v.  Boatman's  Savings  Inst.  38  ilo.  60. 


REMEDY   OF   HOLDER  AGAINST  COLLECTING  AGENT.       281 

tion  being  between  Lim  and  it,  and  it  alone  being  his  agent/ 
Another  chass  of  cases  holds  that  the  holder  can  sue  only 
the  bank  or  the  notary  which  committed  the  default,  such 
bank  or  notary  being  the  agent  of  the  owner,  selected  for 
him  by  the  bank  which  received  the  paper  for  collection, 
under  implied  authority  from  the  holder  to  do  so.^  And 
still  anotlier  doctrine  has  been  declared  that  the  holder  has 
an  election  as  to  the  remedy,  and  may  resort  to  either  party 
— the  first  bank  employed  to  collect  the  paper,  or  the  one 
to  whom  it  was  transmitted,  and  which  actually  does  the  act 
of  default  complained  of.* 

§  345.  A  distinction  has  been  taken  which,  though  fine, 
seems  reasonable,  between  cases  in  which  the  paper  is  put 
in  bank  "  for  collection,"  and  those  in  which  it  is  there 
placed  to  be  "  transmitted  for  collection."  And  it  has  been 
held  that,  in  the  latter  case,  the  first  bank  performs  its  whole 
duty,  and  discharges  itself  from  further  liability,  by  trans- 

'  Montgomery  County  Bank  v.  Albany  City  Bank,  3  Seld.  459  (1852),  case  in 
point;  Commercial  Bank  v.  Union  Bank,  1  Kern.  212  (1854).  [These  cases  over- 
rule Bank  of  Orleans  v.  Smith,  3  Hill,  500  (1842)].  See  McBiide  v.  Farmer's 
Bank,  26  N.  Y.  450;  Hyde  v.  First  National  Bank,  7  Bissell,  156.  Hopkins,  J., 
saying:  "It  follows  that  the  owner  is  to  look  to  his  immediate  contractor,  and 
has  no  remedy  against  the  under-contractor  or  agent  employed  by  the  bank ;  that 
such  agents  or  contractors  have  no  privity  of  contract  with  the  owner,  and  are 
not  liable  to  him,  but  are  only  liable  to  the  party  immediately  employing  them  ; 
in  short,  that  the  subagent  employed  by  the  bank  owes  no  duty  to  the  party  who 
deposited  the  paper  for  collection  with  his  principal,  and  hence  is  not  responsible 
to  him  for  any  damages.  This,  I  understand  to  be  the  effect  and  meaning  of  the 
late  decision  of  the  Supreme  Court  of  the  United  States  in  the  case  of  Hoover, 
Assignee  v.  Wise,  8  Chicago  Legal  News,  193  (1  Otto,  91  U.  S.  308)."  See  also 
Reeves  v.  State  Bank,  8  Ohio  St;  465;  Mackay  v.  Ramsay,  9  Clark  &  Fin.  818. 

"  Farmers'  Bank  of  Va.  v.  Owen,  5  Cranch  C.  C.  504  (1838) ;  see  Mechanics' 
Bank  v.  Earp.  4  Rawle,  386 ;  Bank  of  Washington  v.  Triplett,  1  Pet.  25. 

In  Wilson  v.  Smith,  3  How.  769,  tlie  U.  S.  Supreme  Court,  per  Taney,  C.  J., 
held  that  tiie  subagent  for  collection  might  be  sued  by  the  holder.  Taney,  C.  J., 
said :  "  We  think  the  rule  very  clearly  established,  that  whenever,  by  express 
agreement  between  the  parties,  a  subagent  is  to  be  employed  by  the  agent  to  re- 
ceive money  for  the  principal,  or  where  an  authority  to  do  so  may  be  fairly  im- 
plied from  the  usual  course  of  trade,  the  principal  may  treat  the  subagent  as  his 
agent;  and  where  he  has  received  the  money,  may  recover  it  in  an  action  for 
money  had  and  received." 

'  Bank  of  Orleans  v.  Smith,  3  Hill  (N.  Y.)  503,  Nelson,  C.  J. 


282  AGElfTS  FOR  NEGOTIATION   OR  COLLECTION. 

initting  tlie  paper  duly  in  course  of  collection  ;  ^  while,  in  the 
former,  it  undertakes  to  collect  the  paper,  and  is  absolutely 
bound  if  it  be  not  properly  attended  to,  whatever  agency  it 
may  employ.^  Where  nothing  is  said  upon  the  subject,  and 
the  contract  is  to  be  implied  from  the  mere  act  of  placing 
the  paper  in  the  bank,  we  should  say  that,  by  accepting  it, 
it  undertook  absolutely  its  collection. 

§  346.  If  the  paper  change  ownership  after  being  left  at 
a  bank  for  collection,  it  seems  that  an  action  will  lie  against 
the  bank  for  negligence  by  any  person  who  becomes  bene- 
ficially interested.^ 

§  347.  Instructions  to  the  collecting  bank  or  other  agent, 
given  by  the  holder  in  respect  to  the  method  to  be  pursued 
in  collecting  or  protesting  the  paper,  or  notifying  any  of 
the  parties,  must  be  duly  transmitted ;  and  if  the  bank  fail 
to  do  so,  it  is  bound  for  any  resulting  damage.*  Thus,  where 
bankers  at  St.  Paul,  Minnesota,  received  paper  for  collection 
payable  at  St.  Anthony,  were  informed  that  there  were  two 
persons  of  the  same  name  as  the  indorser,  the  one  residing 
at  St.  Paul,  and  the  other  at  Nininger,  and  that  the  latter 
was  the  indorser  (which  the  note  did  not  state),  they  should 


■  Biink  of  Washington  v.  Triplett,  1  Pet.  28,  30.  The  payees  of  a  bill  in- 
dorsed it  in  blank,  and  delivered  it  to  the  cashier  of  the  Mechanics'  Bank  of 
Alexandria,  "  for  the  purpose  of  being  transmitted  through  the  said  bank  to  a 
bank  in  Washington  for  collection."  The  cashier  indorsed  it  to  the  order  of  the 
Bank  of  Washington,  and  transmitted  it  to  it  for  collection;  and  suit  was 
brought  by  the  holder  against  the  Bank  of  Washington  for  damages,  on  the 
ground  of  negligence  in  failing  to  give  proper  notice  of  non-acceptance.  Marshall, 
C.  J.,  said:  "The  bill  was  not  delivered  to  the  Mechanics'  Bank  of  Alexandria 
for  collection,  but  for  transmission  to  some  bank  in  Washington  to  be  collected. 
'J'hat  bank  would,  of  course,  become  the  agent  of  the  holder.  By  transmitting 
the  bill  as  directed,  tlie  Mechanics'  Bank  performed  its  duty,  and  the  whole  re- 
sponsibility of  collection  devolved  on  the  bank  which  received  the  bill  for  that 
purpose ;  the  Mechanics'  Bank  was  the  mere  channel  through  which  Triplett  and 
Keale  (the  ])ayees)  transmitted  the  bill  to  the  Bank  of  Washington."  See  also, 
Mechanics'  Bank  v.  Earp,   4  Rawle,  386;   Allen  v.  Merchants' Bank,  22  Wend. 

235. 

'  Montgomery  County  Bank  v.  Albany  City  Bank,  3  Seld.  402,  Jewett,  J. 

'  Bank  of  Utica  v.  M'Kinster,  11  Wend.  475. 

*  Borup  v.  Nininger,  5  Minn.  523;  Merchants'  Bank  v.  Stafford  Bank,  44 
Conn.  567. 


REMEDY  OF  HOLDER  AGAINST  COLLECTING   AGENT.       283 

have  transmitted  such  information  to  their  agents  at  St.  An- 
thony, and  failing  therein,  were  liable  in  damages  to  the 
holder  of  the  paper.^ 

§  348.  Collections  are  sometimes  undertaken  by  express 
companies,  and  they  come  then  within  the  rule  laid  down. 
Thus,  whei-e  an  express  company  received  a  draft  for  collec- 
tion, with  instructions  to  return  it  at  once  if  not  paid,  and 
on  demand  of  tlie  drawee,  he  refused  to  pay  until  certain  ex- 
planations were  received  from  the  drawer,  whereupon  the 
company  consented  to  wait  until  the  drawee  could  communi- 
cate with  the  drawer ;  and  he  receiving  satisfactory  explana- 
tions, was  ready  to  pay,  and  so  remained  two  days  without 
renewed  demand  from  the  company,  but  on  the  fourth  day 
(the  third  being  Sunday)  became  insolvent,  the  company  was 
held  liable  to  the  drawer  for  the  loss.^ 

§  349.  When  the  owner  of  a  bill  or  note  sends  it  to  a 
notary  or  correspondent  for  collection,  he  has  a  right  to  an- 
ticipate that  the  maker  or  acceptor  will  honor  his  paper,  and 
it  is  not  incumbent  on  him  to  inform  the  holder  for  collec- 
tion where  notices  shall  be  sent,  in  the  event  of  dishonor  to 
the  drawer  or  indorsers.  The  "due  diligence"  required  by 
law  it  is  incumbent  on  the  holder  for  collection  to  exercise 
by  making  proper  injuries;  and  if  he  is  not  in  defiuilt,  the 
owner  may  recover.^  It  might  be  otherwise  where  the  col- 
lector is  a  raere  servant  of  the  owner,  acting  under  his  super- 
vision.* 


'  Borup  V.  Nininger,  si/pra. 

^  Whitney  v.  Merchants'  Union  Express  Co.  104  Mass.  152. 

'  Bartlett  v.  Isbell,  31  Conn.  297.  *  Bartlett  v.  Isbell,  stcpra. 


CHAPTER  XIL 

PARTNERS    A9    PARTIES    TO    NEGOTIABLE  INSTRUMENTS. 


SECTIOI^    I. 

NATURE   AND   VARIETIES    OF   COPARTNERS  HIP. 

§  350.  A  partnership  exists  whenever  two  or  more  persons 
unite  skill,  labor  or  property  in  an  undertaking,  and  partici- 
pate in  its  profits;  unless  such  participation  in  the  profits  be 
by  way  of  services  as  an  employee  without  interest  in,  or 
control  of,  the  subject-matter,  in  which  case  the  participant 
is  not  a  partner.^  Partners  are  of  several  kinds.  I.  Actual 
and  ostensible.  II.  Secret  or  dormant.  III.  Nominal  or  os- 
tensible.   IV.  General.    V.  Special  or  limited.     VI.  Retired. 

In  the  first  case,  where  the  partner  is  both  actual  and 
ostensible,  there  can  be  no  difiiculty  in  fixing  his  liability, 
which  is  palpable,  although  his  name  may  not  be  expressed 
in  the  style  of  the  firm.  Secret  or  dormant  partners  are  just 
as  liable,  when  they  are  discovered,  as  those  who  are  ostensi- 
ble, because,  participating  as  they  do  in  the  profits,  they  are 
held  equally  liable  for  losses.  But  in  case  of  withdrawal 
from  the  firm,  no  notice  is  necessary,  the  secrecy  of  their  con- 
nection with  it  rendering  it  superfluous.^  And  the  dormant 
partner  who  retires  will  not  therefore  be  bound  on  a  note 
made  in  the  firm  name  after  dissolution.^ 

§  351.  In  an  English  case,  it  was  said  by  Bayley,  B. : 
"  We  are  of  opinion  that  where  a  partnership  name  is  pledged, 
the  partnership,  of  whomsover  it  may  consist,  whether  the 
partners  are  named  in  the  firm  or  not,  and  whether  they  are 

'  Ogden  V.  Astor,  4  Sandf.  311;  Vandenburg  v.  Hall,  20  Wend,  70. 
'  Da\ns  V.  Allen,  3  N.  Y.  1G8;  Magill  v.  Merrie,  5  B.  Mon.  IGS;  Scott  v.  Col. 
misnil,  7  J.  J.  Marsh.  416  ;  1  Parsons  on  Contracts,  143. 
•  Vacarro  v.  Toof,  9  Heiskell,  194. 


NATURE  AND  VARIETIES  OP  COPARTNERSHIP.  285 

known  or  secret  partners,  will  Ijc  bound,  unless  the  conduct 
or  title  of  the  person  who  seeks  to  charge  them  can  be  im- 
peached." ^  Where  a  bill  of  exchange  has  been  drawn,  ac- 
cepted or  indorsed  in  the  name  of  a  firm,  as  for  instance, 
"  Brown,  Robinson  &  Co.,"  without  stating  the  names  of  each 
of  the  partners,  the  holder  may  sue  only  those  known  to  him 
to  be  partners  at  the  time  he  received  the  bill ;  and  though 
he  may,  if  he  pleases,  sue  all  whom  he  discovers  afterward  to 
be  partners,  he  is  not  obliged  to  do  so.'^ 

§  352.  A  mere  nominal  or  ostensible  partner  is  as  much 
bound  by  the  negotiable  paper,  or  other  engagements  of  the 
firm,  as  if  actual;  for  if  he  sutler  himself  to  be  held  out  to 
the  world  as  a  member,  he  authorizes  third  persons  to  regard 
him  as  a  contracting  party.  If  such  partner  desires  to  avoid 
liability,  he  must  give  due  notice  that  he  is  not  an  actual 
partner.^ 

A  general  partnership  is  such  as  exists  by  operation  of 
law  when  two  or  more  persons  combine  in  an  undertaking 
and  share  the  profits,  and  in  which  all  are  jointly  and  sev- 
erally bound  for  all  the  partnership  debts.  A  special  or  lim- 
ited partnership  is  one  in  which  the  special  partner  contrib- 
utes to  the  common  stock  a  specific  sum  in  actual  cash,  and 
is  liable  only  to  that  extent  for  the  debts  of  the  partnership. 
This  privilege  is  granted  by  statute  in  most  of  the  States, 
being  unknown  to  the  common  law,  and  is  accompanied  by 
stringent  conditions.* 

§  353.  When  a  copartner,  who  has  not  been  secret  or 
dormant,  retires  from  a  firm,  he  should  take  immediate  steps 
to  acquaint  all  having  business  connections  with  the  firm  of 
his  retirement,  in  order  that  they  may  be  apprised  that  he  no 
longer  designs  to  be  held  resj^onsible  for  its  transactions. 

Personal  notice  to  those  indebted  to,  or  doing  business 


'  Wiulle  V.  Crowtlier,  1  Tyrw.  215;  1  Cromp.  &  J.  310;  see  ex  parte  Hamper, 
17  Vcs.  403. 

"  Dc  Mantort  v.  Saunders,  1  Bar.  &  Adol.  398. 

'  1  Parsons  N.  &  B.  142,  143;  Davis  v.  Alien,  3  N.  Y.  173. 

*  Edwards  ou  Bills,  106,  107. 


286  PARTNERS  AS  PARTIES  TO  NEGOTIABLE  INSTRUMENTS. 

witli  tlie  firm,  by  circular  letters  addressed  to  them  or  other- 
wise, and  advertisement  in  a  public  journal,  is  the  proper  and 
business-like  way  to  proceed.  And  when  these  steps  are 
taken,  they  are  sufficient  notice  for  the  purpose  of  exonerating 
the  retiring  partner  from  further  liability.^  But  unless  no- 
tice is  brought  home  to  tliose  who  have  regularly  dealt  with 
the  firm,  it  is  insufficient.' 

§  354.  If  a  ]_:>erson  is  a  partner  in  two  jirm%  the  one  firm 
cannot  sue  the  other  at  law,  as  the  names  of  all  the  members, 
whether  appearing  in  the  firm's  name  or  not,  must  be  set 
forth  in  the  declaration,  and  the  same  party  cannot  be  both 
a  plaintiff  and  a  defendant.'  The  remedy  would  be  in  equity. 
In  some  States,  however,  as  in  Pennsylvania,  the  common  law 
has  been  changed  by  statute,  so  that  an  action  will  lie. 

But  this  difficulty  ceases  when  the  instrument  passes  to  a 
third  party,  who  may  sue  both  firms.^  And  when  there  is  a 
good  defense  against  one  of  several  partners,  it  applies  equally 
to  all,  although  the  others  may  have  been  entirely  innocent 
of  complicity  in  the  fraud  of  the  one,  or  have  been  them- 
selves its  victims.^ 

One  member  of  a  firm  may  advance  money  to  another 


•  la  Davis  v.  Allen,  3  N.  Y.  172,  Jewitt,  C.  J.,  says:  "The  general  principle 
is,  that  where  a  person  has  done  business  witli  another,  as  a  member  of  a  tirm, 
or  has  so  publicly  appeared  as  a  partner  as  to  satisfy  a  jury  that  the  plaiutiflF 
must  have  believed  him  to  be  such,  and  lie  suffers  the  plaintiff  to  continue  iu 
and  act  upon  that  bcliel",  by  omitting  to  give  notice  of  his  having  ceased  to  be  a 
partner,  after  he  really  had  ceased,  he  Avill  be  responsible  for  the  consequences 
of  his  original  representation,  uncontradicted  by  a  subsequent  notice.  An  omis- 
sion to  give  such  person  notice,  under  such  circumstances,  of  his  retirement,  is 
held  to  be  equivalent  to  a  continual  representation  that  he  still  remains  a  member 
of  the  firm.  But  in  order  to  render  him  liable  on  this  ground,  it  is  necessary 
that  he  should  have  been  known  as  a  member  of  the  firm  to  the  plaintiff,  either 
by  direct  transactions  or  public  notoriety."     See  Eldwards  on  Bills,  115,  116. 

"Parkin  v.  Carruthers,  3  Esp.  248;  Vernon  v.  Manhattan  Co.  17  Wend.  524. 

'  Pitcher  v.  Barrows,  17  Pick.  361;  Babcock  v.  Stone,  3  McLean,  172;  Main- 
waring  V.  Newman,  2  B.  &  P.  120;  Neale  v.  Turtou,  4  Bing.  149;  Moffat  v. 
Van  Milligan,  2  B.  &  P.  124;  Thomson  on  Bills,  163;  Chitty  on  Bills  [*60],  75. 

"  Pitcher  v.  Barrows,  17  Pick.  30 1 ;  Davis  v.  Briggs,  39  Me.  304. 

'  Richmond  v.  Ileapy,  1  Stark.  204;  Brandon  v.  Scott,  7  E.  &  B.  231  (90  E. 
C.  L.  R.) ;  Aistley  v.  Johnson,  5  H.  «fc  N.  137. 


AUTnORITY  OF  A  COPARTNER  TO   BIND  THE  FIRM.       287 

to  relieve  liim  from  liability  for  debts  of  the  firm,  uiul 
take  his  note  therefor;  and  the  transaction  will  ]je  re- 
garded as  a  private  one  between  the  two  raeml)ers.  The 
other  members,  in  such  case,  are  not  lial)le  to  pay  the  note, 
and  have  nothing  to  do  with  it.^  A  note  of  a  firm  payable 
to  one  of  its  members  is  valid  in  the  hands  of  an  indorsee.^ 


SECTION  II. 

THE    AUTHORITY    OF    A    COPARTNER   TO    BIND   THE    FIRM. 

§  355.  The  general  authority  of  a  partner  to  bind  the 
firm  springs  from  the  mutual  agency  of  the  copartners  for 
each  other ;  and  from  the  course  and  usage  of  the  business 
in  which  they  are  engaged.  It  follows,  tlierefore,  that  a  per- 
son contemplating  partnership  wdth  another  cannot,  without 
a  special  authority,  bind  him  by  a  contract  for  the  proposed 
partnership  benefit — for  example,  for  the  purpose  of  raising 
capital — his  agency  not  commencing  until  the  connection  is 
consummated.^  The  copartnership  being  formed,  the  copart- 
ner can  bind  his  associates  only  in  sucli  transactions  as  per- 
tain to  their  partnership  business;  and  the  copartnership 
business  must  be  of  such  a  character  that  the  giving  of 
negotiable  paper  would  be  the  convenient  and  proper  mode 
of  conducting  it,  in  order  to  create  the  presumption  of  agency 
in  a  copartner  to  give  a  bill  or  note  in  the  firm's  name. 

§  356.  Implied  autlwritij  of  partner  to  hind  the  firm. — It 
results  from  the  very  nature  of  partnership — from  the  very 
fact  that  the  copartners  are  mutual  general  agents  for  each 
other  in  their  copartnership  affairs — that  the  express  assent 
of  one  to  the  act  of  another  within  the  scope  of  their  busi- 
ness is  unnecessary.  The  authority  to  each  partner  is  im- 
plied to  bind  the  firm  within  the  legitimate  scope  of  its  busi- 

'  Chamberlain  v.  Walker,  10  Allen,  429. 

"  Hapgood  V.  Watson,  65  Me.  510. 

»  Greenslade  v.  Dower,  7  B.  »&  C.  G35;  6  L.  J.  (K.  B.  O.  S.)  155. 


288  PARTNERS  AS  PARTIES  TO  NEGOTIABLE  INSTRUMENTS. 

ness  by  the  very  fiict  tlitit  it  is  a  firm,  and  it  has  been  said 
by  Lord  Ellenborough,  C.  J. :  "  It  would  be  a  strange  and 
novel  doctrine  to  liold  it  necessary  for  a  person  receiving  a 
bill  of  exchange  indorsed  by  one  of  several  partners,  to 
know  whether  the  others  assented  to  such  indorsement,  or 
that  it  should  be  void."  ^ 

§  357.  The  borrowing  of  money  and  negotiation  of  bills 
and  notes  being  incidental  to,  and  usual  in,  the  business  of 
copartnerships  formed  for  tlie  purpose  of  trade,  it  follows 
that  when  a  copartner  borrows  money  professedly  for  the 
firm,  and  executes  therefor  a  negotiable  instrument  in  the 
copartnership  name,  it  will  bind  all  the  partners,  whether 
the  borrowing  were  really  for  the  firm  or  not,  and  whether 
he  diverts  and  misapplies  the  funds  or  not,  provided  tlie 
lender  is  not  himself  cognizant  of  the  intended  fraud.  And 
the  burden  will  not  be  thrown  on  him  to  show  that  he  was 
not  cognizant  of  the  fraud,  or  to  prove  value  given  for  the 
paper.'"* 


>  Swan  V.  Steele,  7  East,  210.  In  Fox  v.  Clifton,  6  Bing.  795,  Tmdal,  C.  J., 
said  :  "  By  the  general  rule  of  law  relating  to  partnerships  in  trade,  each  member 
of  it  is  liable  to  the  debts  and  engagements  of  the  whole  company  contracted  in 
the  course  of  the  trade.  This  is  a  consequence  not  confined  to  the  law  of  this 
country,  but  extending  generally  throughout  Europe;  and  it  is  founded,  partly 
on  the  desire  to  favor  commerce,  that  merchants  in  partnership  may  obtain  more 
credit  in  the  world ;  and  more  especially  on  the  principle  that  the  members  of 
trading  partnerships  are  constituted  agents,  the  one  for  the  other,  for  entering 
into  contracts  connected  with  the  business  and  concerns  of  the  partnership,  so 
that  by  the  contracts  of  the  agent  all  his  principals  are  bound.  But  to  subject  a 
person  to  responsibility,  as  a  partner,  for  the  acts  of  another  done  without  his 
express  concurrence,  he  must  stand  in  one  or  other  of  these  two  situations :  first, 
he  must  at  the  time  of  making  the  contract,  whether  bill,  note  or  other  instru- 
ment, have  been  actually  a  partner  in  the  joint  concern;  or,  secondly,  admitting 
that  he  was  not,  he  must  have  represented  or  permitted  himself  to  be  represented 
as  such,  before  or  at  the  time  of  making  the  contract,  either  generally  to  all 
the  world,  or  to  several  individuals,  or  to  the  plaintiff  in  particular,  or  to  some 
person  through  whom  he  claims." 

■'  Ilayward  v.  French,  12  Gray,  453  ;  see  also  Onondaga  County  Bank  v.  De 
Puy,  17  Wend.  47;  U.  S.  Bank  v.  Bonney,  5  Mason,  17G;  Buekner  v.  Lee,  8  Ga. 
285;  Ihmsen  V.  Negley,  1  Casey,  297;  Edwards  on  Bills,  106;  Sedgwick  v. 
Lewis,  70  Penn.  St.  221;  Sherwood  v.  Snow,  40  Iowa,  485;  Whitaker  v.  Brown, 
IG  Wend.  505. 


AUTHORITY  OF  A  COPARTNER  TO  BIND  THE  FIRM.       289 

§  358.  If  there  be  mere  joint  ownersliip,  as  in  the  case 
of  a  ship,  or  only  a  particular  agreement  to  share  in  a  single 
transaction,  or  a  copartnership  in  a  matter  of  business  not 
requiring  the  execution  of  negotiable  paper  as  the  proper, 
usual  and  conv^enient  mode  of  conducting  it,  the  copartners 
will  not  be  impliedly  bound  by  the  act  of  one,  but  must 
give  him  express  authority.^  Thus,  where  a  bill  was  ad- 
dressed to  two  owners  of  a  ship,  as  for  necessaries  furnished 
the  same,  and  one  accepted  in  the  name  of  both,  it  was  de- 
cided that  the  other  was  not  bound  to  a  bona  fide  holder, 
the  bill  having  been  drawn  for  'the  separate  use  of  the  ac- 
ceptor.'' So,  where  there  is  no  partnership  in  trade,  but  an 
agreement  as  to  a  particular  transaction  between  farmers, 
the  acceptance  by  one  of  bills,  without  the  other's  concur- 
rence, will  not  bind  him.^  The  principle  seems  to  be  well 
stated  by  Mr.  Chitty,  who  says:  "The  partnership  must  be 
in  a  trade  or  concern  to  which  the  issuing  or  transfer  of  bills 
is  necessary  or  usual."  ^  The  United  States  Supreme  Court 
has  held  that  a  bill  drawn  by  a  partner  in  the  name  of  a 
firm  engaged  in  farming,  working  a  steam  saw-mill,  and  in 
trading,  was  binding,  because  trading  and  running  the  mill 
required  capital  and  the  use  of  credit ;  but  if  the  firm  had 
been  engaged  in  farming  alone,  no  one  partner  could  have 
bound  it  by  a  bill  or  note.^  It  has  also  been  held  that  partners 
in  mining^  and  gaslight*^  companies  have  no  implied  author- 
ity to  bind  the  firm  as  parties  to  negotiable  instruments. 

Upon  these  principles  one  of  a  law  firm  cannot  bind  it 
by  a  promissory  note  without  consent  of  all  the  members ; ' 

'  Chitty  on  Bills  (13  Am.  ed.)  [*45],  58. 

»  Williams  v.  Thomas,  6  Esp.  IS;  Edwards  on  Bills,  111. 

*  Grecnslade  v.  Dower,  7  B.  &  C.  635 ;  1  Man.  &  Ry.  640. 

*  Chitty  on  Bills  (13  Am.  ed.)  [*45],  58;  see  Thomson  on  Bills,  153. 

*  Kimbro  v.  BuUit,  23  How.  256 ;  see  Greenslade  v.  Dower,  supra. 

*  Dickinson  v.  Valpy,  10  B.  &  C.  128. 

'  Brumah  v.  Roberts,  3  Bing.  N.  C.  96. 

*  Levy  V.  Pyne,  Car.  &  M.  453;  Hedley  v.  Bainbridge,  3  Q.  B.  316  (42  E.  C.  L. 
R);  Marsh  v.  Gold,  2  Pick.  285;  Thomson  on  Bills,  158;  Garland  v.  Jacomb, 
L.  R.  SExch.  218,  6  Moak.  E.  R.  2«9;  Smith  v.  Sloan,  37  Wis.  285. 

Vol.  I.— 19 


290  PARTNERS  AS  PARTIES  TO  >fEGOTIABLE   INSTRUMENTS. 

Dor  can  one  of  a  firm  practicing  medicine  bind  it  in  a  like 
manner  except  for  medicine  and  other  necessaries  of  his  pro- 
fession ;  ^  nor  can  one  of  a  firm  keeping  tavern  bind  bis  co- 
partners except  strictly  within  the  business.'^  It  is  said,  how- 
ever, that  if  the  concerns  were  of  such  vast  magnitude  as  to 
require  large  capital  and  credit,  the  rule  would  be  of  doubt- 
ful application,  and  that  it  would  depend  very  much  upon  the 
usage  of  the  particular  firm  and  others  similarly  engaged.' 
The  general  authority  of  a  partner  to  bind  the  firm  exists 
only  by  implication,  and  may  be  rebutted  by  evidence  that 
the  party  who  took  the  security  had  previous  notice  that  no 
such  authority  existed.* 

§  359.  If  the  firm  receive  and  hold  the  proceeds  of  nego- 
tiable paper,  executed  by  one  of  their  number  in  a  transaction 
not  in  their  business,  the  firm  will  be  considered  as  ratifying 
the  act,  and  will  be  bound  ;  ^  and  this  is  the  rule  whether  the 
paper  be  signed  by  the  partner  in  his  own  name  or  the  firm's ;  ® 
and  likewise  if  they  delay  so  long  after  having  knowledge  of 
the  transaction  as  to  raise  a  presumption  that  they  ratify  and 
adopt  it.  But  if  as  soon  as  the  other  partners  hear  of  the 
transaction  they  repudiate  it,  they  will  not  be  bound.'^ 


SECTION  III. 

FORMAL    SIGNATURE     OF    THE    FIRm's    NAME. 

§  8 GO.  As  to  the  form  of  sujnature  of  the  firm. — The  sig- 
nature of  the  firm  should  be  written  by  the  copartner  in  the 
very  terms  of  the  st}de  of  the  firm.  Or  the  copartner  should 
express  that  he  signs  his  own  name  for  himself  and  his  co- 

'  Crosthwait  v,  Ross,  1  Humph.  23;  Edwards  on  Bills,  102. 
'  Cooke  V.  Branch  Bank,  3  Ala.  175. 
»  1  Parsons  N.  B.  139. 

*  Galhvay  v.  Matthew,  10  East,  264;  King  v.  Faber,  22  Penn.  21. 
'  Richardson  v.  French,  4  Mete.  577;  Clay  v.  Cottrell,18  Penn.  408;  Whitaker 
V.  Brown,  IG  Wend.  505. 

'  Hardeman  v.  Bank  of  Middletown,  28  Penn.  440. 
'  Foster  v.  Andrews,  2  Penn.  160. 


FORMAL   SIGNATURE  OF  THE  FIRM'S  NAME.  291 

partners,  or  should  write  out  the  names  of  the  firm.  The 
best  way  is  to  write  simply  the  firm's  name,  and,  it*  he 
pleases,  with  the  addition  "  by  A.  B.,"  that  being  the  name 
of  the  signing  member.  Certainly,  it  should  distinctly  ap- 
pear that  the  signature  is  intended  to  bind  the  firm,  and 
(except  in  the  case  of  an  acceptance  by  one  partner  in  his 
own  name  of  a  bill  drawn  on  the  firm,  which  case  will 
presently  be  considered)  such  will  not  be  the  manifest  inten- 
tion unless  the  instrument  be  signed  in  the  manner  above 
indicated.^ 

And  in  general,  ^dien  the  name  of  one  partner  only  ap- 
pears on  the  bill  or  note,  his  copartners  would  not  be  charge- 
able, although  the  instrument  were  used  for  partnership 
purposes.  Therefore,  where  the  plaintiff  declared,  on  a  note 
made  by  T.  W.,  in  his  own  name,  as  on  a  note  made  by  T. 
W.  and  E.,  and  offered  to  show  that  they  were  jointly  in- 
debted, and  that  they  gave  the  note  for  that  debt,  he  was 
nonsuited,  on  the  ground  that  this  was  a  separate  security 
for  a  joint  debt.^  The  same  rule  applies  to  acceptance.^  So 
the  indorsement  of  one  partner  does  not  bind  the  firm  on  the 
bill,  though  the  money  were  applied  to  the  firm's  purposes, 
and  they  might  be  sued  for  money  lent.* 

The  principle  is  simply  this:  that  when  it  can  be  col- 
lected from  the  face  of  the  paper  that  the  signing  partner 
intended  to  bind  the  firm,  it  wdll  be  bound;  otherwise  not. 

§  301.  In  accordance  with  the  principle  of  the  text,  it  has 
been  held  that  a  note  beginning  "  I  promise,"  and  signed  by 
one  of  the  firm  for  the  rest,  as  "A.  B.  for  A.  B.  C.  D.'ife  Co.," 
will  bind  the  whole  firm,°  and  not  the  signing  partner  singly.^ 
So  if  it  begins,  "  I  promise,"  and  is  signed  in  the  firm's  name.' 

'  Chitty  on  Bills,  [*57],  72 ;  Thomson  on  Bills,  164. 

"  Siffkin  V.  Walker,  2  Camp.  307.         '  Cunningham  v.  Smithson,  12  Leigh,  43. 

*  Emiy  V.  Lye,  15  East,  7;  Kilgour  v.  Finlayson,  1  H.  Black.  156;  ex  parta 
Emly,  1  Rose,  61 ;  Cunningham  v.  Smithson,  12  Leigh,  43.  But  see  the  case  of 
Denton  v.  Rodie,  3  Camp.  493,  and  Chitty  on  Bills,  [*59],  74,  note/. 

'  Galhvay  v.  Mathew,  10  East,  264;  1  Camp.  403;  Staats  v.  Ilowlett,  4  Den. 
559;  Thomson  on  Bills,  156. 

•  In  re  Clarke,  14  M.  &  W.  469,  overruling  Hall  v.  Smith,  1  B.  &  C.  407. 
^  Doty  V.  Bates,  11  Johns.  544. 


292  PARTNERS  AS  PARTIES  TO  NEGOTIABLE  INSTRUMENTS. 

And  if  a  partner  draws  a  bill  or  note  in  a  fictitious  name,  and 
indorses  it  in  the  partnership  name,  the  firm  will  be  bound 
by  the  indorsement.^ 

If  the  partner,  intending  to  use  the  firm's  name,  make  a 
slight  and  immaterial  variation  from  it,  the  firm  is  still 
bound ;  "^  but  if  the  variation  is  material,  it  will  not  be.'  If 
A.  B,  and  C.  are  partners,  a  note  given  by  one  of  them, 
signed  "A.  <fe  Co.,"  will  be  presumed  to  be  in  the  partnership 
name ;  "*  and  if  the  names  of  all  the  partners  are  written  on 
the  paper,  instead  of  the  firm's  name,  and  it  is  given  in  the 
firm's  business,  the  firm  will  be  bound.'* 

One  partner  cannot,  without  special  authority,  execute  a 
joint  and  separate  note  in  the  partnership  name;^  but  it  has 
been  held — and  justly,  as  we  think — that  such  a  note  would 
be  void  only  as  a  several  note,  and  good  as  a  joint  note.'' 

§  362.  Acceiotances. — The  doctrine  is  generally  recognized 
that  if  a  bill  be  drawn  upon  a  firm,  the  acceptance  by  one 
partner,  whether  in  his  own  name  or  the  name  of  the  firm,  will 
bind  the  firm,  it  being  only  necessary  for  it  to  appear  that  he 
acted  for  it.^  In  an  English  case  a  bill  was  drawn  on  "  Hum- 
sey  &  Co."  It  was  presented  to  "  T.  Rumsey,  Jr.,"  who  wrote 
across  it  "  accepted,  T.  Rumsey,  Sen."  It  was  contended  that 
the  firm  was  not  bound.  But  Lord  Ellenborough  said  :  "This 
acceptance  does  not  prove  the  partnership;  but  if  the  defend- 
ants were  partners,  they  are  both  bound  by  it.  For  this  pur- 
pose it  would  have  been  enough  if  the  word  '  accepted '  had 
been  written  on  the  bill,  and  the  eflfect  cannot  be  altered  by 

'  Thicknesse  v.  Bromilowe,  2  Croinp.  &  J,  425. 

'  Williamson  v.  Jolinson,  1  B.  «&  C.  146;  Faith  v.  Richmond,  11  Ad.  &  El. 
339;  Forbes  v.  Marshall,  11  Exch.  106. 

=•  Kirk  V.  Blurton,  9  M.  &  W.  284;  Maclae  v.  Sutherland,  3  Ellis  &  B.  31. 
Where  the  style  of  the  firm  was  simply  "  John  Blurton,"  it  was  held  that  a  bill 
signed  "  John  Blurton  &  Co."  did  not  bind  them.  Kirk  v,  Blurton,  12  L.  J.  Ex. 
117;  Thomson  on  Bills,  164. 

*  Drake  v.  Elwyn,  1  Caine,  184. 

*  Norton  v.  Seymour,  3  C.  B.  792 ;  Maynard  v.  Fellows,  43  N.  11.  258. 

•  Perring  v.  Hone,  2  C.  &  P.  401 ;  4  Biug.  28  (77  E.  C.  L.  R.) 
'  Maclae  v.  Sutherland,  3  El.  &  B.  36  (77  E.  C.  L.  11.) 

•  1  Parsons  N.  &  B.  123;  Collyer  on  Partnership,  §  410;  Bylcs  on  Bills,  144. 


FORMAL  SIGNATURE  OP  THE  FIRM'S  NAME.  293 

adding 'T.  Rumsey,  Sen.'  If  a  bill  of  exchange  is  drawn 
upon  a  firm,  and  accepted  by  one  of  the  partnei's,  he  must  be 
understood  to  exercise  his  power  to  bind  his  copartners,  and 
to  accept  the  bill  according  to  the  terms  in  which  it  was 
drawn."  ^  This- seems  the  true  rationale  of  the  question,  and 
should  be  sustained  on  the  familiar  maxim,  "  Ut  res  magis 
valeat  qiiam  'pereatr  But  it  has  been  held  that,  in  such  a 
case  as  that  quoted,  the  firm  would  not  be  bound,  because  its 
name  is  not  signed  as  acceptor,  and  that  the  single  partner, 
whose  name  is  on  the  bill,  could  not  be  charged  as  acceptor, 
because  not  the  drawee  of  the  bill.'^   In  Connecticut,  the  view 


'  Mason  v.  Rumsey,  1  Camp.  884  (1808) ;  to  same  effect  see  Wells  v.  Master- 
man,  2  Esp.  731.  In  Thomson  on  Bills,  164,  note  i,  it  is  said,  "  It  may  be  doubted 
whether  this  doctrine  would  be  adopted  in  Scotland."      See  ipoit,  §  488. 

'  Heenan  v.  Nash,  8  Minn.  409  (1863).  In  this  case  it  was  said,  in  sustaining 
this  doctrine,  by  Flandrau,  J. :  "  In  the  case  of  Mason  v.  Rumsey,  1  Camp.  384, 
it  was  held  that  an  acceptance  by  one  member  of  a  firm  in  his  own  name  would 
bind  the  firm  when  the  bill  was  drawn  on  the  firm.  The  same  was  again  held  in 
Wells  V.  Masterman,  3  Esp.  731.  This  doctrine  seems  to  have  been  adopted  in 
Collyer  on  Partnership,  §  410,  and  in  Byles  on  Bills,  144,  on  the  authority  of 
these  cases  and  some  others  there  collected.  In  the  case  of  Dougal  v.  Cowles, 
5  Day's  Connecticut  Reports,  511,  the  same  is  again  laid  down  on  the  authority 
of  the  case  of  Mason  v.  Rumsey.  There  are  other  cases  that  hold  an  acceptance 
by  a  member  of  a  firm  in  a  name  other  than  the  firm  name,  to  raise  a  question  of 
fact,  to  be  left  to  the  jury,  whether  the  name  used  substantially  describes  the 
firm,  or  whether  it  so  far  varies  that  the  acceptor  must  be  taken  to  have  made  it 
on  his  own  account.  See  Faith  v.  Richmond,  11  Adolph.  &  Ellis,  338,  339;  Eng. 
Com.  Law.  Rep.  113;  Drake  v.  Elwyn,  1  Caine's  Rep.  184. 

"Acceptances  could  formerly  be  made  by  parol,  which  was  the  law  in  Con- 
necticut at  the  time  of  the  decision  cited  from  5  Day,  and  that  pokit  is  expressly 
made  by  the  court  in  deciding  the  case.  The  same  may  be  said  of  the  case  of 
Mason  v.  Rumsey,  which  was  decided  before  the  statute  of  1  &  2  George  IV,  chap. 
78,  sec.  2,  which  provided  that  acceptances  to  be  valid  must  be  in  writing.  Even 
after  this  statute  the  English  courts  have  held  that  the  word  '  accepted,'  written 
on  the  bill  by  one  having  authority,  is  sufficient  to  bind  the  drawees.  The  only 
principle  upon  which  the  courts  have  held  that  an  acceptance  by  one  partner  in 
his  own  name  will  bind  the  firm,  is  the  implied  authority  which  each  member  has 
to  act  for  the  whole,  and  when  the  bill  is  drawn  upon  the  firm  and  accepted  by 
one.  they  hold  that  he  intended  to  accept  it  as  drawn. 

"I  find  one  English  case,  decided  in  the  Court  of  Exchequer  in  1841,  which 
holds  a  doctrine  much  more  in  accordance  with  our  views  of  the  principles  which 
should  govern  the  question.  In  Kirk  v.  Blurton,  9  Meesou  AWelsby's  Rep.  283, 
the  defendants  were  partners  under  the  name  of  'John  Blurton.'  One  of  the 
firm  drew  a  bill  in  the  name  of  '  John  Blurton  &  Co.'    The  firm  was  sued  upon 


294  PARTNERS  AS  PARTIES  TO  NEGOTIABLE  INSTRUMENTS. 

of  the  text  seems  to  be  taken ;  and  it  is  there  held  that  the 
drawing  of  a  bill  by  one  partner  in  his  own  name  on  the  firm 
of  which  he  is  a  member  is,  in  contemplation  of  law,  an  ac- 
ceptance of  the  bill  by  the  drawer  in  behalf  of  the  firm.^ 

And  in  England,  where  a  bill  was  drawn  on  "  E.  M.  and 
others,  trustees,  etc,"  and  there  was  w^ritten  across  it,  "  ac- 
cepted, E.  M." — it  appearing  that  E.  M.  had  authority  to 

it,  and  the  partner  who  did  not  draw  the  bill  defended.  Faith  v.  Richmond, 
Mason  v.  Runisey,  and  other  cases  were  cited.  Aldorson,  B.,  in  delivering  the 
opinion,  says:  'The  court  do  not  entertain  any  doubt  as  to  the  principles  of  law 
applicable  to  this  case.  One  partner  can  bind  his  copartner  only  to  the  extent  of 
the  authority  which  is  given  to  partners  generally,  to  enable  them  to  carry  on  the 
partnership  business,'  which  authority,  he  says,  in  another  part  of  the  opinion,  is 
'  to  bind  the  firm  in  the  name  of  the  partnership,  and  in  that  only.' 

"  Since  the  passage  of  our  statute  on  the  subject  of  acceptances,  no  inferences 
can  be  indulged  in.  To  make  an  acceptance  valid,  it  must  l)e  in  writing,  signed 
by  the  acceptor  or  his  lawful  agent.  Mr.  Nash,  as  a  partner  of  the  firm  of  Nash 
&  McGrorty,  had  a  right  to  accept  the  bill  for  the  firm  by  virtue  of  his  general 
powers  as  a  partner,  but  this  power  of  a  partner  is  to  bind  the  firm  by  the  use  of 
the  firm  name,  and  in  no  other  way.  This  he  did  not  do,  and  we  are  clear  that 
the  acceptance  cannot  be  held  to  bind  the  firm. 

"We  are  next  to  consider  whether  the  defendant  can  be  held  as  acceptor  in- 
dividually. It  is  a  well  settled  rule  of  commercial  civil  law  that  no  one  can 
accept  a  bill  but  the  person  upon  whom  it  is  drawn,  except  for  honor.  Polhill 
V.  Walter,  3  Bam.  &  Ad.  114;  Davis  v.  Clark,  1  Carr.  &  Kir.  117;  May  v.  Kelly 
&  Frazier,  27  Ala.  497.  If  a  bill  is  drawn  upon  A ,  and  B.  accepts  it,  the  act  is 
merely  voluntary,  without  any  consideration,  and  creates  no  liability  whatever  in 
the  law.  It  is  allowed,  for  the  convenience  of  commerce,  that  a  person,  other 
than  the  drawee,  may,  after  presentation,  refusal  and  ])rotest,  accept,  for  the 
honor  of  the  drawer  or  any  of  the  indorsers,  or  of  all  the  parties,  as  he  may  see 
fit;  but  this  is  a  well  understood  transaction,  and  is  done  supra  protest,  and  un- 
der certain  well  settled  forms  and  ceremonies.  There  is  no  pretense  that  Mr. 
Nash  was  such  an  acceptor  of  the  bill  in  question. 

"  Where  a  bill  is  drawn  upon  several  individuals,  an  acceptance  by  any  one  of 
them  is  binding  upon  him,  although  the  bill  may  be  treated,  and  should  be,  as 
dishonored,  if  not  accepted  by  all  the  drawees,  because  the  holder  is  entitled  to 
the  acceptance  of  them  all ;  but  in  such  case  a  liability  accrues  against  the  party 
accepting,  because  he  is  a  drawee,  as  much  as  if  the  bill  had  been  drawn  upon 
him  alone.  Where,  however,  the  bill  is  drawn  upon  a  firm,  any  member  of  the 
partnership;  in  hi>;  individual  capacity,  is  quite  as  much  a  stranger  to  the  same  as 
a  third  person.  He  is  only  connected  with  the  bill  through  his  membership  of 
the  firm,  which  is  dra^^ee,  and  in  virtue  of  such  membeiship  he  has  power  to  use 
the  firm  name  in  accepting  it.  If  he  accepts  it  in  his  individual  name,  he  does 
not  bind  the  firm,  and  there  is  no  consideration  for  his  act.  It  is  the  case  of  a 
bill  drawn  on  one  party,  and  accepted  by  another." 

'  Dougal  V.  Cowles,  5  Day,  511. 


FORMAL  SIGNATURE   OP  THE  FIRM'S   NAME.  295 

accept  for  the  trustees — they  were  held  liable  as  acceptors, 
Pollock,  C.  B.,  saying :  "  His  acceptance  did  not  import  that 
he  accepted  merely  as  an  individual,  but  that  he  was  the 
party  whose  hand  performed  that  duty  by  direction  of  the 
rest :  and  the  mere  fact  that  he  needlessly  added  his  name  to 
the  acceptance  made  no  difference."  ^ 

§  363.  Whe7'e  fiv7n  trayisacts  business  in  one  partjier'^s 
name. — Sometimes  the  firm  transacts  business  in  the  name  of 
a  single  partner,  and  questions  often  arise  whether  or  not 
paper  executed  iu  the  name  of  a  single  partner  was  intended 
as  his  only,  or  as  that  of  the  firm.  Prima  facie^  it  is  to  be 
presumed  to  be  the  paper  of  the  individual  partner  whose 
name  is  signed  to  it,  and  the  burden  of  proof  is  upon  the 
holder  to  show  afiirmatively  that  the  signature  was  intended 
for  the  signature  of  the  finn.^  Judge  Story  has  said  on  this 
subject:  "  Where  the  business  is  carried  on  in  the  name  of 
one  of  the  partners,  and  his  name  alone  is  the  name  of  the 
firm,  it  is  necessary  not  only  to  prove  the  signature,  but  that 
it  was  used  as  a  signatui-e  of  the  firm,  by  a  party  authorized 
to  use  it  on  that  occasion,  and  for  that  purpose.  In  other 
words,  it  must  be  shown  to  be  used  for  partnership  objects 
and  as  a  partnership  act.  The  proof  of  the  signature  is  not 
enough.  The  burden  of  proof  is  upon  the  plain tifts  to  es- 
tablish that  it  is  a  contract  of  the  firm,  and  ought  to  bind 


'  Jenkins  v.  Morris,  16  M.  &  W.  877. 

'  Cunningham  v.  Smitlison,  12  Leigh,  43 ;  Macklin  v.  Crutchcr,  6  Bush  (Ky.) 
401:  Boyle  v.  Skinner,  19  Mo.  83;  Mercantile  Bank  v.  Cox,  38  Me.  500;  Buckner 
V.  Lee,  8  Ga.  285 ;  Bank  of  Rochester  v  Monteath,  1  Denio,  402  ;  Manufacturers' 
&c.  Bank  v.  Winship,  5  Pick.  11.  Putnam,  J.  :  ''If  it  had  been  proved  that 
the  note  had  been  given  for  the  use  of  the  firm  at  the  manufactory,  the  partners 
in  that  concern  would  be  liable.  The  burden  of  proof  was  on  the  plaintiffs." 
Isaac  and  Peter  Blackburn  carried  on  business  near  Plymouth  in  the  name  of 
Isaac  Blackburn  only.  Peter  carried  on  business  separately  in  London.  la 
respect  to  bills  drawn  by  Isaac  in  his  own  name,  Lord  Eldou  said,  in  en  parU 
Bolitho,  1  Buck,  100:  "Unless  you  can  show  that  when  Isaac  drew  the  bills  he 
drew  them  not  as  Isaac,  but  as  Isaac  and  Peter,  there  can  be  no  legal  contract 
upon  the  bills  against  the  two;  there  may  be  a  right  of  action,  if  you  can  bring 
it  to  this,  that  the  money  was  raised  liy  them  for  partnership  purposes."  Chittj 
on  Bills  [*42,  43],  56. 


29G  TARTNERS  AS  PARTIES  TO  NEGOTIABLE  INSTRUMENTS. 

them."  ^  But  when  it  is  shown  to  liave  been  executed  in  the 
business  of  the  firm,  .iiul  that  the  firm  was  intended  to  be 
bound,  there  is  no  doubt  that  it  will  be.'^ 

§  364.  In  New  York  it  has  been  held,  that  where  the 
bank  account  of  a  firm  was  kept  in  the  name  of  one  of  its 
members,  and  all  checks  were  drawn  in  his  name,  with  the 
knowledge  and  assent  of  the  others,  the  firm  was  liable  upon 
such  a  check  drawn  in  the  firm  business ;  and  that  the  holder 
of  such  a  check  might  show  that  the  money  was  not  advanced 
by  him  upon  the  individual  security  of  the  single  partner.^ 

In  accordance  wath  the  principles  stated,  if  the  partner- 
ship is  carried  on  in  the  uame  of  one  individual  only,  and 
he  issues  a  bill  or  note  in  his  own  name  for  his  separate  use, 
his  copartners  would  not  be  liable  in  case  of  misapplication, 
because  the  firm  is  not  pledged,*  though  if  really  for  the 
benefit  of  the  firm  it  would  be.^ 

SECTION  IV. 

ACCOMMODATION — PEIVATE — AND   PKOIIIBITED   TRANSACTIONS. 

§  365.  (1)  As  to  accommodation  transactions  of  copart- 
ner.— No  one  member  of  a  firm  can  bind  it,  without  the  con- 
sent of  all  of  its  members,  by  signing  the  copartnership  name 
as  drawer,  maker,  acceptor  or  indorser  of  a  negotiable  paper 
for  the  accommodation  of  a  third  party,  for  the  obvious  rea- 
son that  such  a  transaction  is  not  within  the  scope  of  copart- 
nership business,  unless  expressly  or  impliedly  made  so,  and 
would  ordinarily  be  without  authority,  and  in  fraud  of  the 
firm.  And  every  holder  of  such  paper,  chargeable  with  no- 
tice of  its  character,  would  be  disqualified  to  recover  upon  it ;  * 

•  U.  S.  Bank  v.  Binney,  5  Mason,  176. 

»  South  Carolina  Bank  v.  Case,  8  Barn.  &  C.  427. 
»  Ciocker  v.  Colwell,  46  N.  Y.  212. 

*  Ex  parte  Bolitlio,  1  Buck,  100.  Explained  in  Wintle  v.  Crowther,  1 
Tyrw.  214. 

*  South  Carolina  Bank  v.  Case,  8  Bar.  &  C.  433;  2  M.  <Sb  B.  459. 

•  Chenowith  v.  Chamberlain,  6  B.  Men.  60;  Bank  of  Rochester  v.  Bowen,  7 
Wend.  158;  Tompkins  v.  Woodward,  5  West  Va.  (Uagans)  229;  1  Parsons  K 
&  B.  129;  Bloom  v.  Helm,  53  Miss.  21. 


PRIVATE  AND  PROHIBITED  TRANSACTIONS.  297 

and  if  the  plaintiff  be  payee,  he  would  be  required  to  prove 
the  assent  of  the  copartners  before  he  could  do  so.^ 

If  it  appears  on  the  face  of  the  bill  or  note  that  it  was 
signed  by  a  partner,  in  the  name  of  the  firm,  as  surety,  this 
will  be  notice  to  the  world  that  it  was  not  given  in  due 
course  of  the  partnership  business ;  and  the  burden  would  be 
thrown  upon  the  holder  not  only  to  show  that  he  gave  value 
for  the  instrument,  but  also  that  all  the  parties  assented  to 
its  execution  in  their  name.^  If  the  word  "  surety "  be 
attached  to  the  partnership  name,  that  would  impress  upon 
the  paper  notice  of  its  character.^  Where  a  bill  or  note  is 
carried  by  the  drawer  or  maker  to  a  bank  to  get  it  dis- 
counted on  his  own  account,  or  transfer  it  to  another  party, 
and  it  bears  the  name  of  a  firm  which  is  payee  and  indorsed 
thereon,  the  transaction  shows  on  its  face  that  it  is  accommo- 
dation paper,  and  the  bank  or  other  holder  must  prove  the 
copartners'  assent  in  order  to  bind  them.^  But  a  bank  dis- 
counting partnership  paper  for  one  partner,  and  placing  the 
amount  to  his  credit,  would  not  be  chargeable  with  notice 
that  he  was  acting  in  fraud  of  the  firm,  or  be  required  to 
prove  assent  of  his  copartners.^  If  the  partnership  engage- 
ment as  surety  or  indorser  is  really  for  the  partnership  bene- 
fit in  their  legitimate  business,  it  has  been  held  that  the 
paper  will  be  valid.*'  Where  A.,  B.  &>  C,  copartners,  in- 
dorsed a  note  for  accommodation,  and  A.  dying  before  its 
maturity,  B.  &  C.  renewed  the  indorsement  in  the  partner- 
ship name,  it  was  held  that  A.'s  estate  was  discharged,  on 
the  old  note  by  want  of  notice,  and  on  the  new  one  by  want 
of  authority ;  ^  but  that  if  A.,  B.  <fe  C.  had  been  makers  of 
the  note  that  was  renewed,  it  would  be  different.^ 

'  Tompkins  v.  Woodward,  5  West  Va.  230.        '  1  Parsons  N.  &  B.  140. 
'  Austin  V.  Vandemark,  4  Hill,   259;   Foot  v.  Sabin,  19  Johns.  154;  Boyd  v. 
Plumb,  7  Wend.  309;  Edwards  on  Bills,  103,  104. 

*  Bank  of  Vergennes  v.  Cameron,  7  Barb.  143 ;   see  Bloom  v.  Helm,  53  Miss. 
21. 

'  Ex  parte  Bonbonus.  8  Ves.  542. 

'  Langaa  v.  Hewitt,  13  Smedes  &  M.  123. 

'  Central  Savings  Bank  v.  Mead,  52  Mo.  546. 

*  Boatman's  Sav.  Inst.  v.  Mead,  52  Mo.  543. 


298  PARTNERS  AS   PARTIES  TO   NEGOTIABLE   INSTRUMENTS. 

§  366.  (2)  As  to  private  debts  of  a  memher  of  the  firm. — 
No  one  member  of  a  firm  can,  without  the  consent  of  all  of 
his  copartners,  bind  them  by  making,  drawing,  accepting  or 
indorsing  a  bill  or  note,  for  his  private  debt,  in  the  partner- 
ship name  ;  and  the  creditor  who  receives  such  an  instrument, 
or  tlie  indorsee  who  takes  it  with  notice  of  the  consideration, 
cannot  recover  upon  it.  In  order  to  recover,  the  party  who 
took  the  paper  from  the  partner  for  his  private  debt,  must 
prove  the  assent  of  all  the  copartners  to  his  act.^  Pi'of.  Par- 
sons seems  to  think  that  the  English  authorities  are  to  the 
contrary ;  ^  and  Mr.  Chitty's  opinion  seems  to  be  that  the 
mere  circumstance  that  an  acceptance  in  the  partnership 
name  by  one  partner  is  given  for  his  private  debt,  does  not 
raise  the  presumption  that  it  was  wrongfully  made.  But 
such  a  transaction  is  out  of  the  orderly  and  usual  course  of 
business.  It  does  not  import  fairness  on  its  face,  and  the 
American  authorities  seem  to  us  to  reach  the  correct  conclu- 
sion. We  quote  Mr.  Chitty's  language  as  showing  the  state 
of  the  English  law  on  the  subject.^ 

•  Foot  V.  Sabin,  19  Johns.  154;  Dob  v.  Halsey,  16  Johns.  34;    Williams  v. 
Wallbiidge.  3  Wend.  415;  Rogers  v.  Batclielor,  12  Pet.  229;  Smith  v.  Strader,  4 
How.  404  ;  Baird  v.  Cocbran,  4  Serg.  &  R.  397;  Noble  v.  McClintock,  2  Watts  & 
S.  152;    Maiildin  v.  Branch  Bank,  2  Ala.  502;  Swectser  v.  Frencli,  2  Cu.sb.  309 
Taylor  V.  Ilillyer,  3  Blackf.  433;    Windham   Co.   Bank  v.  Kendall,  7   R.I.  77 
Tompkinj  v.  Woodward,  5   West  Va.  229,  230;   Gale  v.  Miller,  54  N.  Y.  538; 
Parsons  N.  &  B.  126,  127;    Sherwood  v.  Snow,  46  Iowa,  486;    Bank  of  Com- 
merce V.  Selden,  3  Minn.  155. 

'  1  Parsons  N.  &  B.  127.  In  Ridley  v.  Taylor,  13  East,  175,  Lord  Ellen- 
borough,  C.  J.,  said:  ''This  bill  had  an  existence,  according  to  its  apparent  date, 
eighteen  days  before  the  time  of  its  delivery  to  the  plaintiffs  ;  it  was  drawn  for  a 
sum  considerably  exceeding  the  debt,  and  was  not  only  drawn  and  indorse',  but 
accepted  also,  before  it  was  produced  to  them  ;  and  although  it  is  stated  in  the 
case,  that  in  fact  the  bill  was  drawn  and  indorsed  by  Ewbank  in  the  iwrtnership 
firm,  it  does  not  appear  that  the  plaintiffs  knew  that  it  was  drawn  and  indorsed 
by  him.  Under  these  circumstances  it  might  reasonably  be  supposed,  by  the 
party  to  wliom  it  was  given,  to  be  a  partnership  security,  of  which  Ewbank,  the 
partner  in  possession  of  it,  had  for  some  valuable  consideration,  or  in  virtue  of 
some  arrangement  with  Ord,  the  other  partner,  become  the  proprietor,  so  as  to 
be  authorized  to  deal  with  it  as  his  own.  At  any  rate,  the  contrary  does  not 
either  actually  or  presumptively  appear."     See  Green  v.  Deakin,  2  Stark.  317. 

'  Chitty  on  Bills  (13  Am.  ed.)  [*47],  60,  where  it  is  said:  "  It  has  been  con- 
Bidered  that  the  mere  circumstance  of  a  bill  being  given  for  an  antecedent  debt 


PRIVATE  AND  PROHIBITED  TRANSACTIONS.  299 

§  3Cu.  Distinct  j^jroof,  it  has  been  held,  must  be  given  of 
the  copartner's  assent,  and  that  mere  knowledge  on  their  part 
is  not  sufficient.^  But  unless  they  were  prompt  to  repudiate 
the  act  as  not  binding  on  them,  we  should  say  they  were 
bound.^  And  their  assent  may  be  implied  by  circumstances.^ 
A  course  of  dealing  by  the  firm  in  recognizing  such  transac- 
tions would  suffice.^  And  when  such  a  course  of  dealing  is 
proved,  evidence  that  the  copartnership  articles  contained  an 
express  prohibition  of  such  acts  by  any  copartner  would  be 
inadmissible.^      The   admissions    of   the    partner    executing 


due  from  oneonlj^  of  the  partners  raises  a  presumption  that  tlie  creditor  knew  the 
bill  was  given  without  the  concurrence  of  the  other  partners."  And  in  Ex  parte 
Goulding,  2  G.  &  J.  118,  the  Vice-Chancellor  said:  "  After  an  attentive  consid- 
eration of  the  authorities,  I  am  of  opinion  that  when  one  partner  gives  the  ac- 
ceptance of  the  firm  in  payment  of  his  separate  debt,  without  authority  from  his 
copartner,  such  acceptance  dots  not  bind  the  firm."  And  it  has  also  been  consid- 
ered that  the  taking  the  instrument  from  one  of  the  partners  in  his  own  hand- 
writing, without  consulting  the  others,  raises  a  presumption  that  there  is  not  any 
concurrence  of  the  firm.  Hope  v.  Gust,  1  East,  53.  And  in  an  action  on  a  bill 
against  three  acceptors  where  it  appeared  that  the  defendants  were  partners  in  a 
tea  speculation,  and  the  drawer,  a  wine  merchant,  drew,  in  payment  for  wine 
delivered  to  one  of  the  three,  the  judge  directed  the  jury  that,  if  they  found  that 
the  bill  was  so  drawn  without  the  knowledge  and  consent  of  the  other  two  de- 
fendants, they  were  not  liable;  and  the  jury  found  for  the  defendant.  Wood  v. 
Holbeck,  May  28,  1826.  And  from  the  cases  of  Shirreflf  v.VTilks,  1  East,  48,  and 
Green  v.  Deakin,  2  Stark.  3-i7,  a  conclusion  has  been  reached,  in  an  excellent 
work,  that  if  one  partner  accept  in  the  partnership  name  a  bill  drawn  by  his  own 
separate  creditor  for  his  separate  debt,  or  if  for  such  separate  debt  he  give  a 
promissory  note  in  the  name  of  the  firm,  it  lies  upon  the  creditor  to  show  that 
his  debtor  had  authority  so  to  give  him  the  joint  security  of  the  firm,  and  that 
prima  facie  the  transaction  is  fraudulent  on  the  part  of  both  debtor  and  creditor. 
Bayley  on  Bills,  59.  But  as  a  partner  may,  in  his  individual  capacity,  have  a 
claim  upon  the  firm,  in  the  respect  of  which  he  might  draw,  accept  or  indorse  a 
bill  in  the  name  of  the  firm,  it  has  in  other  cases  been  considered  that  the  mere 
circumstance  of  the  party  to  whom  he  delivers  it  knowing  that  he  was  using  it 
for  his  private  benefit  does  not  of  itself  necessarily  afford  suflBcient  presamptive 
evidence  of  collusion  to  invalidate  tlie  transaction,  and  that  the  partner  objecting 
to  liability  must  prove  all  the  facts  sufficient  to  induce  a  jury  to  find  that  the 
partner  really  acted  fraudulently,  and  that  the  holder  had  notice  of  the  fraud. 
Ex  parte  Bonbonus.  8  Ves.  512;  Ridley  v.  Taylor,  13  East.  175. 

*  Elliott  V.  Dudley,  19  Barb.  326.  '  Foster  v.  Andrews,  2  Penn.  160. 
'  Gansevoort  v,  Williams,  14  Wend.  133. 

*  Butler  V.  Stocking,  4  Seld.  108. 

*  .Michigan  Bank  v.  Eldred,  9  Wall.  544. 


300  PARTNERS  AS  TARTIES  TO  NEGOTIABLE  INSTRUMENTS. 

partnership  paper  for  his  private  debt,  are  no  evidence  to 
bind  the  firm. 

§  368.  (3)  As  to  speciul  limitations  of  partnership  author- 
ity.— Copartners  may  enter  into  any  contract  between  them- 
selves restraining  the  firm,  or  any  member  of  it,  from  execut- 
ing or  indorsing  a  negotiable  instrument ;  and  it  is  a  fraud 
upon  the  firm  for  any  member  to  violate  it,  for  which  his  in- 
jured copartners  may  maintain  an  action.^ 

But  in  the  hands  of  a  bona  fide  holder,  without  notice,  the 
fact  that  express  partnership  articles  have  been  violated,  or 
that  the  name  of  the  firm  has  been  used  in  a  private  or  ac- 
commodation transaction,  is  no  objection  to  the  validity  of 
the  instrument,  or  their  right  to  recover  ;  for  their  association 
with  the  wrono:-doer  enabled  him  to  commit  the  fraud.^ 

§  369.  (4)  As  to  the  burden  of  proof. — The  order  in 
which  the  burden  of  proof  shifts  from  one  side  to  the  other 
may  be  stated  as  follows:  (1)  When  the  payee  of  a  bill  or 
note  sues  upon  it,  and  it  appears  to  have  been  signed  in  the 
firm's  name,  and  he  exhiVnts  the  paper  and  proves  the  sig- 
nature of  the  signing  partner  (where  this  is  necessary),  he 
establishes  his  case  prima  facie,  it  being  presumed  that  the 
partner  acted  within  the  scope  of  the  partnership  business.^ 

(2)  If  the  firm  resists  payment,  it  will  be  sufficient  to 
show  that  the  copartner  signed  the  firm's  name  for  a  private 
debt  due  the  plaintiff,  and  its  defense  is  then  complete,  unless 
the  plaintiff  reply  by  showing  the  assent  of  the  copartners.* 

»  Byles  on  Bills  (Sharswood's  ed.)  128. 

"Michigan  Bank  v.  Eldred,  9  Wall.  544;  Kimbro  v.  Bullit,  23  How.  256; 
Winsbip  v.  Bank  ofU.  S.  5  Pet.  539;  Catskill  Bank  v.  Stall,  15  Wend.  364,  and 
18  Wend.  466;  Wells  v.  Evans,  30  Wend.  251 ;  Waldo  Bank  v.  Lambert,  16  Me. 
416 ;  Bascom  v.  Young,  7  Mo.  1 ;  Cotton  v.  Evans,  1  Dev.  &  B.  Eq.  284 ;  Miller  v. 
Hughes,  1  A.  K.  Marsh.  181 ;  Parker  v.  Burgess,  5  R.  I.  277;  First  Nat.  Bank  v. 
Morgan,  13  N.  Y.  S.  C.  R.  (6  Ilun),  346;  Wright  v.  Brosseau,  73  Jtll.  381  ;  see 
Hibernian  Bank,  v.  Everman,  52  Miss.  500. 

'  Doty  V.  Bates,  11  Johns.  544;  Manning  v.  Hays,  6  Md.  5;  Vallett  v.  Parker 
6  Wend.  615;  Michigan  Bank  v.  Eldred,  9  Wall.  548;  Knapp  v.  McBride,  7  Ala. 
19;  First  National  Bank  v.  Carpenter,  3t  Iowa,  433;  Hamilton  v.  Summers,  12 
B.  Mon,  11 ;  Foster  v.  Andrews,  2  Penn.  160;  Edwards  on  Bills,  105. 

MVilliams  v.  Walbridge,  3  Wend.  415;  Rogers  v.  Batchelor,  13  Pet.  399; 
Taylor  v.  Hillyer,  3  Biackf.  433. 


PRIVATE   AND   PROHIBITED  TRANSACTIONS.  301 

(3)  And  the  burden  would  also  be  devolved  upon  the 
plaintiff  to  prove  value  given,  if  it  were  shown  that  the 
paper  was  executed  in  violation  of  partnership  articles  of 
agreement.^ 

(4)  When  suit  is  brought  by  a  subsequent  holder,  it  will 
also  be  sufficient  for  him  to  produce  the  instrument  and  prove 
the  signing  partner's  signature  in  order  to  make  out  tipritna 
facie  case.'' 

(5)  If  when  this  had  been  done  tbe  firm  shows,  by  way 
of  defense,  that  the  instrument  was  executed  by  the  signing 
partner  in  fraud  of  the  firm,  by  being  given  to  the  payee  for 
the  partner's  private  debt,  or  for  the  payee's  accommodation, 
and  thus  perfects  its  defense  as  against  the  payee,  it  is  held, 
by  numerous  cases,  that  the  holder  must  then  prove  that  he 
acquired  it  in  the  usual  course  of  business  for  a  valuable 
consideration,  under  circumstances  not  affecting  him  with 
notice  of  the  fraud.'  And  such  seems  to  be  the  accepted 
doctrine  on  the  subject,*  though  upon  the  plea  oi  noii  accepit 
it  has  been  held  in  England  insufficient  to  show  that  an  ac- 
ceptance was  fraudulent  on  the  part  of  the  signing  partner, 
without  bringing  home  to  the  plaintiff  knowledge  of  the 
fraud.*^ 

'  Grunt  V.  Hawks,  Chitty  on  Bills  (13  Am.  ed.)  [*42],  55. 

»  Michigan  Bank  v.  Eldred,  9  Wall.  548. 

'  Bank  of  St.  Albans  v.  Gilliland,  23  Wend.  311 ;  Bank  of  Vergcnnes  v. 
Cameron,  7  Barb.  143;  Monroe  v.  Cooper,  5  Pick.  412;  Hart  v.  Potter,  4  Duer, 
458;  Hogg  v.  Skene,  84  L.  J.  C.  P.  (N.  S.)  153.  In  Carner  v.  Cameron,  31  Mich. 
373  (1875),  in  an  action  by  a  transfcrree  of  a  note  signed  in  the  name  of  a  firm 
it  was  held  (1)  That  the  presumption  was  that  it  was  for  the  benefit  of  the  firm; 
but  (2)  the  defendants  might  show  it  was  made  in  fraud  of  the  firm  to  the 
knowledge  of  the  payee ;  and  (3)  that,  therefore,  the  presumption  would  be  that 
the  transferree  was  not  a  bona  fide  holder  for  value,  and  the  burden  of  proof  was 
ou  him. 

*  Chitty  on  Bills  (13  Am.  ed.)  [*42],  55;  Edwards  on  Bills,  105,  lOG ;  Byles  on 
feills  (Sharswood's  ed.)  [*47],  129.  Judge  Sharswood  says  in  his  note:  "The 
doctrine  of  the  text  is  sustained  by  the  whole  current  of  the  American  authori- 
ties."    1  Parsons  N.  &  B.  128. 

'  Musgrave  v.  Drake,  5  Q.  B.  185  (48  E.  C,  L.  R.)  Lord  Denman  saying: 
"Where  issue  is  joined  on  the  plea  of  non  accepit,  and  the  proof  offered  of  the 
acceptance  is  the  signature  of  one  partner  competent  to  bind  the  firm,  then, 
though  the  defendants  show  that  this  signature  was  a  fraudulent  act  on  the  part 


302  PARTNERS  AS  PARTIES  TO  NEGOTIABLE  INSTRUMENTS. 

(C)  111  an  English  case,  it  was  said  "by  Lord  Ellen- 
borouo'li :  "  An  indorsee  may  recover  on  a  bill  against  part- 
ners in  a  concern,  thougli  the  drawing  or  accepting  were 
contrary  to  agreement  between  them,  and  by  one  of  the  part- 
ners in  fraud  of  the  rest ;  but  then  the  indorsee  must  show 
that  he  gave  value."  ^  This  is,  we  think,  the  correct  view, 
though  not  entirely  concurred  in.'^  The  fact  that  a  bill  or 
note  made  by  a  member  of  a  firm  in  his  own  name,  is  after- 
wards indorsed  in  the  name  of  the  firm  in  his  handwriting, 
is  not  a  circumstance  of  suspicion,  nor  does  it  carry  with  it 
notice  to  a  purchaser  that  the  firm's  name  is  being  used  in 
the  private  business  of  the  maker,  or  otherwise  improperly.' 

SECTION  Y. 

THE   EFFECT   OF   A   DISSOLUTION    OF   THE   FIKM. 

§  370.  The  power  of  a  partner  ceases  upon  dissolution  of 
the  firm,  and  the  surviving  partners  or  expartners  can  enter 
into  no  contract  which  will  bind  the  estate  of  the  deceased, 
except  such  as  is  necessary  or  appropriate  in  settling  the  af- 
fairs of  the  concern.'*  "  Dissolution  operates  as  a  revocation 
of  all  authority  for  making  new  contracts.  It  does  not  re- 
voke the  authority  to  arrange,  liquidate,  settle  and  pay  those 
before  created."  ^  The  power  of  the  surviving  partner  does 
not  extend  to  giving  a  note,  drawing  a  check,^  or  accepting  a 
bill  in  the  firm's  nanie."^    And  the  firm  will  not  be  bound  on 

of  such  partner,  yet  if  the  proof  does  not  aflFect  the  plaiutiflF  with  knowledge  of 
the  fraud,  that  does  not  put  the  plaintiff  to  an  answer  nor  make  it  necessary  for 
him  to  give  auy  explanation  or  account  of  the  transaction."  To  same  eflfect  is 
Thomson  on  Bills  (Wilson's  ed.)  761 ;  but  see  Hogg  v.  Skene,  supra. 

'  Grant  v.  Hawks,  Chitty  on  Bills  (13  Am.  ed.)  [*42],  55. 

»  See  Michigan  Bank  v.  Eldred,  9  Wall.  548. 

'  Moorehead  v.  Gilmer,  77  Penn.  St.  118;  Miller  v.  Consolidation  Bank,  13 
Wright,  514. 

*  Darling  v.  March,  22  Maine,  184.  '  Id. 

•  Gale  V.  Miller,  54  N.  Y.  536. 

'  Morrison  v.  Perry,  18  N.  Y.  S.  C.  (11  Hun),  33  (1877);  Lockwood  v.  Corn- 
stock,  4  McLean,  383;  Husk  v.  Smith,  8  Barb.  570;  Mitchell  v.  Ostrom,  2  Hill, 
620;  Penin  v.  Keene,  19  Me.  355;  Haddock  v.  Crocberon,  32  Tex.  276;  Uamil- 


THE  EFFECT   OF   A   DISSOLUTION   OF   TUE   FIRM.  303 

such  note  or  acceptance,  althougli  the  creditor  had  no  notice 
of  dissolution.^  And,  according  to  tlie  weight  of  authority, 
no  one  partner  can  after  the  dissolution  renew  a  bill  or  note 
of  the  firm.^  Nor  can  one  partner  indorse  bills  and  notes 
given  to  the  firm  before  dissolution,^  unless  the  dissolution 
occur  by  the  death  of  one  or  more  of  the  partners,*  for,  as 
said  by  Lord  Keuyon,  "  the  moment  the  partnership  ceases, 
the  partners  become  distinct  persons ;  they  are  tenants  in 
common  of  the  partnership  property  undisposed  of  from  that 
period ;  and  if  they  send  any  securities  which  did  belong  to 
the  partnership  into  the  world  after  such  dissolution,  all 
must  join  in  doing  so."  ^  But  where  the  dissolution  is  by 
the  death  of  one  of  the  partners  the  survivor  may  indorse  a 
note,  payable  to  the  firm  in  his  own  name.^  The  reason  of  the 
distinction  between  the  authority  of  a  partner  after  dissolu- 
tion while  his  copartner  is  living,  and  the  authority  of  the 
survivor  when  dissolution  has  been  caused  by  death,  is  that 
in  the  former  case  the  implied  authority  for  one  partner  to 
act  is  all  gone ;  whereas  in  the  latter  case  the  bill  or  note 
vests  exclusively  in  the  survivor,  although  he  must  account 
therefor,  as  part  of  the  partnership  assets.'^ 

In  the  case  of  a  renewal  note,  increasing  the  rate  of  inter- 
est upon  the  original,  made  after  dissolution,  it  does  not  dis- 

ton  V.  Seaman,  1  Ind.  185;  Bank  of  Port  Gilson  v.  Baugb,  9  Smcdes  &  M.  290; 
Tombeckbee  Bank  v.  Duinell,  5  Mason,  56;  Lansing  v.  Gaine,  2  Jolms.  300; 
Wriglitson  v.  PuUan,  1  Stark.  375,  fer  Lord  Ellonborough;  Edwards  on  Bills, 
111,  113;  Bayley  on  Bills  (2  Am.  ed.)  58;  contra,  Robinson  v.  Taylor,  4  Barr,  242. 

'  Morrison  v.  Perry,  18  N.  Y.  S.  C.  (11  Hun),  36. 

^  Parker  v.  Cousins,  2  Grat.  373  ;  Long  v.  Story,  10  Mo.  036;  Stone  v.  Cham- 
berlain, 20  Ga.  259;  Martin  v.  Kirk,  2  Humph.  529;  National  Bank  v.  Norton, 
1  Hill,  572;  Palmer  v.  Dodge,  4  Ohio  St.  21 ;  Wilson  v.  Forder,  20  Ohio  St.  89; 
Edwards  on  Bills,  117,  118. 

•  Parker  v.  Macomber,  18  Pick.  505;  Fellows  v.  Wyman,  33  N.  H.  351.  The 
case  of  Lewis  v.  Reilly,  1  Q.  B.  349,  to  the  contrary,  has  been  generally  disap- 
proved. Sec  Story  on  Notes  (Thorndikc's  ed.)  §  125  and  note.  Humphrcj-s  v. 
Chastain,  5  Ga.  160 ;  Sanford  v.  Micklcs,  4  Johns,  224  ;  Abel  v.  Sutton,  3  Esp. 
108;  Edwards,  120. 

•  See  j90se.  '  Abel  v.  Sutton,  3  Esp.  108. 

•  Johnson  v.  Berlizhcimer,  84  111  54  ;  Jones  v.  Thorn.  2  Mart.  (La.)  N.  S.  463. 
■'  Story  on  Notes  (7th  ed.  by  Thorndikc),  §   125;  Crawshay  v.    Collins,  15 

Vesey,  218,  226. 


004  PARTNERS  AS  PARTIES  TO  NEGOTIABLE  INSTRUMENTS. 

charge  the  partnership  liability  upon  the  original,  and  the 
amount  of  the  original,  with  the  aggregate  of  interest  there- 
on, may  be  received  (there  being  nothing  objectionable  as 
to  the  shape  of  the  pleadings).^ 

§  371.  Where  a  note  is  issued  by  a  partner  after  dissolu- 
tion, it  will  not  bind  the  other  partners,  even  though  given 
for  a  debt  due  by  the  firm  ;  *  and  even  tbough  it  is  antedated 
so  as  to  appear  of  a  date  anterior  to  the  dissolution,*  and 
thouo:h  it  be  in  the  hands  of  a  hona  fide  holder  without 
notice,  unless,  indeed,  he  were  not  chargeable  with  notice  of 
the  dissolution,  in  which  case  it  would  be  different.* 

As  a  note  takes  effect  by  delivery,  it  has  been  held  that  a 
note  signed  in  the  partnership  name  before  tlie  dissolution, 
and  delivered  to  the  payee  after  the  dissolution,  without  the 
consent  of  other  members  of  the  firm,  would  not  bind  them.* 
And  in  like  manner  if  the  paper  was  indorsed  before  disso- 
lution of  tbe  firm,  and  not  put  into  circulation  until  after- 
ward, unless  all  the  partners  unite  in  doing  so  they  would 
not,  according  to  high  authorities,  be  bound  by  it.* 

§  372.  But  the  contrary  doctrine  prevails  in  England. 
In  one  case,  one  partner  drew  a  bill  in  the  partnership  name, 
leaving  the  amount  and  date  blank,  and  then  indorsed  it  in 
blank  in  the  partnership  name,  to  be  afterward  negotiated 
by  the  clerk  of  the  firm.  The  partner  wbo  drew  the  bill 
afterward  died,  and  the  survivors  formed  a  new  firm,  but 
the  clerk  filled  up  the  blanks  in  the  bill  drawn  by  the  de- 
ceased partner  and  negotiated  it.  And  the  surviving  part- 
ners were  held  bound,  although  no  part  of  the  value  came  to 

'  Wilson  V.  Forder,  20  Ohio  St.  89. 

»  Whitman  v.  Leonard,  3  Pick.  177;  Bank  of  S.  C.  v.  Humphreys,  1  McC. 
388;  Haddock  v.  Crocheron,  32  Tex.  276. 

*  Wriglitman  v.  Pullan,  1  Stark.  375 ;  Bayley  on  Bills  (2  Am.  ed.)  59 ;  Lansing 
V.  Gaine,  2  Johns.  300. 

*  Bristol  V.  Sprague,  8  Wend.  423;  see  post,  §  286. 
'  Woodford  v.  Dorwin,  3  Vt.  82. 

*  3  Kent  Com.  63;  Collyer  on  Partnership,  §  544 ;  Abel  v.  Sutton,  3  Esp.  108, 
Lord  Kenyon  duUtante  ;  Glasscock  v.  Smith,  25  Ala.  474  ;  but  see  1  Parsons  N. 
&  B  146. 


THE  EFFECT  OF   A  DISSOLUTION  OF   THE  FIRM.  305 

In  another  case,  A.  and  B,  were  sued  Ijy  an 
indorsee  on  a  bill  drawn  by  them  payable  to  their  own  order 
and  indorsed  by  them.  B.  pleaded  that  A.  had  indorsed  the 
bill  to  the  plaintiff  after  dissolution  of  the  firm,  and  that  de- 
fendant knew  of  the  dissolution  at  the  time  of  the  dissolution. 
The  plea  was  held  bad  for  not  showing  that  plaintiff  had 
colluded  with  A.  or  was  privy  to  the  fraud.  Lord  Denman 
said :  "  It  is,  perhaps,  doing  no  violence  to  language,  to  say 
that  the  partnership  could  not  be  dissolved  as  to  this  bill,  so 
as  to  2:)revent  it  from  being  indorsed  Ijy  either  defendant  in 
the  name  of  the  firm.''  ^  And  this  doctrine  seems  to  us  more 
in  consonance  with  the  principles  of  the  law  merchant  re- 
specting negotiable  instruments.  In  Massachusetts,  it  has 
been  held,  that  where  the  individual  note  of  a  partner,  made 
after  dissolution  was  transferred  by  the  holder  to  the  firm 
by  an  indorsement  in  blank,  in  payment  of  a  debt,  such  note 
being  payable  to  bearer,  might  be  legally  transferred  to  a 
third  person  by  another  partner  who  was  authorized  to  settle 
the  partnership  concerns.^ 

§  373.  When  expartner  may  bind  firm. — If  authorized 
verbally,  or  in  writing,  one  expartner  may  bind  the  firm 
after  dissolution  as  party  to  a  bill  or  note,  but  authority  to 
settle  or  close  up  the  business  of  the  firm  does  not  imply  au- 
thority to  one  partner  after  dissolution  to  give  a  note  in  the 
name  of  the  firm  for  the  firm  debt,  or  to  renew  one  given  be- 
fore the  dissolution.*  Nor  will  authorit}^  to  give  or  renew  a 
note  be  implied  by  authority  "  to  settle  business  of  the  firm 
and  sign  its  name  for  that  purpose  ; "  ^  "  to  use  the  name  of 

'  Usher  v.  Daiincey,  4  Camp.  97.  Lord  Ellenborough  said  that  tliis  case 
came  within  the  principle  of  Russell  v.  Langstaff,  Doug.  513. 

'  Lewis  V.  Keilly,  1  Q.  B.  :H9.  '  Parker  v.  Macombcr,  18  Pick.  505. 

*  White  V.  Tudor,  14  Texas,  641;  Haddock  v.  Crocheron,  32  Texas,  276; 
Myatt  V.  Bell,  41  Ala.  222;  Palmer  v.  Dodge,  4  Ohio  St.  21;  Martin  v.  Wal- 
ton, 1  McCord,  16;  Parker  v.  Macomber,  18  Pick.  505;  Long  v.  Story,  10  Mo. 
636;  Parker  v.  Cousins,  2  Grat.  572;  Kilgour  v.  Finlayson,  1  H.  Black,  155;  Ed- 
wards on  Bills,  118. 

'  National  Bank  v.  Norton,  1  111.  372;  Hamilton  v.  Seaman,  1  Ind.  185. 
Vol.  I.— 20 


30G     FxVRTNERS  AS  PARTIES  TO  NEGOTIABLE  INSTRUMENTS. 

tlie  finii  ill  liquidation  only  of  past  business  ;"^  "to  settle  all 
demands  in  favor  of  or  against  the  firm ; "  ^  or  by  the  use  of 
any  similar  expression. 

In  England,  however,  authority  to  use  the  partnership 
name  was  considered  in  one  case  sufficient  to  leave  it  for  a 
jury  to  say  whether,  according  to  usage  and  custom,  it  would 
autborizL'  a  renewal  in  the  firm's  name.^  In  Pennsylvania,  it 
is  held  that  after  dissolution  of  the  firm  one  partner  has  free 
authority  to  borrow,*  and  to  execute  or  renew  bills  and 
notes  in  settlement  of  the  past  business  of  the  firm.^  And 
in  that  State  it  was  also  held  in  a  suit  by  the  indorsee  of  a 
note,  executed  by  one  of  two  partners  in  the  firm's  name, 
after  dissolution,  could  recover  against  the  firm,  notice  of  the 
dissolution  being  proved  as  against  the  payee,  but  not  as 
against  the  indorsee.'' 

§  374.  Stattite  of  Limitations. — By  some  authorities  it  is 
maintained  that  where  the  statute  of  limitations  has  run 
against  a  partnership  debt,  one  partner's  promise  or  acknowl- 
edgment, though  Tnade  after  dissolution,  will  revive  it,*^ 
while  others  take  the  contrary  view.**  This  seems  to  us  cor- 
rect, for,  as  said  by  the  United  States  Supreme  Court,  "  when 
the  statute  has  once  run  against  a  debt  the  cause  of  action 
against  the  paitnei'ship  is  gone.  The  acknowledgment,  if  it 
is  to  operate  at  all,  is  to  create  a  new  cause  of  action."  ^  Nor 
will  a  part  payment  by  one  partner  made  after  dissolution 
revive  the  debt  to  wdiich  the  statute  has  applied  as  against 
others  for  the  same  reasons.^*^  But  the  English  doctrine  is 
otherwise.'^ 

It  has  been  held  in  Massachusetts  that  an  acknowledg- 

'  Martin  v.  Kirk,  2  Humph.  529.       ^  Lockwood  v.  Comstock,  4  McLean,  383. 
'  Myers  v.  Huggins,  1  Strob.  473.  *  Davis  v.  Deeauque,  5  Wliart.  530. 

'  Brown  v.  Clark,  14  Penn.  St.  4G9;  Robinson  v.  Taylor,  4  Penn.  St.  242. 
•  Albeit^  V.  Mellon,  37  Penn.  St.  869.  '  Mclutire  v.  Oliver,  2  Hawks,  209. 

«  Van  Keuren  v.  Parmelee,  2   Comst.  523;  Levy  v.  Cadet,  17  Serg.  &  R,  126; 
Belote  V.  Wynne,  7  Yerg.  534. 
'  Bell  V.  Morrison,  1  Pet.  351. 
'"  Exeter  Bank  v.  Sullivan,  6  N.  H.  124. 
"  Whitcomb  v.  Whiting,  Dcug.  652. 


THE  EFFECT  OF   A  DISSOLUTION   OF  THE   FIRM.  307 

ment  signed  in  the  partnersliip  name,  made  by  one  partner 
after  dissolution,  of  a  balance  due  in  a  course  of  dealing 
proved  by  other  evidence,  is  admissible  against  the  other 
party  in  a  suit  against  both,  especially  where  the  partner 
who  made  the  acknowledgment  was  authorized  to  settle  the 
business  of  the  firm.^ 

8  375.  Notwitbstandinof  the  dissolution  of  the  firm,  the 
use  of  the  firm's  name  by  one  partner  will  bind  all,  unless 
due  notice  of  the  dissolution  were  given  so  as  to  affect  the 
holder  of  the  paper  with  its  infirmities.'^ 

'  Ide  V.  Ingrabani,  5  Gray,  106. 

=  Lansing  v.  Gaine,  3  Johns.  300;  Bristol  v.  Sprague,  8  Wend.  423;  Cony  v. 
Wheclock,  33  Me.  366;  Whitman  v.  Leonard,  3  Pick.  177;  Booth  v.  Quin,  7 
Price,  193. 


CHAPTER  XIII. 


PRIVATE  CORPORATIONS  AS  PARTIES  TO  NEGOTIABLE  INSTRUMENTS. 

^  B76.  The  first  inquiry  to  be  made  in  respect  to  an  in- 
strument purporting  to  be  that  of  a  corporation,  is, "  Has  the 
corporation  in  question  a  legal  right  to  bind  itself  in  such  a 
form?"  That  question  being  determined  affirmatively,  the 
party  negotiating  for  the  instrument  should  then  ascertain — 
First.  Whether  or  not  the  officer  or  agent  who  has  signed 
on  behalf  of  the  corporation  is  competent  in  law  to  bind  it. 
Second.  Whether  the  individuals  signing  as  officers  or  agents 
of  the  corporation  are  in  fact  such.  Third.  Whether  or  not 
they  were  authorized,  expressly  or  impliedly,  by  the  corpora- 
tion to  sign  the  instrument  in  its  behalf.  Fourth.  Whether 
the  signatures  are  genuine ;  and  Fifth.  Whether  or  not  the 
instrument  is  to  be  interpreted  as  a  corporate  or  individual 
obligation.  These  inquiries  we  shall  endeavor  to  answer 
under  three  general  heads  :  I.  Authority  of  the  corporation 
to  execute  the  instrument.  11.  Authority  of  the  agent,  in 
law  and  in  fact,  to  bind  the  corporation.  HI.  Interpretation 
of  the  instrument. 


SECTION  I. 

AUTHORFTY   OF   THE   CORPOEATION   TO    EXECUTE   THE   INSTRUMENT. 

§  377.  It  is  obvious  that  the  inquiry  as  to  the  power  of 
the  corporation  to  execute  the  instrument  is  of  the  first  im- 
portance, for  if  it  exceed  its  powers,  its  act  is  as  much  a 
nullity  as  the  act  of  a  married  woman  or  a  lunatic  ;  and  how- 
ever ignorantly  or  innocently  the  party  dealing  with  it  may 
have  been,  he  cannot  enforce  his  contract  made  with  it. 


AUTHORITY  TO  EXECUTE  THE  INSTRUMENT.      309 

It  is  considered  as  an  act  "  idtra  vires,^''  that  is  "  l^cyoud 
the  powers  "  of  the  corporation,  and  therefore  without  legal 
sanction  or  vitality.  And  being  a  mere  nullity,  circulation 
from  hand  to  hand,  and  ownership  by  a  hona  jide  holder,  can 
impart  no  vitality  to  it ;  and  as  against  the  corporation  he 
can  stand  on  no  better  footing  than  his  predecessors.^  Nor 
is  this  rule  so  harsh  as  it  might  seem.  Ignorance  of  the  law 
excuses  no  one,  and  a  corporation  being  a  legal  creation,  all 
persons  dealing  with  it  are  chargeable  with  notice  of  its 
legal  character.^ 

§  378.  Chief  Justice  Marshall  has  well  defined  a  corpora- 
tion as  "  an  artificial  being,  invisible,  intangible  and  existing 
only  in  contemplation  of  law.  Being  the  mere  creature  of 
the  law,  it  possesses  only  those  properties  which  the  charter 
of  its  creation  confers  upon  it,  either  expressly  or  as  inci- 
dental to  its  very  existence.  These  are  such  as  are  supposed 
to  be  best  calculated  to  effect  the  object  for  which  it  is 
created."  ^  In  endeavorins:  then  to  ascertain  whether  or  not 
a  corporation  has  authority  to  do  a  certain  act,  we  should 
see^Jirst,  whether  any  express  power  is  conferred,  and  second, 
if  none  such  be  found,  whether  such  power  is  implied  as  an 
incident  of  its  nature.  And  in  the  latter  inquiry,  the  char- 
acter of  the  corporation  is  obviously  the  controlling  element 
to  be  considered. 


'  School  Directors  v.  Foglcman,  7G  111.  189;  Pearce  v.  Madison,  etc.  R.  R.  21 
IIow.  441;  Macgregor  v.  Dover,  &c.  R.  R.  18  Q.  B.  G18;  Earl  of  Shrewsbury  v. 
North  Staflfordshire  R.  R.  L.  R.  1  Eq.  593. 

'  In  Broughton  v.  Manchester  &  S.  Waterworks  Co.  3  B.  &  Aid.  1,  where  it 
appeared  that  an  act  of  Parliament  prohibited  corporations,  other  than  the  Bank 
of  England,  from  accepting  bills  payable  at  a  less  period  than  six  months  from 
date;  and  the  acceptance  in  suit  came  within  the  prohibition.  Ilolroyd,  J., 
said :  "  Here  the  defendants  are  made  a  corporation  by  a  public  act  of  Parlia- 
ment, and  every  person  is  bound  to  take  notice  of  that  act;  and  when,  therefore, 
a  holder  of  a  bill,  though  a  bona  Jide  indorsee,  takes  the  defendant's  acceptance, 
he  must  know  that  they  are  a  body  corporate;  and  he  therefore  receives  it, 
knowing  it  to  be  the  acceptance  of  a  corporation  prohibited  from  owing  money 
on  such  a  bill;  he  is  not,  therefore,  an  innocent  indorsee,  because  he  takes  a  bill 
which  he  knows  is  prohibited  by  statute." 

'  Dartmouth  Colltge  v.  Woodward,  4  Wheat.  636. 


310  PRIVATE  CORPORATIONS  AS  PARTIES. 

§  379.  Corporations  are  either  private  or  public — public 
wben  "  the  whole  interests  and  franchises  are  the  exclusive 
property  and  domain  of  the  government  itself;"^  otherwise 
private.  Public  corporations  are  established  exclusively  for 
public  purposes,  and  comprise  cities,  towns,  villages,  counties, 
tow^nships,  parishes  and  all  other  corporations  erected  by 
the  government  as  governmental  agencies.  Private  corj^ora- 
tions  comprise  banks,  building  associations,  railroad  com- 
panies, and  all  other  associations  formed  for  manufacturing, 
trading  or  other  objects  of  private  gain,  emolument,  gratifi- 
cation or  benefit' 

§  380.  Of  the  authority  of  private  corporations  to  issue 
negotiable  instruments  we  shall  first  speak,  and  then  of  the 
authority  of  public  cor2:)orations.  It  is  quite  easy  to  deter- 
mine whether  or  not  there  is  express  power  in  totidem  verbis 
to  issue  the  particular  instrument  by  consulting  the  terms  of 
the  corporate  charter.  If  not  expressed,  then  the  inquiry 
arises,  is  the  power  implied  in  some  power  conferred,  or 
from  the  general  character  of  the  institution  ?  ^  The  English 
decisions  on  this  subject  seem  to  us  more  consistent  with 
principle  than  those  in  the  United  States. 

There  it  has  been  held  that  trading  and  banking  corpo- 
rations might  draw  or  accept  bills  without  express  authority 
to  do  so,  because  such  acts  are  necessary  to  the  very  objects 
of  their  existence.  But  that  a  corporation  chartered  to  sup- 
ply a  city  with  water  could  not  do  so,  for,  as  said  by  Bayley, 
J.,  "  it  cannot  be  necessary  for  this  purpose  that  they  should 
become  the  makers  of  promissory  notes,  or  the  acceptors  of 
bills  of  exchange."  ^  And  certainly  it  does  not  seem  "  inci- 
dental to  its  very  existence"  (to  quote  Chief  Justice  Mar- 

■  Dartmouth  College  v.  Woodward,  4  Wheat.  636. 

'  See  Dillon  on  Municipal  Corporations  (2  ed.),  Vol  I,  §  30,  and  cases  cited. 

'  Broughton  v.  Manchester  &  S.  Waterworks,  3  B.  &  Aid.  1,  Best,  J.,  saying 
that  when  "  a  company  like  the  Bank  of  England,  or  the  East  India  Company, 
are  incorporated  for  the  purposes  of  trade,  it  seems  to  result  from  the  very  object 
of  their  being  so  incorporated  that  they  should  have  power  to  accept  bills  or 
issue  promissory  notes." 

*  Broughton  v.  Manchester  &  S.  Waterworks,  3  B.  &  Aid.  1. 


AUTHORITY   TO   EXECUTE   THE   INSTRUMENT.  .'HI 

shall's  definition)  that  a  water  supply  corporation  should 
execute  a  negotiable  instrument,  as  its  corporators  might  be 
expected  to  operate  with  a  cash  capital,  unless  the  power 
were  conferred  to  operate  upon  credit. 

Likewise,  it  has  been  held  that  a  railroad  company  can- 
not, without  exj)ress  authority,  bind  itself  by  accej^ting  a  bill 
of  exchange.^ 

§  381.  In  the  United  States  the  cases  go  to  great  lengths 
in  upholding  the  validity  of  corporate  negotiable  instru- 
ments. "  In  this  country  it  may  be  regarded  as  settled," 
says  Prof.  Parsons,^  "  that  the  power  of  corporations  to  be- 
come parties  to  bills  of  exchange,  or  promissory  notes,  is  co- 
extensive with  their  power  to  contract  debts.  Whenever  a 
corporation  is  authorized  to  contract  a  debt,  it  may  draw  a 
bill  or  give  a  note  in  payment  of  it.  Every  corporation, 
therefore,  may  become  a  party  to  bills  and  notes  for  some 
purposes.  Thus  a  mere  religious  corporation  may  need  fuel 
for  its  rooms,  and  as  an  economical  measure  may  buy  a  cargo 
of  coal,  and  give  its  note  for  it ;  and  such  a  note  would  un- 
doubtedly be  valid  in  this  country."  And  instancing  how 
far  a  corporation  may  go,  he  adds :  "  if,  for  example,  the 
Trustees  of  Columbia  College,  in  New  York,  bought  a  cargo 
of  cotton,  and  gave  their  negotiable  note  foi*  twenty  thousand 
dollars,  the  seller  might  suppose  that  they  had  need  of  some 
means  of  transmitting  a  large  amount  of  money,  and  found 
that  they  could  do  it  to  most  advantage  by  using  this  cotton ; 
or  that  they  wanted  it  for  some  other  legitimate  purpose. 
Such  a  note  would  clearly  be  valid  in  the  hands  of  a  bona 
fide  holder  without  notice ;  nor  do  we  think  that  the  nature 
of  the  transaction  merely  would  be  notice  to  the  original 
payee  that  it  was  given  for  an  unauthorized  purpose."  But 
it  might  be  said  with  propriety,  that  so  singular  a  spectacle 
as  the  trustees  of  a  literary  institution  buying  cotton,  would 
more  naturally  lead  the  party  dealing  with  them  to    suspect 

'  Batcman  v.  Mid-Wales  R.  R.  L.  R.  1  C.  P.  499. 

"^  1  Tarsous  X.  &  B.  164,  165  ;  approved  in  Cattron  v.  First  Uuiversalist  So- 
ciety, 4G  Iowa  108. 


312  PRIVATE  CORPORATIONS  AS  PARTIES. 

tliat  they  were  speculating  with  their  trust  funds,  and  that 
sucli  party  would,  by  the  very  nature  of  the  act,  be  apprised 
of  their  defective  authority. 

§  382.  Prevailing  doctrines  m  United  States. — In  this 
country  three  pi-opositions  respecting  private  corporations 
may  be  regarded  as  settled.  First.  That  it  has  implied 
power  to  contract  debts  like  au  individual  whenever  neces- 
sary or  convenient  in  furtherance  of  its  legitimate  objects.^ 
Second.  That  whenever  it  may  contract  a  debt,  it  may  borrow 
money  to  pay  it.^  And,  Thirds  That  whenever  it  contracts 
a  debt  for  materials,  services,  or  otherwise,  in  the  scope  of  its 
business,  or  borrows  money,  it  may  execute  a  negotiable  bill, 
note,"  or  bond,^  and  secure  it  by  mortgage,  to  the  creditor  in 
payment.  The  doctrine  on  this  subject  was  well  stated  in  a 
New  York  case,  where  Vice  Chancellor  Sandford,  said  :  "  K.  cor- 
poration, in  order  to  attain  its  legitimate  objects,  may  deal  pre- 
cisely as  an  individual  may  who  seeks  to  accomplish  the  same 
ends.  If  chartered  for  the  purpose  of  building  a  bridge,  it  may 
contract  a  debt  for  labor,  the  materials,  or  the  land  upon 
which  the  bridge  is  abutted.  If  more  advantageous,  it  may 
bori-ow  money  to  purchase  such  land  or  materials,  or  to  pay 

'  Fay  V.  Noble,  12  Cush.  1 ;  McMasters  v.  Reed,  1  Grant's  Cas.  36 ;  Moss  v. 
Averill,  10  N.  Y.  449;  Barry  v.  Merchants'  Exchange  Co.  1  Sand.  Ch.  280;  Cora- 
nicrcial  Bank  v.  Newport,  1  B.  Mon.  13.  See  also  cases  cited  in  succeeding 
notes. 

"  Mead  v.  Kceler,  24  Barb.  20 ;  Beers  v.J'hoenix  Glass  Co.  14  Barb.  358  (1852) ; 
Partridge  v.  Badger,  25  Barb.  146  (1857) ;  Fay  v.  Noble,  12  Cush.  1 ;  Stratton 
V.  Allen,  10  N.  J.  Eq.  229. 

=  Mott  V.  Hicks,  1  Cow.  513;  SaflFord  v.  Wyckoff,  4  Uill,  442;  Moss  v.  Oak- 
ley, 2  Hill,  265;  Barry  v.  Merchants'  Exchange  Co.  1  Sand.  Ch.  280;  Meed  v. 
Kceler,  24  Barb.  20 ;  Barber  v.  Mechanics'  Ins.  Co.  3  Wend.  96 ;  Barnes  v.  On- 
tario Bank,  19  N.  Y.  152;  Leavitt  v.  Blatcliford,  17  N.  Y.  521 ;  Curtis  v.  Leavitt, 
15  N.  Y.  06;  Partridge  v.  Badger,  25  Barb.  140;  Moss  v.  Averill,  10  N.  Y.  449; 
Att.  Gen.  v.  Life  and  F.  Ins.  Co.  9  Paige,  470;  Hamilton  v.  Newcastle  R.  R!  Co. 
9  Ind.  359;  Hardy  v.  Mcrriman,  14  Ind.  203;  McMasters  v.  Reed,  1  Grant's  Cas. 
86;  Smith  v.  Eureka  Flour  Mills,  6  C  al.  1 ;  Came  y.  Brigham,  39  Me.  35;  Clark 
V.  School  District,  3  R.  I.  199;  Lucas  v.  Pitney,  3  Dutch  221 ;  Commercial  Bank 
V.  Newport  Man.  Co.  1  B.  Mon.  13;  Buckley  v.  Hriggs,  30  Mo.  452. 

'  Smith  V.  Law,  21  N.  Y.  296;  Curtis  v.  Leavitt,  15  N.  Y.  66;  Barry  v.  Mer- 
chants' Exchange  Co.  1  Sand.  Ch.  2S0;  Commonwealth  v.  Pittsburgh,  41  Penn. 
St.  278;  Railroad  Co.  v.  Evansvillc,  15  lud.  395;  White  Water  Valley  Canal  Co. 
21  How.  414. 


AUTUORITY   TO   EXECUTE   THE   INSTRUMENT.  313 

for  sucli  labor ;  and  as  the  evidence  of  the  indebtedness,  it 
may  execute  to  the  creditors  a  note,  a  bond,  or  a  mortgage, 
whether  the  debt  be  for  the  money  borrowed,  or  the  work, 
material,  or  lands."  ^  And  in  a  more  recent  case  it  was  said 
that  "  the  right  of  corporations  m  general  to  give  a  note, 
bond,  or  other  engagement  to  })ay  a  debt  is  so  nearly  identi- 
cal or  so  inseparably  connected  with  the  right  to  contract  the 
debt,  that  no  doubt  upon  the  question  ought  to  be  admitted. 
When  a  corporation  can  lawfully  purchase  property,  or  pro- 
cure money  on  loan  in  the  course  of  its  business,  the  seller  or 
the  lender  may  exact,  and  the  purchaser  or  borrower  must 
have,  the  power  to  give  any  known  assurance  which  does  not 
fall  within  the  prohibition,  express  or  implied,  of  some  statute. 
The  particular  restriction  must  be  sought  for  in  the  charter 
of  the  corporation,  or  in  some  other  statute  binding  upon  it; 
but  if  not  found  in  that  examination,  we  may  safely  affirm 
that  it  has  no  existence."  ^ 

§  383.  Applying  these  principles  in  particular  cases,  the 
courts  have  upheld  the  right  to  contract  debts,  and  to  bor- 
row money  to  pay  them,  where  the  company  was  chartered 
to  build  a  railroad;^  to  build  a  plank-road;*  to  hold  real 
estate,  and  to  erect  buildings  for  a  public  exchange;^  to 
build  and  hold  property  for  religious  purposes;*^  to  operate 
a  flouring  mill;'  and  where  a  railroad  was  empowered  to 
contract  with  a  connecting  road  for  its  use,  it  was  held  that 
it  might  accept  bills  drawn  by  the  connecting  road,  as  a  con- 

'  Barry  v.  Merchants'  Exchange  Co.  1  Sand.  Ch.  280. 

» Comstock.  J.,  in  Curtis  v.  Leavitt,  15  N.  Y.  66.  See  also  Mott  v.  Ilicks,  1 
Cow.  513 ;  Barber  v.  Mechanics'  Ins.  Co.  3  Wend.  96 ;  Jackson  v.  Brown,  5  Wend. 
596  ;  Moss  v.  Oakley,  2  Hill,  205;  Att.  Gen.  v.  Life  &  Fire  Ins.  Co.  9  Paige,  470; 
Safford  v.  Wykoff,  4  Hill,  443 ;  Barry  v.  Merchants'  Exchange  Co.  1  Sand.  Ch. 
280;  Meed  v.  Keeler,  24  Harl).  20;  Hamilton  v.  Newcastle,  &c.  R.  R.  Co.  9  Tnd. 
359;  Hardy  v.  Merriman,  14  Ind.  203;  Smith  v.  Eureka  Flour  Mills,  6  Cal.  1; 
Buckley  v.  Briggs,  30  Mo.  452;  Commercial  Bank  v.  Newport  Man.  Co.  1  B. 
Mon.  13;  McMnsters  v.  Reed,  1  Grant's  Cas.  36;  Carne  v.  Brigham,  39  Me.  35. 

'  Lucas  V.  Pitney,  3  Dutch.  221.  *  Smith  v.  Law,  21  N.  Y.  296. 

5  Barry  v.  Merchants'  Ex.  Co.  1  Sand.  Ch.  2S0. 

•  Davis  V.  Proprietors'  Meeting  House,  8  ^letc.  321. 

'  Smith  V.  Eureka  Flour  Mills  Co.  6  Cal.  1. 


314  PRIVATE  CORPORATIONS  AS  PARTIES. 

sicleration  for  a  change  of  gaiige.^  So  trustees  of  a  society  to 
build  a  monument,  it  has  been  held,  may  make  a  promissory 
note  ;  '^  so  may  corporations  empowered  to  buy  and  sell  lands 
or  goods  ;  ^  so  may  one  authorized  to  advance  money  upon 
goods,  accept  l)ills  in  anticipation  of  consignments ;  *  so  may 
one  engaged  in  the  manufacture  of  glass  execute  its  bills  or 
notes  for  wood  to  be  used,  or  other  materials ;  ^  so  may  a 
building  fund  association  borrow  money  and  execute  its 
notes  in  payment.® 

§  384.  Ordinarily  a  corppration  has  implied  power  to 
take  a  bill  or  note  for  a  debt  due  it.  But  there  is  no  im- 
plied power  to  a  corporation  to  loan  out  its  funds/  unless 
it  be  a  bank,  or  authorized  to  conduct  banking  business,  or 
make  loans  and  discounts,  as  other  corporations  are  some- 
times empowered  to  do.  Therefore  an  insurance  company 
prohibited  from  discounting  paper  could  not  lend  money  on 
a  note  and  take  interest  in  advance.®  And  prohibition  of 
hanldng  powers  is  a  prohibition  from  making  discounts.^ 

But  it  has  been  held  that  an  insurance  company  empow- 
ered to  make  insurances  cannot  contract  debts,  or  borrow 
money,  and  consequently  could  not  draw  or  accept  a  bill,  or 
make  a  note ;  for  no  such  implied  power  can  be  deemed 
necessary  to  its  business,  which  is  to  be  conducted  by  sub- 
scriptions of  stock.^*^ 

'  Smead  v.  Indianapolis  R.  R.  Co.  11  Ind.  104. 

""  Hayward  v.  Pilgrim  Society,  21  Pick.  270. 

=  Clark  V.  Farmers'  Woolen  Man.  Co.  15  Wend.  256;  Commercial  Bank  v. 
Newport  I^Ian.  Co.  1  B.  Mon.  13;  Fay  v.  Noble,  12  Cush.  1  ;  Ketchum  v.  City  of 
Buffalo,  4  Kern.  356. 

*  Munn  V.  Commission  Co.  15  Johns.  44. 
»  Mott  V.  Hicks,  1  Cow.  513. 

*  Davis  V.  West  Saratoga  B.  Union,  32  Md.  285. 

'  Madison,  &c.  Plank  R.  Co.  v.  Watertown  Plank  Road  Co.  7  Wis.  59.  Held, 
that  a  plank  road  company  is  not  authorized  to  lend  money  generally,  but  might 
lend  an  amount  to  one  of  its  contractors  to  enable  him  to  build  a  section.  Grand 
Lodge  of  Freemasons  v.  WaddiU,  3G  Ala.  313.  Hell,  tiiat  Lodge  of  Masons 
could  not  lend  money.  Waddill  v.  Alabama  R.  R.  Co.  35  Ala.  (N.  S.)  323. 
Held,  railroad  company  could  not. 

*  N.  Y.  Fireman's  Ins.  Co.  v.  Ely,  2  Cow.  664. 

»  Philadelphia  Loan  Co.  v.  Towner,  13  Conn.  249. 
"  Bacon  v.  Mississippi  Ins.  Co.  31  Miss.  116. 


AUTHORITY   TO   EXECUTE  TOE  INSTRUMENT.  315 

§  385.  Corporations  having  a  riglit  to  receive  Lills  or 
notes  in  payment  of  debts,  have  the  implied  right  to  indorse 
them,  or  to  disj^ose  of  them  by  assignment  without  indorse- 
ment, as  may  suit  their  purposes.^  And  if  authorized  to  bor- 
row money,  they  may  borrow  a  bill  or  note,  and  indorse  it, 
or  assign  it.*^  Power  to  "  sell  and  convey  "  its  bills  and  notes 
impliedly  authorizes  the  corporation  to  transfer  them  by  in- 
dorsement or  assignment.^ 

§  386.  When  a  corporation  has  a  general  power,  express 
or  implied,  to  be  a  party  to  bills  and  notes,  such  instruments 
will  be  presumed  to  have  been  executed  in  the  legitimate 
course  of  its  business,  and  whether  so  executed  or  not  ^vill 
be  valid  in  the  hands  of  a  bona  fide  holder  without  notice.^ 
Unless  the  corporation  be  specially  authorized  to  do  so,  the 
execution  or  indorsement  of  accommodation  paper  for  the 
benefit  of  a  third  person  is  an  act  beyond  the  scope  of  its 
corporate  authority ;  but,  according  to  the  principles  stated,  a 
bona  fide  holder  taking  without  notice  of  its  character  could 
enforce  it.^  Its  indorsement  on  the  paper  is  presumably 
valid,  and  it  cannot  be  inferred  in  the  absence  of  j)i'oof  that 
it  was  for  accommodation.'  Where  a  railroad  company  trans- 
ferred and  guaranteed  bonds  of  another,  itself  receiving  the 
proceeds,  if  was  held  estopped  to  deny  its  liability  u})on  the 
guaranty.''' 

'  Marvine  v.  Hymers,  13  N.  Y.  223;  Planters'  Bank  v.  Sharp,  6  How.  301; 
Hardy  v.  Merriweather,  14  Ind.  203;  Mclntyre  v.  Preston,  5  Gil.  48;  Bank  of 
Genesee  v.  Patchin  Bank,  3  Kern.  309. 

'  Lucas  V.  Pitney,  3  Dutch.  221;  Turniss  v.  Gilchiist,  1  Sand.  53;  Holbrook 
V.  Basset,  5  Bosw.  147. 

'  Cooper  V.  Curtis,  30  Mo.  488;  Savage  v.  Walshe,  26  Ala.  (N.  S.)  G19. 

*  Mitcliell  V.  Rome  R.  R.  Co.  17  Ga.  574;  Supervisors  v.  Schenck,  5  Wall. 
784;  Hart  v.  Missouri,  &c.  F.  &  M.  Ins.  Co.  21  Mo.  91  ;  Barker  v.  Mechanics'  Ins. 
Co.  3  Wend.  94;  Lafayette  Bank  v.  St.  Louis  Stoneware  Co.  2  Mo.  App.  294. 

'  Bird  V.  Daggett,  97  Mass.  494;  Monument  Nat.  Bank  v.  Globe  Works,  101 
Mass.  57;  Bank  of  Genesee  v.  Patchin  Bank,  3  Kern.  309;  19  N.  Y-.  312;  Mor- 
ford  V.  Farmers'  Bank,  20  Barb.  568;  Bridgeport  City  Bank  v.  Empire  Stone 
Dressing  Co.  30  Barb.  42!  ;  Hall  v.  Auburn  Turnpike  Co.  27  Cal.  255  ;  Madison, 
«&c.  R.  R.  Co.  v.  Norwich  Sav.  Soc'y,  24  Ind.  457 

•  Lafayette  Bank  v.  St.  Louis  Sto:jeware  Co.  2  Mo.  App.  299. 
'  Arnot  V.  Erie  R.  R.  Co.  13  N.  Y.  S.  C.  (5  Hun),  COS. 


316  PRIVATE  CORPORATIONS  AS  PARTIES. 

Although  the  agent  or  officer  of  tlie  corporation  making  ac- 
commodation paper  exceeded  his  authority,  such  holder  could 
not  sue  him  for  his  tortious  act,  as  the  paper  is  valid  as  to 
him,  and  having  a  remedy  against  the  corporation,  he  suffers 
no  damage  thereby.^  The  same  principle  which  prohibits 
corporations  from  becoming  parties  to  accommodation  paper 
would  apply  to  their  becoming  guarantors,  or  sureties  for 
others.^ 

A  corporator  sued  on  a  note  by  a  corporation  cannot 
plead  its  illegality.^ 


SECTION  IT. 

AUTHORITY    OF   THE   AGENT  IN*  LAW   AND   IN   FACT   TO   BIND   THE 

COBPOKATION. 

§  387.  (1)  When  it  is  settled  that  the  corporation  has 
legal  authority  to  do  the  act,  the  next  question  is,  are  the 
parties  pretending  to  act  for  it  the  legal  agencies  by  which 
its  authority  may  be  exercised.  Not  infrequently  the  charter 
of  incorporation  provides  that  the  corporate  instruments  of 
debt  shall  be  signed  by  the  president,  or  signed  by  its  presi- 
dent and  countersigned  by  the  cashier,  or  prescribe  some  such 
formality  of  their  execution.  In  such  cases,  these  being  the 
legal  agencies  provided  by  law  to  bind  the  corporation  by 
their  acts  in  a  particular  way,  instruments  signed  by  other 
officers  or  agents,  purporting  to  bind  the  corporation,  would 
bear  upon  their  face  evidence  of  departure  from  the  legal 
mode,  and  be  notice  to  all  of  the  irregularity.  And  it  would 
not  be  competent  for  the  corporation  to  bind  itself  by  instru- 
ments ill  any  other  form,  or  executed  by  other  agents,  than 
those  prescribed  by  law.^    Thus,  where  a  bank  charter  pro- 


'  Bird  V.  Daggett,  97  Mass.  494. 

'  Madison,  &c.  Plank  Road  Co.  v.  Watertown,   &c.  Plank  Road  Co.  7  Wis. 
59 ;  Madison,  &c.  R.  R.  Co.  v.  Norwich  Sav  Soc'y,  24  lud.  457. 
'  Ramsey  v.  Peoria,  &c,  Ins.  Co.  55  III.  311. 
*  McCullon2:h  V.  Moss.  5  Den.  575,  Lott,  Senator. 


ADTHOmTY  TO  BIND  THE  CORPORATION.  317 

vided  that  its  bills,  notes  and  other  contracts  should  l)e  l/md- 
ing  if  signed    by  the    president    and  countersigned  by  the 
cashier,  and  that  the  funds  of  the  corporation  should  not  be 
bound  for  any  contract  unless  it  was  so  signed  and  counter- 
signed, it  was  held  that  bank  bills  signed  by  the  vice-presi- 
dent and  countersigned  by  the  assistant  cashier  were  not  bind- 
ing although  the  board  of  directors  had  authorized  the  vice- 
president  and  assistant  cashier  to  sign  them.^     And  this  is 
clearly  correct,  for  when  a  corporation  is  limited  and  restricted 
to  certain  defined  powers,  and  also  to  certain  prescribed  modes, 
the  ends  contemplated  l)y  the  charter  would  be  practically 
defeated,  as  well  by  a  departure  from  the  mode  designated 
as  by  an  exercise  of  the  powers  prohibited.^     So  where  it  was 
provided  that  the  business  of  a  lead  mining  company  should 
be  conducted  by  its  directors,  ilf  was  thought  that  the  presi- 
dent and  secretary  could  not  bind  it  by  a  note  unless  author- 
ized so  to  do  by  the  directors,  and  such  authority  was  not  to 
be  presumed.^     But  any  officer  or  agent,  acting  under  author- 
ity of  directors  having  power  under  the  charter  to  bind  the 
corporation,  might  bind  the  corporation,  and  his  authority 
from  them  might  be  shown  to  exist  by  implication  from  the 
course  of  business,  as  well  as  by  express  resolution.^     Sub- 
stantial  compliance  with    the  statutory  requirements  is  all 
that  is  necessary.    Therefore,  where  the  statute  required  that 
a  corporate  bill  should  be  accepted  by  two  directors,  and  that 
they  should  express  that  it  was  accepted  by  them  on  behalf 
of  the  corporation,  and    the  two  accepting  directors   wrote 
"  appointed  to  accept  this  bill "  in  their  acceptance,  it  was 
held  sufficient.^ 

'  Planters',  &c.  Bank  v.Erwin,  31  Geo.  377,  Lumpkin,  J.:  "  If  it  be  said  that 
these  bills  liave  got  into  the  hands  of  innocent  liolders,  our  reply  is,  that  they 
could  have  protected  themselves  by  looking  at  the  charter,  which,  in  strong 
phraseology,  has  exempted  tlie  corporation  from  liability  for  l)ills  thus  signed. 
The  want  of  power  to  bind  even  the  corporate  funds  in  this  way  was  patent,  and 
whosoever  would  might  avoid  imposition." 

'  Lucas  V.  San  Francisco,  7  Cal.  469. 

'  McCullough  V.  Moss.  5  Den.  575.  To  same  eflFect  see  Cattron  v.  First  Uni- 
versalist  Society,  46  Iowa,  106. 

*  Preston  v.  Missouri,  &c.  Lead  Co.  51  Mo.  45. 

'  Halford  v.  Cameron's  Coalbrook,  &c.  Co.  3  Eng.  L.  &  Eq.  309. 


318  PRIVATE  COKPORATIONS  AS  PARTIES. 

Where  the  directors  of  an  incorporated  company  author- 
ized its  agent  to  give  "  a  company  note  "  it  was  held  that  tHe 
term  "note"  was  not  employed  in  its  strict  sense,  but  that  a 
due  bill,  memorandum,  check  or  other  similar  security  would 
fall  fairly  within  the  meaning  of  it.^ 

§  3^88.  (2)  Whether  or  not  the  parties  so  describing  them- 
selves are  really  officers  or  agents  of  the  corporation  is  next  to 
be  determined.  The  ordinary  and  most  unexceptionable  form 
of  proof  is  made  by  the  production  of  the  records  or  books  of 
the  corporation  containing  the  entry  or  resolution  of  appoint- 
ment, the  records  being  shown  to  be  those  of  the  corpora- 
tion.^ But  it  is  not  necessary  that  this  mode  of  proof  should 
be  adopted.  Nor  is  it  necessary  tliat  there  should  be  such 
record  evidence  in  existence,  or  that  any  particular  mode  of 
appointment  should  have  been  pursued,  unless  required  by 
statute.  It  was  the  ancient  doctrine  of  the  common  law  that 
a  corporation  could  not  express  its  assent,  and  therefore 
could  not  constitute  an  officer  or  agent,  save  by  instrument 
under  seal.^  This  doctrine  is  now  completely  obsolete  in  the 
United  States,  and  here  there  is  no  doubt  that  such  a  body 
may,  by  mere  vote  or  other  appropiiate  corporate  act  not 
under  seal,  appoint  an  officer  or  agent  whose  acts  and  con- 
tracts within  the  scope  of  his  authority  would  bind  the  cor- 
poration.^ And  if  a  corporation  employ  a  person  to  dis- 
charge official  duties — such  as  a  bank,  which  places  a  person 
behind  its  counter  to  exercise  the  duties  of  cashier — it  will 
be  bound  by  his  acts  although  the  formalities  of  qualification 
have  not  been  complied  with,  unless  the  statute  creating  the 
corporation  provides  that  his  acts  shall  be  void  until  such 
formalities   be   performed.^      Indeed,  the   doctrine   is   well 

>  Tripp  V.  Swanzey  Man.  Co.  13  Pick.  293. 

'Clark  V.  Benton  Man.  Co.  15  Wend.  256;  Narragansett  Bank  v.  Atlantic 
Silk  Co.  3  Mete.  282 ;  Thayer  v.  Middlesex  Mut.  Ins.  Co.  10  Pick.  326 ;  Owings  v. 
Speed,  5  Wheat.  424. 

*  Angell  &  Ames  on  Corporations,  chap,  ix,  §  3,  p.  214. 

«  Bank  of  Columbia  v.  Patterson's  Adm'r,  7  Cranch,  305 ;  Fleckner  v.  U.  S. 
Bank,  8  Wlioat.  387. 

*  Bank  of  U.  S.  v.  Dandredge,  12  Wheat.  83. 


AUTHORITY  TO  BIND  THE  CORPORATION.  319 

settled  that  if  officers  of  a  corporation  openly  exercise  a 
power  which  presupposes  a  delegated  authority  for  the  pur- 
pose, and  other  corporate  acts  show  that  the  coi-poration 
must  have  contemplated  the  legal  existence  of  such  author- 
ity, the  acts  of  such  officers  will  be  deemed  rightful,  and  the 
delegated  authority  will  be  presumed.  If  a  person  acts 
notoriously  as  cashier  of  a  bank,  and  is  recognized  by  the 
directors,  or  by  the  coi-poration,  as  an  existing  officer,  a  reg- 
ular appointment  will  be  presumed,  and  his  acts  as  cashier 
will  bind  the  corporation,  although  no  written  proof  is  or 
can  be  adduced  of  his  appointment.  In  short,  the  acts  of 
artificial  persons  affi^rd  the  same  presumptions  as  the  acts  of 
natural  persons.  Each  affords  presumptions,  from  acts  done, 
of  what  must  have  preceded  them,  as  matters  of  right  or 
matters  of  duty.^ 

§  389.  (3)  Whether  or  not  the  officer  or  agent  is  author- 
ized in  fact  to  do  the  'particular  act^  is  the  next  question. — 
Proof  of  his  official  character  is  often  sufficient  to  decide  it, 
for  if  the  acts  be  done  within  the  scope  of  his  official  duties, 
and  the  party  dealing  with  him  had  no  notice  that  the  gen- 
eral authority  implied  by  official  relation  was  restricted  by 
private  instructions,  the  corporation  would  be  liable.  And 
here  the  distinction  between  general  and  special  agents 
should  be  observed.  If  a  corporation  were  to  employ  a 
special  agent  to  go  to  a  city  and  buy  a  fireproof  safe,  he 
could  not  execute  a  bill  or  note,  or  borrow  money  in  its 
name,  such  acts  not  being  within  the  scope  of  his  sj^ecial 
agency,  and  all  dealing  with  him  would  be  chargeable  with 
notice  of  his  limited  authority.^  But  if  a  corporation  elects 
a  board  of  directors,  a  president,  cashier,  teller,  or  treasurer, 
it  thereby  designates  such  persons  as  authorized  to  exercise 
all  powers  which  its  charter  reposes,  or  the  usual  course  of 

'  Bank  of  U.  S.  v.  Dandredge,  12  Wheat.  64,  Story,  J.  See  also  Wild  v.  Bank 
of  Passamaquoddy,  '6  Mascn,  C.  C.  R.  505;  Union  Bank  v.  Ridgelcy,  1  Har.  & 
G.  392;  Barrington  v.  Bank,  14  Serg.  &  R.  421  ;  Morse  on  Bankii  g,  139;  East 
River  Nat.  Bank  v.  Gove,  57  N.  Y.  601.  Distinguishing  and  questioning  That- 
cher V.  Bank  of  the  State,  5  Sand.  S.  C.  121. 

'  McCullough  V.  Moss,  5  Den.  567. 


320  PRIVATE  CORPORATIONS  AS  PARTIES. 

business  in  like  institutions  accords  to  such  officers.  Tliey 
are  its  general  agents  within  the  sphere  of  official  duty  and 
discretion.  It  can  only  act  by  its  agents.  And  they  are,  in 
fact,  held  out  to  the  public  as  its  representatives  within  these 
spheres,  and  are,  in  fact,  so  far  as  the  public  is  concerned, 
p'o  tanto^  the  corporation.  The  corporation  is,  therefore, 
bound  by  their  acts  done  within  the  range  of  their  official 
cbaracter  ;  and  the  general  principle,  as  stated  by  the  United 
States  Supreme  Court,  is,  that  "  where  a  party  deals  with  a 
corporation  in  good  faith,  the  transaction  is  not  ultra  vires, 
and  he  is  unaware  of  any  defect  of  authority  or  other  irreg- 
ularity on  the  part  of  those  acting  for  the  corporation,  and 
there  is  nothing  to  excite  suspicion  of  such  defect  or  irreg- 
ularity, the  corporation  is  bound  by  the  contract,  although 
such  defect  or  irregularity  in  fact  exists.  If  the  contract 
can  be  valid  under  any  circumstances,  an  innocent  party  in 
such  a  case  has  a  right  to  presume  their  existence,  and  the 
corporation  is  estopped  to  deny  them."  And  it  adds : 
"  The  principle  has  become  axiomatic  in  the  law  of  corpora- 
tions." ^ 

§  390.  Applying  this  principle  to  particular  cases,  the 
couris  have  enforced  the  liability  of  the  corporation,  where 
the  president  of  a  railroad  company,  who  was  also  a  director 
and  transfer  agent,  fraudulently  overissued  certificates  of 
stock ;  ^  where  the  cashier  of  a  bank  issued  a  false  certificate 
of  deposit;^   where  the   cashier  of  a  bank  certified  a  check 

'  Merchants'  Bank  v.  State  Bank,  10  "Wall.  644  (1870),  Swayne,  J. ;  see  also 
Supervisors  V.  Schenck,  5  Wall.  784;  Thompson  v.  Lee  County,  3  Wall.  337; 
Mercer  County  v.  Ilacket,  1  Wall.  93 ;  Gelpcke  v.  Dubuque,  1  Wall.  203;  Moran 
V.  Commissioners,  2  Black,  722;  Bissell  v.  JefTcrsonville,  24  How.  288;  Commis- 
sioners of  Knox  County  v.  Aspinwall,  21  IIow.  539;  Com,  v.  Pittsburg,  34  Pcnn. 
497;  Commonwealth  V.  Alleghany  County,  37  Ponn.  287;  Stoney  v.  American 
Life  Ins.  Co.  11  Paige,  635  ;  Society  for  Savings  v.  New  London,  29  Conn.  174; 
Claflin  V.  Farmers'  Bank,  30  Barb.  540,  overruling  s.  c.  25  N.  Y.  (11  Smith)  293 ; 
Safford  v.  Wyckoff,  4  Hill  (N.  Y.)  445;  De  Voss  v.  City  of  Richmond,  18  Grat. 
338. 

"  New  York,  &c.  R.  R.  t.  Schuyler,  34  N.  Y.  30. 

*  Barnes  v.  Ontario  Bank,  19  N.  Y.  156, 


AUTHORITY  TO   BIND  THE  CORPORATION.  321 

without  authority  ;  ^  where  the  teller  of  a  bank  fraudulently- 
certified  a  check  to  be  good ;  '^  where  the  treasurer  of  a  rail- 
road company,  whose  duty  it  was  to  issue  certificates  of  stock, 
fraudulently  issued  certificates  regular  in  form,  but  represent- 
ing no  real  stock,  and  pledged  them  as  security  for  a  loan  to 
himself^ 

§  391.  The  principle  is  based  upon  the  idea  that  where 
one  of  two  innocent  parties  must  suffer,  the  loss  should  fall 
upon  the  one  who  created  the  trust  which  enabled  the  trustee 
to  mislead,*  And  it  applies  as  well  where  the  controversy  is 
between  the  original  parties,  as  in  favor  of  indorsers  and 
holders  without  notice  of  the  alleged  defect.^  And  it  is  set- 
tied  law  that  a  negotiable  security  of  a  corporation  which 
appears  upon  its  face  to  have  been  duly  issued  by  such  cor- 
poration, and  in  conformity  with  the  provisions  of  its  charter, 
is  valid  in  the  hands  of  a  bona  fide  holder  thereof  without 
notice,  although  such  security  was  in  point  of  fact  issued  for 
a  purpose,  and  at  a  place  or  in  a  manner  not  authorized  by 
the  charter  of  the  corporation.^ 

§  392.  What  officers  have  implied  powers  to  hind  cor- 
porations as  parties  to  negotiable  instruments. — The  cashier 
of  a  bank  has  prima  facie  authority  by  virtue  of  his  office 
to  transfer  and  indorse  negotiable  paper  held  by  the  bank 
for  its  use,  and  on  its  behalf;  and  while  it  is  perfectly  com- 
petent for  the  bank  to  depart  from    the  general  course  of 

•  Merchants'  Bank  v.  State  Bank,  10  "Wall.  604. 

'  Farmers'  Bank  v.  Butchers'  Bank,  14  N.  Y.  624,  s.  c.  16  N.  Y.  133;  Mead 
V.  Merchants'  Bank,  25  N.  Y.  146. 

'  Tome  V.  Parkersburg  R.  R.  Co.  39  Md.  36. 

"  Bank  of  U.  S.  v.  Davis,  2  Hill,  465;  F.  &  M.  Bank  v.  B.  &  D.  Bank,  16  N. 
Y.  133;  Welland  Canal  Co.  v.  Hathaway,  8  Wend.  480 ;  N.  Y.  &  N.  H.  R.  R.  Co. 
V.  Schuyler,  34  N.  Y.  30;  Hern  v.  Nichols,  1  Salk.  289;  Barnes  v.  Ontario  Bank, 
10  N.  Y.  156;  Farmers'  &  M.  Bank  v.  Butchers'  &  D.  Bank,  14  N.  Y.  624;  16 
N.  Y.  133;  jlilead  v.  Merchants'  Bank,  25  N.  Y.  146;  Merchants'  Bank  v.  State 
Bank,  10  Wall.  604. 

'  Savings  Co.  v.  New  London,  29  Conn.  174;  Tash  v.  Adams,  10  Cush.  252; 
Super\-isors  v.  Schenck,  5  Wall.  784. 

"  Gelpcke  v.  Dubuque,  1  Wall.  203;    Thompson  v.  Lee  County,  3  Wall.  327; 
Goodman  v.  Simonds,  20  How.  365. 
Vol.  I.— 21 


32'2  PRIVATE  CORPORATIONS  AS  PARTIES. 

ImsiiK'Ss,  it  is  inciiniheut  on  it  to  show,  in  order  to  escape 
liaLility  on  sucli  an  indorsement,  that  it  liad  restricted  his 
power  in  this  regard,  and  that  such  restriction  was  known  to 
the  holder.^  Especially  has  the  cashier  authority  to  indorse 
ne2:otiable  paper  for  collection  merely.^  But  he  has  no  im- 
plied power  to  transfer  non-negotiable  paper,  judgments,  or 
personal  property  ;  and  his  authority  must  be  proved  directly 
or  by  usage.^  So,  he  has  implied  authority  to  draw  bills  or 
checks  on  funds  of  the  bank  elsewhere;*  to  certify  checks 
drawn  upon  the  bank ;  ^  to  receipt  for  and  issue  certificates 
of  deposit ; "  to  borrow  money  and  execute  promissory  notes 
of  the  bank  therefor;"^  also,  we  should  say,  to  accept  bills 
in  the  bank's  name,^  although  the  implication  of  this  power 
virtute  officii  has  been  denied.^  And  to  buy  and  sell  bills 
and  notes  for  the  bank,  indorsing  them  also  when  sold,  is 
within  the  ordinary  scope  of  his  office.^*^  So,  too,  in  the  ab- 
sence of  restrictions,  if  he  has  procured  a  bona  fide  rediscount 

'  West  St.  Louis,  &c.  Bank  v.  Shawnee,  &c.  Bank,  95  U.  S.  (5  Otto)  558 ;  Fleck- 
ner  v.  U.  S.  Bank,  8  Wheat.  357 ;  Wild  v.  Passamaquoddy  Bank,  3  Mason,  505 ; 
Robb  V.  Ross  County  Bank,  41  Barb.  580  ;  Cooper  v.  Curtis,  30  Me.  488;  City 
Bank  v.  Perkins,  29  N.  Y.  554;  Kimball  v.  Cleveland,  4  Mich.  600;  Everett  v. 
•XJ.  S,  6.  Port.  (Ala.)  106  ;  Harper  v.  Calhoun,  7  How.  (Miss.)  203  ;  Farrar  v. 
Oilman,  19  Me.  440;  State  Bank  v.  Wheeler,  21  Ind.  90;  Lafayette  Bank  v.  State 
Bank,  4  McLean,  208 ;  Angell  &  Ames  on  Corporations,  245 ;  Morse  on  Banking, 
i5.1,  152,  153. 

In  Bissell  v.  First  Nat.  Hank,  09  Penn.  St.  415,  it  was  held  that  tlie  bank 
was  bound  by  indorsement  of  its  cashier,  "A.  B.,  casliier,"  altliough  not  made 
at  the  bank,  but  upon  the  street. 

''  Potter  V.  Merchants'  Bank,  28  N.  Y.  041 ;  Elliott  v.  Abbott,  12  N.  H.  549; 
Corser  v.  Paul,  41  N.  H.  24 ;  Hartford  Bank  v.  Barry,  17  Mass.  94. 

3  Barrick  v.  Austin,  21  Barb.  241 ;  Holt  v.  Bacon,  25  Miss.  567. 

*  Morse  on  Banking,  150. 

'  Merchants'  Bunk  v.  Hank  of  Columbia,  5  Wheat.  326;  United  States  v.  City 
Bank,  21  How.  356;  Merchants' Bank  v.  Central  Bank,  1  Kel.  418  ;  Morse  on 
Banking,  150. 

"  Merchants'  Bank  v.  State  Bank,  10  Wall.  604:  Morse  on  Banking,  148. 

'  State  Bank  v.  Kain,  1  Brecse,  45  ;  Morse  on  Banking,  54,  55. 

»  Barnes  v.  Ontario  Bank,  19  N.  Y.  152;  Sturgis  v.  Bank  of  Circleville,  U 
Ohio  St.  153 ;  Bidgway  v.  Farmers'  Bank,  12  Sergt.  &  R.  256  ;  Ballston  Spa 
Bank  v.  Marine  Bank,  16  Wis.  120  ;  Morse  on  Banking,  148. 

9  Farmers,  &c.  Bank  v.  Troy  City  Bank,  1  Dough.  (Mich.)  457.  Such  is  the 
implication  of  this  case.     Morse  on  Banking,  164. 

">  Pendleton  v.  Bank  of  Ky.  1  T.  B.  Mon.  179. 


AUTHORITY   TO   BIND   TIIK   CORrORATION.  323 

of  the  paper  of  the  bank,  his  acts  will  be  binding,  because  of 
his  implied  power  to  transact  such  Ijusiness.^  But  he  has  no 
power  to  bind  the  bank  as  a  party  to  accommodation  paper ; 
and  it  would  be  void  in  the  hands  of  any  one  taking  it  (ex- 
cept from  a  holder  without  notice)  with  notice  of  its  char- 
acter;^ nor  has  he  power  to  release  a  debt,'^  though  if  he 
informs  a  surety  that  the  debt  of  his  principal  is  paid,  and 
the  surety  I'elying  on  his  statement  change  his  position,  the 
bank  would  be  estopped  from  making  claim  against  him.* 
The  assistant  cashier  has  no  implied  power  to  accept  or  cer- 
tify a  check.^ 

§  393.  The  president  of  a  bank  and  of  other  incorporated 
institutions  has  implied  authority  to  take  charge  of  their 
litigation,  and  to  employ  counsel  to  prosecute  or  defend 
causes.  And  the  corj^oration  will  be  bound  by  his  action 
unless  it  be  known  to  the  party  employed  that  he  was  acting 
against  the  will  of  the  corporation.^  A  bank  president  has 
the  implied  power  to  receipt  for  deposits."^  But  the  presi- 
dent of  a  bank  is  not  the  executiv^e  officer  who  has  charore  of 
its  moneyed  operations.  A  recent  author  says  that  he  has  no 
implied  power  to  draw  checks  on  its  behalf,  or  against  its 
fundSjHhough  established  usage  may  confer  such  power  upon 
him,  to  be  exercised  in  the  cashier's  absence,  or  otherwise.^ 

It  has  been  thought  that  the  president  of  a  lead  mining 

'  West  St.  Louis,  &c.  Bank  v.  Shawnee,  &c.  Bank,  95  U.  S.  (5  Otto),  559 
(1877). 

^  West  St.  Louis,  &c.  Bank  v.  Shawnee,  &c.  Bank,  95  U.  S.  (5  Otto),  558 ; 
Lafayette  Bank  v.  State  Bank,  4  McLean,  208  ;  Morse  on  Banking,  164;  Farmers' 
&c.  Blink  V.  Troy  City  Bank,  1  Dough.  (Mich.)  457. 

'  Cocheco  Nat.  Bank  v.  Haskell,  51  N.  H.  116.      '  '  Id. 

'  Pope  V.  Bank  of  Albion,  57  N.  Y.  136  (1874). 

"  Alexandria  Canal  Co.  v.  Swann,  5  How.  83;  American  Ins.  Co.  v.  Oakley, 
9  Paige,  496  ;  Savings  Bank  v.  Benton,  2  Mete,  (Ky.)  240;  Mumford  v.  Hawkins, 
5  Den.  355;  Hodges'  Ex'r  v.  First  Nat.  Bank,  21  Grat.  59;  Morse  on  Banking, 
128,  129;  but  in  Ashuelot  Man.  Co.  v.  Marsh,  1  Cush.  507,  it  was  held  that  a 
president  of  a  manufacturing  corporation  cannot  bind  it  by  bringing  suit  with- 
out autliorily. 

'  Sterling  v.  :Marietta,  &c.  Trading  Co.  11  Sergt.  &  R.  179. 

•  Morse  on  Banking,  132. 

'  Neiffer  v.  Bank  of  Knoxvillc,  1  Head,  162. 


324  PKIVATB  CORPOKATIONS   AS  TAKTIES. 

company  has  no  implied  power  to  Lincl  it  by  a  note  in  the 
absence  of  authority  from  the  directors ;  ^  and  it  was  recently 
held  in  Michigan  that  no  such  power  was  impliedly  vested  in 
the  general  agent  of  a  mining  company,  although  his  drafts 
were  customarily  drawn  for  current  needs  of  the  company, 
and  were  duly  honored.^ 

§  394.  If  he  has  a  general  authority  from  the  directors, 
the  president  of  a  bank  may  indorse  bills  or  notes  payable  to 
it.^  And  it  would  seem  that  he  has  an  imjilied  power  to  in- 
dorse and  transfer  its  negotiable  paper/  The  president  of  an 
insurance  company  may  indorse  its  bills  and  notes  so  as  to 
bind  it,  when  it  is  shown  that  according  to  the  usual  prac- 
tice of  the  company  its  notes  were  so  negotiated,  or  that  by 
its  course  of  business  he  had  been  held  out  as  a  proper  per- 
son to  indorse  them,^  but  not  otherwise,  without  express  au- 
thority."^ 

The  treasurer  of  a  corporation  authorized  to  pay  and  dis- 
charge a  debt  is  not  thereby  empowered  to  execute  a  note 
for  it,  being  without  funds  in  hand."^  And  the  treasurer  of 
a  coi'poration  is  not  such  an  officer  as  is  vested  with  implied 
power  to  make  negotiable  paper  in  its  name,  though  particu- 
lar circumstances  might  exist  which  would  create  such  an 
implied  power.^ 

An  allegation  that  a  corporation  made  a  note  or  accei:)ted 
a  bill,  by  its  treasurer  or  other  officer,  is  a  sufficient  averment 
that  such  officer  had  authority  to  bind  the  corporation.^ 

§  395.  It  is  well  settled  that  neither  the  president  nor 
the  cashier  of  a  bank  has  authority,  virtute  officii,  to  give  up 

*  McCullough  V.  Moss,  5  Den.  575. 

"  New  York  Iron  Mine  v.  First  Nat.  Bank,  Sup,  Ct.  of  Michigan,  Albany  L. 
J.  Dec,  21st,  1878,  Vol.  18,  No.  25,  p.  489. 

•■'  Spear  v.  Ladd,  11  Mass.  94  ;  Northampton  Bank  v.  Pepoon,  11  Mass.  288. 

*  See  Leavitt  v.  Connecticut  Peat  Co.  6  Blatchf.  139  (18G8). 

"  Elwell  V.  Dodge,  33  Barb.  336.     This  was  the  case  of  an  indorsement  by  a 
president  of  an  insurance  company,  but  the  doctrine  stated  is  inferable  from  it. 
'  Marine  Bank  v.  Clements,  3  Bosw.  GOO. 
'  Torrey  v.  Dustin  Monument  Ass'n,  5  Allen,  327. 
«  Partridge  v.  BaJger,  25  Barb.  172.  '  Id, 


INTERPRETATION  OF  THE  INSTRUMENT.  325 

or  release  a  debt  or  liahility  to  the  bank,  or  make  any  ad- 
mission which  would  release  any  party  to  an  obligation, 
negotiable  or  other\vise,  due  to  the  bank — for  such  purposes 
the  board  of  directors  only  having  the  power  to  act.^ 

§  396.  The  decisions  upholding  the  doctrine  that  certain 
officers  have  implied  power  to  bind  their  corporations,  rest 
upon  the  view  that  such  acts  fall,  according  to  the  customs 
and  usages  of  business,  within  their  spheres  of  duty.  But 
it  is  only  in  such  spheres  of  duty  that  the  implication  arises.^ 
The  secretary  of  an  insurance  company  is  not  to  be  presumed 
to  have  authority  to  bind  it  by  drawing  a  bill,  and  therefore 
express  authority  or  usage  of  the  company,  giving  him  such 
power  would  have  to  be  proved,  in  order  to  bind  it.^  So  the 
secretary  of  a  mining  company  has  no  implied  power  to  in- 
dorse or  transfer  bills  and  notes  belonging  to  it.^ 

§  397.  It  is  not  uncommon  to  authorize  the  president  and 
cashier  to  borrow  money  or  obtain  discounts,  and  in  such 
case  they  must  act  jointly ;  and  the  act  of  the  cashier  alone 
w^ould  not  bind  the  bank,  unless  the  party  dealing  with  him 
believed  him  to  be  acting  in  pursuance  of  his  general  author- 
ity.^ But  if  both  agree  as  to  the  act,  it  may  be  executed  by 
paper  signed  by  one  of  them.^ 

SECTION   III. 

INTERPRETATION    OF   THE   INSTRUMENT. 

§  398.  Unless  the  name  of  the  corporation  for  which  the 
officer  or  agent  assumes  to  act  is  disclosed  upon  the  face  of 

'  Hodges  V.  First  Nat.  Bank,  23  Grat.  59;  Olney  v.  Chadsey,  7  R.  I.  225; 
Merchants'  Bank  v.  Marine  Bank,  3  Gill,  96 ;  Bank  of  U.  S.  v.  Dunn,  G  Pet.  51 ; 
Bank  of  the  Metropolis  v.  Jones,  8  Pet.  J 2;  Brouwer  v.  Appleby,  1  Sand.  158; 
Hoyt  V.  Thompson,  1  Seld.  320 ;  Spyker  v.  Spence,  8  Ala.  333  ;  Mt.  Sterling 
Turnpike  Co.  v.  Looney,  1  Mete.  (Ky.)  550 ;  Cocheco  Nat.  Bank  v.  Haskell,  51 
N.  II.  110. 

^  Morse  on  Banking,  66,  76,  86,  89. 

'  First  National  Bank  y.  Ilogan,  47  Mo.  472. 

*  Blood  V.  Maveuse,  33  Cal.  590.  '  Morse  on  Banking,  150. 

•  Ridgway  v.  Farmers'  Bank,  12  Sergt.  &  R.  256. 


32G  TEIVATE  CORPORATIONS  AS  PARTIES. 

the  instrument,  or  the  officer's  or  agent's  name  is  adopted  by 
the  corporation  and  used  as  its  own  in  business  transactions, 
the  corporation  cannot  be  bound  upon  the  instrument,  and 
the  officer  or  agent  will  himself  be  personally  bound  if  its 
terms  of  obligation  can  be  inteipreted  as  referable  to  him. 
The  questions  of  most  difficulty  on  this  subject  arise  when 
the  names  of  both  corporation  and  of  officer  or  agent  appear 
on  the  face  of  the  paper ;  and  it  has  often  puzzled  courts  to 
determine  whether  or  not  it  was  in  legal  effect  the  instru- 
ment of  the  corporation,  or  the  private  contract  of  the  officer 
or  agent.  Bills,  notes,  acceptances  and  indorsements  are 
each  to  some  extent  peculiar ;  at  least  the  different  relations 
of  the  parties  respectively  to  the  paper  are  circumstances 
which  in  themselves  throw  some  light  on  its  interpretation. 
And  we  shall,  therefore,  consider  separately  the  interpreta- 
tion of  the  maker's,  acceptor's,  drawer's  and  indorser's  con- 
tract. Certain  general  principles  of  the  law  of  agency 
apply  to  all.  And  where  it  is  manifest  from  the  face  of  the 
instrument,  that  it  was  executed  for  a  corporate  purpose ; 
where,  to  use  the  language  of  the  United  States  Supreme 
Court,  "  the  marks  of  an  official  character  not  only  exist  on 
the  face,  but  predominate,"  ^  it  is,  as  a  general  rule,  to  be 
regarded  as  the  paper  of  the  cor^^oration,  and  not  as  that  of 
the  individual  officer  or  agent.^ 

§  399.  Corporations  may  be  known  by  several  names 
as  well  as  natural  persons,  and  therefore  the  misnomer  of  a 
corporation  in  any  written  contract  does  not  prevent  its 
being  bound,  provided  its  identity  with  that  intended  by 
the  parties  is  averred  ■  in  pleading  and  sustained  by  the 
proof?  It  is  not  infrequently  the  case  that  a  firm  is  incor- 
porated as  a  company,  and  uses  sometimes  its  corporate  and 
sometimes  its  copartnership  title,  or  sometimes  styles  itself 
a  company  instead  of  a  firm.     And  sometimes  a  corporation 


'  Mechanics'  Bank  v.  Bank  of  Coluuibia,  5   Wheat.  336  ;  Jackson  v.  Claw,  18 
Johns.  348. 

"  See  Chapter  on  Agents,  Section  III. 

^  Angell  &  Ames  on  Corporations,  1G9.     See  §  485. 


INTERPRETATION   OF   THP.  INSTRUMENT.  327 

transacts  its  business  in  the  name  of  an  agent,  in  wliich  case 
it  ^vill  be  bound  as  effectually  as  if  its  corporate  title  had 
been  used.  An  action  by  "  The  Redvvay  Cotton  Manu- 
factory "  was  sustained  in  Massachusetts  on  a  note  given  to 
"  Richardson,  Metcalf  &  Co, ; "  ^  and  against  the  "  Boston 
Iron  Company  "  on  notes  signed  "  Horace  Gray  &  Co. ;  "  ^ 
and  in  New  York  one  on  a  bond  by  "  The  New  York  Afri- 
can Society,  (fee,  given  to  the  Standing  Committee  of  the 
New  York  African  Society  ;  ^  and  on  an  acceptance  in  the 
same  State  in  the  name  of  "  H.  G.  &  Co.,"  made  by  the 
president  of  the  corporation,  that  being  his  copartnership 
style,  and  used  by  the  corporation  as  a  convenient  mode  for 
raising  funds,  the  corporation  was  held  liable.* 

§  400.  J?i  respect  to  ike  maJcer,  it  is  best  to  sign  the  cor- 
porate name  after  words  whicli  import  necessarily,  and  only, 
a  corporate  promise.  But  it  is  by  no  means  essential  that 
tliis  form  be  observed.  And  if  the  officer  or  agent  add  to 
his  name  "  for Company,"  it  is  quite  sufficient  to  indi- 
cate that  it  is  the  company's  promise,  and  not  his.^  A  differ- 
ent view  has  been  taken  in  some  cases;*  but  this  rule  is 
sustained  by  reason  and  by  great  weight  of  authority.  If 
the  obligatory  tenor  of  the  note  indicate  that  the  corporation 
is  to  be  bound,  then  the  official  signature  will  be  deemed  to 
be  affixed  as  for  the  corporation,  and  the  individual  Avill  not 
be  liable.  It  was  so  held  where  the  note  ran  "  The  Ocean 
Mining  Co.  promise  to  pay,"  and  was  signed  by  "  J.  H., 
Trustee,"  and  by  "  S.  N.  S. ;  "  '^  where  the  note  commenced 

'  Medway  Cotton  Manuf 'y  v.  Adams,  10  Mass.  360.  See  also  Commercial 
Bank  v.  French,  21  Pick.  486;  Minot  v.  Curtis,  7  Mass.  441. 

=  Melledge  v.  Boston  Iron  Co.  5  Cusb.  158. 

'  African  Society  v.  Varick,  13  Johns.  38. 

*  Conro  V.  Port  Henry  Iron  Co.  13  Barb.  37. 

'  Emerson  v.  Providence  Hat  Man.  Co.  13  Mass.  237.     See  ante^  %  298. 

"  McBean  v.  Morrison,  1  A  K.  Marsh.  545.  When  the  note  ran  ''  I  promise  to 
pay,  etc.,  A.  B.  for  value  received  of  C.  D.,  on  account  of  his  wages  at  the  Madi- 
son Hemp  Flax  Spinning  Company,"  and  was  signed  ''For  the  .Madison  Hemp 
and  Flax  Company,  W.  Macbean,  Pres't,"  it  was  held  the  individual  note  of  Mac- 
bean,  on  the  ground,  as  stated  by  Rowan,  J.,  that  "  the  law  reduces  the  liability 
from  tlio  obligatory  tenor  of  the  note." 

'  Shaver  v.  Ocean  Mining  Co.  21  Cal.  45. 


328  PRIVATE  CORPORATIONS  AS  PARTIES. 

"  The  Newport  Manufacturing  Co.  promise  to  pay,"  and  was 
signed  "  J.  W.  T.,  Treasurer ; "  ^  where  tlie  note  ran  "  The 
Patent  Clotli  Man.  Co.  promise  to  pay,"  and  was  signed 
"  W.  S.,  Agent."  "" 

§  401.  Where  the  note  ran,  "I  promise,"  and  was  signed 
"  For  the  Providence  Hat  Manufacturing  Company,  A.  B.  (the 
agent),"  it  was  held  the  company's,  and  not  the  agent's,  note, 
uotw^ithstaiiding  the  words  "I  promise,"  it  being  sufficiently 
indicated  that  it  was  done  as  aj^ent.^  But  wdiere  the  note 
commenced  "  We,  the  subscribers,  jointly  and  severally  prom- 
ise," and  was  signed  "  for  the  Boston  Glass  Manufactory,  A., 
B.  &  C,"  the  joint  and  several  undertaking,  and  the  omission 
of  any  designation  of  office  or  agency  were  considered  to- 
gether, as  showing  it  to  be  an  individual  note.*  In  a  later 
case,  wliere  the  note  began,  "  We  jointly  and  severally  prom- 
ise to  pay,"  and  was  signed  "  Patton  &,  Johnson,  for  Ira 
Gove,"  the  words  "jointly  and  severally,"  as  indicating  the 
personal  contract  of  Patton  <fe  Johnson,  were  regarded  as 
overbalanced  by  the  form  of  the  signature,  "  for  Ira  Gove," 
which,  it  was  said,  "  so  clearly  manifests  the  purpose  to  be 

'  Commercial  Bank  v.  Newport  Man.  Co.  3  B.  Mon.  13. 

'  Shotwell  V.  M'Kown,  2  Southard,  828. 

'  Emerson  v.  Providence  Hat  Man.  Co.  12  Mass.  237. 

*  Bradleo  v.  Boston  Glass  Co.  16  Pick.  347.  The  plaintiff  had  proved  the 
agency.  Shaw,  C.  J.,  said :  "  The  words  '  for  the  Boston  Manufactory,'  if  they 
Btood  alone,  would  perhaps  leave  it  doubtful  and  ambiguous  whether  they  meant 
to  bind  themselves  as  promisors  to  pay  the  debt  of  the  company,  or  wliether  they 
meant  to  sign  a  contract  for  the  company,  by  wiiich  they  should  be  bound  to  pay 
tiieir  own  debt,  though  the  place  in  which  the  words  are  introduced  would  seem 
to  warrant  the  former  construction.  But  other  considerations  arise  from  other 
views  of  the  whole  tenor  of  the  note.  The  fact  is  of  importance  that  it  is  signed 
by  three  instead  of  one,  and  with  no  designation  or  name  of  office  indicating 
any  agency  or  connection  with  the  company.  No  indication  appears  on  the  note 
itself  that  cither  of  them  was  president,  treasurer  or  director,  or  that  they  were 
a  committee  to  act  for  the  company.  But  the  words  'jointly  and  severally  '  are 
quite  decisive.  The  persons  are,  '  we,  the  subscribers,'  and  it  is  signed  Jonathan 
Huunewell.  Samuel  Gore,  and  Charles  F.  Ku^jfer.  This  word  '  severally '  must 
have  its  effect;  and  its  legal  effect  was  to  bind  each  of  the  signers.  This  fixes 
the  undertaking  as  a  personal  one.  It  would  be  a  forced  and  wliolly  untenable 
construction  to  hold  that  the  company  and  signers  were  all  bound  ;  this  would  be 
equally  inconsistent  with  the  terms  and  the  obvious  meaning  of  the  contract." 


INTERPRETATION  OF  THE  INSTRUMENT.  329 

the  execution  of  a  contract  binding  solely  upon  the  defend- 
ant, that  if  either  is  to  be  rejected  as  surplusage  and  of  no 
effect,  it  should  be  the  words  'jointly  and  severally.'"^ 

§  402,  Where  the  promissory  terms  of  the  notes  are, 
"  The  president  and  directors  of  the  A.  B.  Comj^any  promise 
to  pay,  etc.,"  they  are  sufficient  to  import  distinctly  a  corpo- 
rate obligation,  and  the  signature  of  the  president  subscribed 
will  not  bind  him  personally.'^ 

But  in  England,  where  the  directors  of  a  joint  stock 
newspaper  company  gave  a  note  for  a  purchase  for  the  com- 
pany, running,  "  On  demand,  we  jointly  and  severally  promise 
to  pay,  <fec.,  for  and  on  behalf  of  the  Wesleyan  Newspaper 
Association,"  and  signed  their  names  as  directors,  it  was  held 
that  the  words  "jointly  and  severally  "  were  equivalent  to 
'* jointly  and  personally,"  and  that  they  were  personally 
bound.^  In  another  case,  where  the  note  ran,  "  We  jointly 
promise  to  pay,  &c.,"  and  was  signed  by  three  of  the  direct- 
ors of  a  joint  stock  company,  and  countersigned  by  the  secre- 
tary, and  purported  to  be  on  account  of  stock  of  the  com- 
pany, it  was  held  the  note  of  the  company.* 

§  403.  The  addition  of  official  character  to  the  signature 
at  the  foot  of  the  note  will  not  of  itself  be  sufficient  to  indi- 
cate an  intention  to  bind  the  corporation,  but  will  be  re- 
garded merely  as  an  earmark  or  descriptio  personce.  Thus, 
where  a  note  was  signed  "A.  B.,  Brest.  Henderson  Loan 
Co.,"  it  was  held  the  individual  note  of  Henderson.*^  The 
like  decisions  were  rendered  where  a  note  commenced  "  I 
promise,"  and  was  signed  "  J.  S.,  Trustee  of  Sullivan  Bail- 
road  ;  "  ^  where  a  note  began  "  We  promise,"  and  was  signed 

'  Rice  V.  Gove,  22  Pick.  158. 

-  Hamilton  v.  Newcastle  R.  R.  Co.  9  Md.  19;  Pitmau  v.  Kintner,  5  Blackf. 
250. 

'  Ilealey  v.  Story.  3  Exch.  3;  18  L.  J.  N.  S.  S. 

*  Lindus  v.  Melrose,  3  IIiul.  &  N.  177 ;  see  Bottomley  v.  Fisher,  8  Law  Times, 
N.  S.  (Excli.)  688;  Price  v.  Taylor,  6  Jurist,  402. 

'  Burbank  v.  Posey,  7  Bush.  (Ky.)  373. 

"  Fiske  V.  Eldridge,  12  Gray,  474.  Dewey,  J.,  saying:  "The  cise  of  Mnnn  v. 
Chandler,  9  Mass.  335,  may  be  thought  to  be  favorable  to  the  defense,  and  con- 


330  PRIVATE   CORPORATIONS  AS  PARTIES. 

"  W.  S.,  Prest.  Blannerliasset  Oil  Company,  and  W.  H., 
Treasurer  ; "  ^  and  where  the  note  was  signed  "  B.  &  C,  Trus- 
tees of  Union  Eeligious  Society  ;  "  ^  where  the  note  was  dated 
"  Commercial  Bank  of  Rodney,  Rodney,  Miss.,  8  Marcli,  1839," 
began  "  We  promise,"  and  was  signed  "  T.  F.,  Prest.,"  and 
countersigned  "  J.  L.,  Cashier  ; "  ^  where  the  note  began,  "  For 
value  received,  on  policy  No.  11,176,  I  promise,"  w-as  signed 
"A.  B.,  Prest.,  Dorchester  Avenue  R.  R.  Co.,"  and  was 
proved  to  have  been  given  in  consideration  of  a  policy  of  in- 
surance issued  to  that  company  by  the  payee  ;  *  where  there 
was  added  to  the  signatures  "  Trustees  of  School  District  No. 
1 ; "  '^  where  the  note  was  signed  "  A.  B.  <fe  C.  B.  Receivers  ;  "  *^ 
where  there  was  added  "  Secretary  Masonic  Female  Col- 
lege ; "  ^  where  there  was  added  "  Trustees  of  Baptist  Soci- 
ety ; "  ^  where  there  was  added  "  Treasurer  of  St.  Paul's  Par- 
ish ; "  °  where  the  note  ran  '^  We,  the  trustees  of  the  Seventh 
Presbyterian  Church,"  and  was  signed  "  A.  B.  C.  &  D.  Trus- 
tees;"" where  there  was  added  "As  Trustees  of  the  First 
Universalist  Society,"  to  a  note  of  several  signers  beginning 
"  I  promise."  '^ 


trary  to  wliat  seems  the  doctrine  of  the  other  cases  refeiTed  to.  *  *  That  case 
differs  from  the  others  in  its  facts  as  to  the  description  annexed  to  tlie  name. 
It  may  be  that  the  signature  of  the  treasurer  of  a  corporation  may  be  thought  to 
be  the  ordinary  mode  of  executing  such  contracts  on  the  part  of  the  corporation, 
and  that  those  words  in  themselves  import  a  promise  of  tlie  party  whose  treasurer 
lie  is.  We  tbink  the  present  case  differs  from  it,  and  is  more  analogous  to  the 
other  cases  cited.  In  the  case  of  Seavcr  v.  Coburn,  10  Cush.  324,  a  party  signing 
a  contract  as  "Treasurer  of  the  Eagle  Lodge,"  was  holden  personally  liable. 
Such  a  note  as  the  one  in  suit  we  think  must  be  taken  to  be  the  personal  prom- 
ise of  the  signer,  and  the  word  "  trustee,"  placed  after  the  signature,  be  held  to 
he  a  mGTG  fJescriiAio  j)ersoncE,  intended  to  indkate  the  fund  to  be  charged  with 
the  note,  or  the  uses  to  whicii  the  money  has  been  applied." 

'  Scott  V.  Baker,  3  Hag.  (W.  Va.)  285  :  Rand  v.  Hale,  Id.  495. 

«  Hovey  v.  Bannister,  8  Cow.  81.  '  Fitch  v.  Lawton,  6  How.  (Miss.)  371. 

*  Haverhill,  &c.  Ins.  Co.  v.  Newhale,  1  Allen,  130. 

'  Fowler  v.  Atkinson,  6  Minn.  579.  *  Towne  v.  Rice,  122  Mass.  67. 

'  Drake  v.  Flewcllen,  33  Ala.  106. 

*  Brockway  v.  Allen,  17  Wend.  41 ;  see  Mears  v.  Graham,  8  Blackf.  144. 
°  Sturdivaut  v.  Hull,  59  Me.  172  ;  see  Gregory  v.  Leigh,  33  Tex.  813. 

'°  Powers  V.   Briggs,  79  111.  493;  see,  to  like  eff'^ct.  Hays  v.  Crutcher,  54  Ind. 
260. 

"  Burlingarae  v.  Brewster,  79  111.  515.  . 


INTERPRETATION    OF   THE   INSTRUMENT.  331 

§  404.  The  weiglit  of  authority,  both  EDglisli  and  Ameri- 
can, undoubtedly  bears  out  the  doctrine  of  the  text.  But 
Prof.  Parsons  takes  a  different  view  of  the  law  in  liis  admi- 
rable work,^  and  there  are  undoubtedly  a  few  cases  which 
sustain  him,  though  by  no  means  so  many  as  those  cited  by 
him,  many  of  them  containing  other  indications  than  mere 
oflBcial  designation  that  they  were  executed  in.  the  business 
of  the  corporation.^ 

§  405.  Official  designation  in  hody  of  the  instrument. — 
Where,  in  the  body  of  the  note,  there  is  the  expression,  "  I, 

A.  B.,  Treasurer  of  Company,"  or,  "I,  A.  B.,  Cashier 

of Company,  or  Bank,"  or,  ''  I,  A.  B.,  President  of ," 

and  it  is  signed  in  like  manner,  there  are  cases  which  con- 
sider it  sufficiently  indicated  that  it  is  intended  to  be  the 
note  of  the  corporation,  and  especially  when  the  signature  is 
likewise  .  accompanied  with  the  official  designation;  and 
high  authority  favors  them.^  Thus  it  has  been  held  that  a 
note  beo-innino;  "  I,  Treasurer  of  Dorchester  Turnpike  Cor- 
poration,"  and  signed  ''  G.  L.  C,  Treasurer,  <fcc.,"  was  the  note 
of  the  corporation;'^  but  the  decision  has  been  criticised  and 


'  1  Parsons  N.  &  B.  168,  in  which  it  is  said:  "If  a  corpora'.ion  certainly 
authorize  to  make,  sign,  accept  or  indorse  negotiable  paper,  has  an  otBcer 
authorized  to  use  their  name  in  this  way,  and  this  officer  writes  his  own  name 
as  drawer  of  a  bill  of  exchange,  with  the  express  addition  of  his  office,  it  seems 
that  he  would  be  held  to  do  this  officially,  and  to  bind  the  corporation  and  not 
himself.'' 

'  Johnson  v.  Smith,  21  Conn.  627.  The  promisors  signed  themselves  "'Vestry- 
men of  the  Episcopal  Society."  The  Society  received  the  money  for  wliich  the 
notes  were  given.  Church,  C.  J.,  quoted  the  language  of  Swift,  C.  J.,  in  Ilovey 
V.  Magill,  3  Conn.  680,  with  approval:  "  I  can  see  no  good  reason  for  the  addi- 
tion of  agent,  but  to  render  the  note  obligatory  on  the  company,  and  exclude  all 
idea  of  individual  liability."  See  also  Ilovey  v.  Magill,  3  Conn.  680,  ^ote  signed 
"A.  W.  Magill,  agent  for  the  Middlctown  Manufacturing  Company,"  and  run- 
ning "I  promise."     Held,  the  company's. 

In  Proctor  V.Webber,  1  D.  Chipman,  371,  the  note  ran,  "  I,  Christopher  W^'bbcr, 
as  Agent  of  the  Green  Mountain  Turnpike  Corporation."  and  was  signed  "  Chris- 
topher Webber,  Agent  of  the  Green  Mountain  Turnpike  Corporation."  Held,  the 
company's.  McCall  v.  Clayton,  Busbee  L.  R.  (N.  C.)  423;  Dispatch  Line  of 
Packets  v.  Bellamy  Man.  Co.  13  N.  H.  205. 

=>  1  Parsons  N.  &  B.  169. 

♦  Mann  v.  Chandler,  9  Mass.  335;  Blanchard  v.  KauU,  -i-i  Cal.  448,  announces 
same  doctrine. 


332  PRIVATE   CORPORATIONS  AS  PARTIES. 

doubted/  and,  we  think,  should  not  he  followed.  It  is  true 
that  bank  bills  are  universally  signed  in  this  way,  as  ob- 
served by  Professor  Parsons ;  and,  as  to  them,  the  principle 
may  be  well  applied,  as  they  bear  upon  their  face  distinct 
evidences  of  their  character  as  representatives  of  money  is- 
sued by  a  bank,  and  which  it  would  be  illegal  (in  many  of 
the  States  at  least)  for  an  individual  to  issue.  And  so  other 
printed  securities,  such  as  bonds  and  coupons,  might  be 
couched  in  similar  phrase  without  exciting  a  douljt  that  they 
were  corporate  obligations.  In  respect  also  to  bills  drawn 
and  notes  signed  by  the  cashier  of  a  bank,  the  mention  of 
his  character  as  cashier,  accordino^  to  the  inclination  of  the 
decisions,  stamj^s  upon  the  instiument  tbe  obligation  of  the 
bank.^  Farther,  we  think,  neither  reason  nor  authority  will 
permit  us  to  go.  In  New  York,  it  has  been  held  that  a  note 
running  "  I,  John  Franklin,  Pres't  of  the  Mechanic  Fire 
Insurance,  promise,  <fec.,"  was  Franklin's  and  not  the  com- 
pany's.^ So  in  Maine,  where  the  note  ran.  "We,  the  Trustees 
of  the  Wayne  Scythe  Company,  promise,"  and  was  signed 
by  the  individual  names.*  So  in  Indiana,  where  the  note 
began,  "  We,  the  Trustees  of  the  Methodist  Church  in  Rock- 
port,  promise,"  and  was  signed  "  A.  B.,  C.  D.,  &c.,  Trustees 
of  the  M.  E.  Church." ' 

§  406.  So  in  Massachusetts,  where  a  note  ran,  "  We, 
Trustees  of  the  New  Congregational  Meeting  House,  prom- 
ise," ^  and  another  ran,  "  We,  the  Prudential  Committee 
for  and  in  behalf  of  the  Baptist  Church  in  Lee,  agree  to  pay, 
<fec.,"  '^  and  only  the  individual  names  of  the  parties  were 

'Barlow  v.  Congregational  Society,  8  Allen,  460;  Fiske  v,  Eldiidge,  12 
Gray,  476.    * 

''  See  post,  §  417.  ="  Barker  v.  Mechanic  Ins.  Co.  3  Wend.  94. 

'  Fogg  V.  Virgin,  19  Me.  353.     But  see  Klostermaun  v.  Loos,  58  Mo.  290. 

"  Mears  v.  Graham,  8  Blackf.  144;  McClure  v.  Bennett,  1  Blackf.  189.  This 
interpretation  was  given  because  there  was  no  power  to  bind  the  corporation. 

"  Packard  v.  Nye,  2  Mete.  (Mass.)  47.  But  the  contrary  was  held  in  Iowa, 
where  the  note  ran,  "  We,  t!ie  undersigned,  Directors  of  School  District  No.  — ," 
and  parol  evidence  to  bind  them  personally  was  excluded.  Baker  v.  Chambliss, 
4  Iowa  (G.  Greene),  429. 

'  Morell  V.  Codding,  4  Allen,  403.     Dewey,  J. :    "  The  present  case  lacks  one 


INTERPRETATION  OF  THE  INSTRUMENT.  333 

sio'iiecl,  without  official  desi<]::iiation,  the  like  view  was  taken 
— that  the  signers  were  individually  bound.  The  latter  case, 
we  do  not  think,  can  be  sustained,  as  the  words  "  for  and  in 
behalf  of  the  Baptist  Church,  etc.,"  sufficiently  indicate  that 
the  signers  did  not  design  to  bind  themselves  personally.^ 

But  the  decisions  are  very  conflicting,  and  the  tendency 
is  to  restrain,  rather  than  to  enlarge,  the  constructive  liabil- 
ity of  corporations.  In  a  late  English  case  a  note  running 
"  We,  the  Directors  of  tbe  Isle  of  Man  Slate  and  Flag  Com- 
pany," in  the  body  was  held  the  individual  note  of  the  com- 
pany, although  the  corporate  seal  was  attached.^  If  the 
expression  ^vere,  "  We,  as  Directors,"  or  "  as  Trustees,"  the 
idea  of  individual  liability  would  be  excluded  by  the  use  of 
the  restrictive  word"  as."  ^  And  in  Ken  tiicky,  where  the 
note  ran,  "  The  President  and  Directors  of  the  H.  <fe  B.  <fec. 
Co.,"  and  was  signed  by  those  officials,  the  president  adding 
"  Pres't "  to  his  name,  it  was  held  clear  that  they  promised 
on  behalf  of  the  company,  and  bound  it  alone.^  But  in 
another  case,  where  the  note  ran,  "  The  President,  by  order 
of  the  Board  "  of  said  company  promises  to  pay,  and  was 
signed  by  him  and  the  directors  with  their  simple  names,  it 
was  held  the  note  of  the  President.^ 

element  which,  when  it  exists,  is  usually  decisive  of  the  character  of  the  promise ; 
that  is,  the  introduction  of  the  name  of  a  principal  as  a  part  of  the  signature,  a3 
in  the  case  of  Long  v.  Colburn,  11  Mass.  97,  where  the  form  of  the  signature 
was  '  pro  William  Gill — J.  S.  Colburn.'"  In  Vermont,  a  note  running  "  We,  in 
behalf  of  the  First  M.  E.  Society  in  Middlebury,"  and  signed  by  simple  indi- 
vidual names,  was  held  at  least  prima  facie  their  individual  note.  Pomcroy  v. 
Slade,  16  Vt.  220. 

'  Haskell  v.  Cornish,  13  Cal.  45.  The  note  ran,  "  We,  the  undersigned  Trust- 
ees of  the  First  African  Methodist  Church,  in  behalf  of  the  whole  Board  of 
Trustees,"  and  was  signed  simply  with  individual  names  of  H.  C.  C.  and  J.  C.  L. 
Held,  that  it  was  the  note  of  the  church,  though  it  might  be  otherwise  if  the  de- 
fendants had  no  authority  to  execute  the  note  for  the  church. 

""  Button  v.  Marsh,  L.  R.  G  Q.  B."[*361],  3o9  (1871). 

=■  Sanborn  y.  Neal,  4  Minn.  137;  Blanchard  v.  KauU,  44  Cal.  448.  Note  be- 
gan, "  We,  as  Trustees  "  of  A.  N.  &  Co.,  and  was  signed  A.,  B.  &  C,  Trustees  of 
A.  &  N.  Co.  Held,  the  company's  note;  see  also  Yowell  v.  Dodd,  3  Bush  (Ky.) 
581. 

*  Yowell  V.  Dodd,  3  Bush  (Ky.)  581. 

"  Caphart  v.  Dodd,  3  Bush  (Ky.)  584. 


334  PRIVATE  CORPORATIONS  AS  PARTIES. 

§  407.  But  there  may  be  some  additional  expression  to 
tbe  mere  official  designation,  which,  taken  in  connection 
therewith,  shows  an  intention  to  bind  the  corporation,  and  it 
will  then  have  that  effect.  Thus  "  I,  as  Treasurer  of  the 
Congregational  Society,  or  my  successors  in  office,  promise  to 
pay,"  was  held  a  note  of  the  society ;  ^  and  a  note  paj-able 
"  to  the  Treasurer  of  the  First  Parish  in  Hopkinton,  or  his 
successor,"  was  held  likewise  payable  to  the  parish,'^  it  being 
indicated  clearly  that  the  official  and  not  the  individual  was 
referred  to. 

So  where  the  promise  was  to  pay  "  eighty-five  dollars  for 
the  use  of  K  E.  P.  Union  Store,  No.  607,"  signed  "  M.-, 
Treasurer,"  it  was  held  to  indicate  an  attempt  to  bind  the 
corporation,  not  the  officer  ;^  and  likewise  where  the  promise 
was  "We,  as  trustees,  but  not  as  individuals,  promise  to 
pay,"  and  signed  "  A.,  B.  tfe  C,  Trustees."  * 

§  408.  Sometimes  there  are  other  indicia  to  which  im- 
portance is  attached,  as  evidencing  a  corporate  or  individual 
character.  In  Indiana,  where  the  note  commenced  "  We 
promise,"  and  was  signed  "  A.  B.,  Secretary,"  but  the  corpo- 
I'ate  seal  was  attached  with  the  impression  "  Neal  Manufact- 
uring Co.,  Madison,  Ind.,"  it  was  held  the  corporate  note.^ 

But  in  England,  where  the  note  ran  "  We,  the  directors  of 
the  Isle  of  Man  Slate  and  Flag  Company,"  and  the  corporate 
seal  was  attached,  it  was  held  differently,  Cockburu,  C.  J., 
saying  that  he  had  had  some  doubt  "  whether  the  affixing  of 
the  seal  might  not  be  taken  as  equivalent  to  a  declaration  in 
terms  on  the  face  of  the  note  that  the  note  was  signed  by  the 
persons  who  put  their  names  to  it  on  behalf  of  the  company, 
and  not  in  behalf  of  themselves ; "  but,  on  consideration,  he 

*  Barlow  v.  Congregational  Society,  8  Allen,  460. 

"  See  Hood  V.  Ilallonbeck,  14  N.  Y.  S.  C.  (7  Hun),  366,  and^wsf,  §  419;  Buck 
V.  Merrick,  8  Allen,  12^. 

'  Dow  V.  Moore,  47  N.  H.  419. 

*  Shoe  &  Leatlier  Nat.  Bank  v.  Doe,  123  Mass.  151,  Ames,  J.:  "  We  believe 
no  case  can  be  found  in  whicli  a  pi-omise  'as  trustees,  &c.,'  accompanied  with 
an  express  disclaimer  of  personal  liability,  would  fail  to  exempt  him." 

'  Means  v.  Swormstedt,  32  Ind.  87. 


IKTEKPRETATION  OF  THE  INSTRUMENT.  335 

concurred  that  tliat  effect  could  not  be  given  to  the  placing 
of  the  seal  of  the  company  upon  the  note.  It  might  be  that 
that  was  simply  for  the  purpose  of  earmarking  the  transac- 
tion." ' 

The  two  cases  are  distinguishable  in  this,  that  the  use  of 
the  plural  expression  "  we  promise  "  in  the  Indiana  case,  fol- 
lowed by  a  single  signature  with  the  corporate  seal,  indi- 
cated a  design  to  bind  the  company,  who  were  many,  rather 
than  the  individual  who,  had  he  intended  to  bind  himself, 
would  doubtless  have  said  "  I  promise,"  while  in  the  English 
case  the  expression  "  we,"  used  in  reference  to  a  number  of 
directors,  was  consistent  with  their  personal  obligation. 

Where  the  note  runs  "  The  President  and  Directors  prom- 
ise to  pay,"  and  is  signed  "  A.  B.,  President,"  it  would  be 
evident  that  no  personal  engagement  was  intended,  and  the 
corporation  alone  would  be  bound.^ 

§  409.  The  drawer. — The  same  general  principle  applies 
to  the  drawer  of  a  bill  as  to  the  maker  of  a  note,  and  although 
he  designate  himself  as  president,  or  otherwise,  as  a  corporate 
official,  he  will  nevertheless  be  personally  liable.  And  the 
mere  fact  that  the  officer  or  agent  directs  on  the  bill  that  it  be 
placed  to  his  account  as  such,  will  not  alter  it.  Thus  where  F. 
&  Co.  drew  a  bill  upon  the  insurance  company  of  which  they 
were  agents,  with  the  direction  to  "charge  the  same  to  ac- 
count of  F.  &  Co.,  agents  P.  F.  &  M.  Ins.  Co.,"  they  were 
held  as  drawers,  although  the  bill  was  delivered  by  the  in- 
surance company  to  the  payee  in  payment  of  a  loss  on  one  of 
its  policies.^ 

§410.  But  the  direction  to  place  to  account  may  often 
indicate,  especially  when  connected  with  other  circumstances, 
that  it  is  .the  corporation's  draft.     Thus,  where  the  direction 

'  Button  V.  Marsh,  L.  R.  6  Q.  B.  363  (1871). 

"  Mott  V.  Hicks,  1  Cow.  532  (1823);  Pitman  v.  Kentner,  5  Blackf.  251. 

'  Tucker  v.  Fairbanks,  C8  Mass.  101.  The  contrary  doctrine  is  maintaiucd 
in  New  York.  In  Conro  v.  Port  Henry  Iron  Co.  12  Barb.  54,  Willard,  P.  J., 
said  :  "  Adding  the  title  '  agent '  to  the  signature  of  the  (h-;iwcr  of  a  bill,  is  notice 
that  the  party  means  not  to  be  personally  liable,  and  wheu  the  principal  is  in- 
dorser,  he  alone  is  re5ponsil)le.'' 


33G  PRIVATE  COKPORATIONS  AS  PARTIES. 

was  "  place  to  account  of  Derby  Fishing  Co."  signed  "  A.  B., 
Pres't,"  it  was  held  that  the  company  was  the  drawer.^  So, 
wheie  a  bill  which  was  stamped  on  the  margin  ''  Pompton 
Iron  Works,"  with  the  direction  "  place  to  account  of  Pomp- 
ton  Iron  Works.  AV.  Burtt,  agent,"  ^  the  like  view  was  taken, 
the  marginal  stamp,  and  the  fact  that  Burtt  signed  himself 
agent,  connected  with  the  direction  being  regarded  as  indica- 
tive that  it  was  the  corporate  bill.  So,  "  charge  to  account 
of  this  company.  I.  K.  Jackson,  agent,"  was  held  the  com- 
pany's draft,  it  being  a  printed  corporate  draft,  with  other 
marks  of  official  character.^  But  the  v/ords,  "  charge  to  ac- 
count of  proprietors  Pembroke  Iron  Works,"  signed  simply 
"  Joseph  Burrell,"  with  no  mark  of  corporate  liability  or 
agency  of  Burrell,  was  considered  his  personal  bill.*  So, 
"  place  to  the  account  of  Durham  Bank,  as  advised,"  signed 
simply  "  Christ'r  Farrow,"  was  held  to  bind  Farrow  person- 
ally, although  he  was  known  to  be  agent  of  the  bank,  the 
expression  importing,  as  said  by  counsel,  "  nothing  more 
than  that  the  drawer  had  a  credit  with  the  Durham  Bank 
to  the. amount,  and  that  the  drawees  were  to  look  to  that 
credit."  ^  So,  a  bill  signed  "  A.  B.,  Pres't,"  with  direction  "  to 
charge  as  ordered,"  would  be  plainly  the  drawer's  individual 
draft.^ 

§  411.  Where  the  bill  was  headed  with  the  name  of  a 
banking  house,  the  direction  was  "  charge  same  to  account  of 
this  office,"  and  was  signed  by  the  drawer  as  agent,  these 
three  circumstances  were  considered  as  definitely  fixing  it  as 
the  banker's  and  not  the  ag^ent's  draft."^  Where  the  bill  con- 
tained  a  direction  "  to  charge  the  same  to  account  of  disburse- 
ments of  bark  Dublin,"  and  was  signed  by  the  master  of 
the  vessel  without  addition,  it  was  held    that   the  owners 

'  Witte  V.  Derby  Fishing  Co.  2  Conn.  435. 

"  Fuller  V.  Hooper,  3  Gray,  334. 

'  Slawson  v.  Loring,  o  Allen,  343;  (see  post,  §§  412,  416,  as  to  acceptor). 

*  Bank  of  British  N.  A.  v.  Hooper,  5  Gray,  567. 
'  Lcadbitter  v.  Farrow,  5  Maule  &  S.  345. 

•  Kean  v.  Davis,  1  N.  J.  683.  '  Sayre  v.  Nichols,  7  Cal.  538. 


INTERPRETATION  OF  TIIE  INSTRUMENT.  337 

were  not  bounel,  there  being  no  disclosure  of  agency.^  And 
this  seems  to  us  the  correct  view,  for  the  reasons  well  stated 
by  the  court ;  but,  in  Louisiana,  where  the  agent  of  the 
owners  of  a  steamboat  drew  a  bill  in  his  own  name,  and 
directed  the  drawee  to  change  the  amount  "  to  account  of 
steamer  Walter  Scott,"  it  was  held  that  the  agency  of  the 
drawer  was  apparent  on  the  face  of  the  bill,  in  consequence 
of  this  direction,  which  negatived  the  idea  of  personal  lia- 
bility.^ If  the  bill  were  in  the  name  of  the  corporation,  and 
the  direction  to  "charge  this  institution,"  signed  "A.  B., 
cashier,"  it  is  plainly  the  bill  of  the  corporation.^  If  the  bill 
were  signed  thus  :  "  For  the  Montgomery  Iron  Works, 
A.  B.,  pres't.  C.  D.,  sect'y,"  it  would  be  the  bill  of  the  cor- 
poration.* 

§  412.  In  respect  to  the  accejjtor  of  a  bill. — There  can  be 
but  one  acceptor  of  a  bill ;  and  that  person  must  be  the 
di-awee,  unless  he  be  an  acceptor  for  honor.  Therefore, 
when  it  is  sought  to  determine  whether  the  officer  or  agent 
of  a  corporation,  or  the  corporation  itself,  is  the  acceptor  of  a 
bill,  the  question  may  generally  be  solved  by  ascertaining 

'  Bass  V.  O'Brien,  12  Gray,  477.  Bigelow,  J.,  saying:  "The  owners  of  the 
vessel  were  clearly  not  liable  as  drawers  of  the  draft.  It  does  not  purport  on  its 
face  to  bind  them.  Peterson  did  not  sign  it  as  master  or  as  agent  of  the  owners, 
or  otherwise  indicate  that  he  drew  it  in  a  representative  capacity.  The  direction 
to  charge  the  amount  to  the  disbursements  of  the  bark  Dublin  was  only  a 
designation  of  the  account  to  which  the  payment  was  to  be  debited  when  the 
draft  was  taken  up  by  the  drawees,  \mt  did  not  in  any  way  disclose  the 
persons  who  were  ultimately  responsible  for  such  disbursements.  The  rule  is 
well  settled  that  when  an  agent  signs  negotiable  paper  in  his  own  name,  without 
disclosing  his  principal,  the  agent  only  is  liable,  and  evidence  dehors  the  instru- 
ment cannot  be  resorted  to  for  the  purpose  of  showing  that  it  was  given  for  or 
on  account  of  some  other  person.  Whoever  takes  negotiable  paper  enters  into  a 
contract  with  the  parties  who  appear  on  the  face  of  the  instrument,  and  cannot 
look  to  other  persons  for  payment." 

Newhall  v.  Dunlap,  14  Me.  182.  The  request  to  charge  to  "  account  of  cargo 
of  the  Hope"  was  said  "  to  indicate  the  fund  to  which  it  was  to  be  charged,  not 
the  character  in  which  the  drawer  signed."  To  same  effect,  see  Snow  v.  Good- 
rich, 14  Me.  235. 

"  Maher  v.  Overton,  9  La.  115. 

'  Safford  v.  Wyckoff,  1  Hill,  11 ;  4  Hill,  443. 

*  Raney  v.  Winter.  37  Ala.  277. 
Vol.  I.— 23 


338  PRIVATE  CORPORATIONS  AS  PARTIES. 

who  is  the  drawee.  If  the  bill  be  drawn  on  the  drawee  as 
an  individual,  he  cannot,  by  words  of  procuration  or  official 
description  in  his  acceptance,  make  it  the  corporation's. 
Thus,  when  the  bill  was  addressed  "  to  Mr.  W.  C,"  and  was 
expressed  "  for  value  received  in  machinery  supplied  the  ad- 
venturers in  11.  mines,"  and  W.  C.  wrote  upon  it,  "  Accepted 
for  the  company,  W.  C,  Purser,"  it  was  held-W.  C.'s  individ- 
ual acceptance.^  So  where  the  drawee  accepted  in  form, 
"  Treasurer,  Neuvitas  M.  Co.,"  it  was  held  likewise.^  And 
on  the  other  hand,  if  the  bill  be  drawn  on  the  corporation  by 
name,  and  accepted  by  its  a^^propriate  officer  or  agent  in  his 
individual  name,  adding  his  official  designation,  the  accept- 
ance will  bind  the  company  only,  and  as  taken  in  connection 
with  the  address,  the  agency  for  the  drawee,  who  alone  could 
accept,  would  be  disclosed.^  And  even  if  there  were  no  ex- 
pression indicating  office  or  agency  annexed  to  the  acceptor's 
name,  the  very  fact  of  acceptance  would,  we  think,  imply 
agency  for  the  drawee. 

§  413.  In  England,  it  has  been  long  settled  that  even  if 
the  drawee's  full  official  character  be  added  to  his  name  in  the 
address  of  the  bill,  his  acceptance  will  bind  him  personally, 
although  there  be  expressions  of  agency  in  it  also.     Thus, 

'  Mare  v.  Charles,  5  El.  &  B.  978.  Lord  Campbell  and  Wightman  and  Cole- 
ridge, JJ.,  concurred,  and  Coleridge,  J.,  said:  "The  bill  was  addressed  to  the 
defendant,  and  no  one  else  could  accept  it.  He  wrote  upon  it  '  Accepted,'  and 
signed  his  name.  He  now  says,  in  effect,  that  it  was  not  accepted  at  all,  and 
what  he  wrote  amounted  to  a  refusal  to  accept;  and  this,  he  says,  is  the  effect  of 
the  words  '  for  the  company.'  The  question  then  is,  are  we  to  construe  this  ut 
res  magis  jxereat,  as  not  an  acceptance  ?  No ;  we  must  construe  it  ut  res  magis 
valeat ;   and^  as  my  Lord  (Campbell)  has  pointed  out,  it  is  easy  so  to  construe  it." 

="  Bruce  v.  Lord,  1  Hilt.  247  (K  Y.  Com.  PI.  1856). 

'  Merchants'  Bank  v.  State  Bank,  10  Wall.  604 ;  Alabama  Coal  Mining  Co.  v. 
Brainard,  35  Ala.  479;  A.  J.  Walker,  C.  J.,  saying:  "The  bill  of  exchange  in 
this  case  is  alleged  to  have  been  drawn  upon  the  defendant  by  tlie  name  and  style 
of  '  Steamer  C.  W.  Dorrance  and  owners,'  and  to  have  been  accepted  by  the  de- 
fendant in  and  by  the  name  and  style  of  '  St'r  Dorrance,  per  G.  M.  McConico.' 
The  bill  of  exchange  given  in  evidence  corresponds  in  the  name  and  style  of 
the  address  and  acceptance,  with  the  description  alleged;  and  if  drawn  upon 
the  defendant,  and  by  it  accepted,  as  alleged,  was  admissible  in  evidence."  See 
§485. 


INTERPRETATION   OF  THE   INSTRUMENT.  339 

where  the  address  of  tlie  bill  was  to  "  H.  Bishop,  cashier  of 
the  York  Buiklings  Coni2>any,  at  their  house  on  Winchester 
street,  London,"  and  the  direction  was,  "  place  the  same  to 
account  of  the  York  Buildings  Company,  as  per  advice,"  and 
was  accepted  thus,  "Accepted  13th  June,  1732,  per  H. 
Bishop,"  it  was  considered  that  the  addition  to  the  name  was 
only  descriptive,  and  as  an  indication  where  the  drawee 
might  be  found,  and  the  order  to  place  to  account  as  a  direc- 
tion how  the  drawee  might  reimburse  himself;  that  the  letter 
of  advice  was  inadmissible  against  the  plaintiff  as  indorsee, 
and  that  Bishop  was  personally  bound.^  So  where  the  bill 
was  addressed  lo  "  J.  D.,  Purser,  West  Downs  Mining  Co.," 
and  was  accepted  as  follows,  "  J.  D.,  Purser,  per  proc.  West 
Downs  Mining  Co.,"  it  was  held  J.  D.'s  individual  accept- 
ance.^ 

And  in  the  United  States  the  same  doctrine  has  been 
applied,^  but  not  without  dissent.**  In  New  York,  where  the 
bill  w^as  drawn  on  "  J.  R.  L.,  President,  Rosendale  M'ng  Co., 
New  York,"  and  accepted  in  like  style,  it  was  said,  "the  bill 
cannot  be  deemed  the  obligation  of  the  company.  It  does  not 
purport  to  have  been  drawn  in  their  behalf,  nor  was  it  ad- 
dressed to  them,  or  accepted  in  their  corporate  name."  ^ 

§  414.  If  the  drawee  be  addressed  as  "  A.  B.,  agent,"  and 
accept  in  like  form  "  A.  B.,  agent,"  he  will  undoubtedly  be 


'  Thomas  v.  Bishop,  Chitty,  Jun.  278 ;  2  Barnard,  335 ;  2  Stra.  955 ;  7  Mod. 
180 ;  Cases,  tem.  Hardwick-,  1  (1734) ;  approved  ia  Slawson  v.  Loring,  5  Allen, 
345. 

»  Nicholls  V.  Diamond,  24  E.  L.  &  Eq,  403;  9  Exch.  154. 

'  Moss  V.  Livingston,  4  Coms.  208. 

*  Shelton  v.  Darling,  2  Conn.  435.  In  this  case  the  bill  was  drawn  on  "A. 
B.,  agent  of  the  Commission  Company,"  and  was  accepted  by  "A.  B.,  agent,  C. 
C."     Hdd,  no  action  could  lie  against  A.  B.  individually. 

Amisjn  v.  Ewing,  2  Cold.  367.  Three  bills  were  drawn  on  John  O.  Ewing, 
two  designating  him  "Treasurer  of  the  N.  &  N.  W.  R.  R.  Co.,"  and  the  other 
without  any  official  designation  whatever.  All  of  them  were  accepted  thus: 
"Accepted  payable  on  return  of  March  estimates,  John  O.  Ewing,  Treas.''  And 
all  of  them  were  held  binding  on  the  company,  and  not  upon  the  drawee  per- 
sonally. 

'  Moss  V.  Livingston,  supra,  Ilurlbut,  J. 


340  PRIVATE   CORPORATIONS  AS  PARTIES. 

personally  bound,  as  there  is  no  disclosure  of  any  principal  in 
the  address  to  which  his  accej^tance  could  be  responsive.^ 

If  the  drawee  be  addressed  personally,  as  H.,  and  he 
write  across  the  bill  "  Accepted ;  Empire  Mills,  by  H.,  Treas- 
urer," it  could  not  be  his  individual  acceptance,  as  there  are 
no  words  which  could  possibly  import  an  obligation  on  his 
part ;  nor  could  it  bo  the  company's,  as  it  is  not  the  drawee.^ 

§415.  In  respect  to  the  payee  cind  indorser. — As  the  de- 
signation of  the  drawee  generally  indicates  who  is  bound  as 
acceptor,  so  the  designation  of  the  payee  generally  indicates 
in  what  character  the  first  indorser  signs.  If  a  note  be  pay- 
able to  an  individual,  with  the  mere  suffix  of  his  official 
character,  such  suffix  will  be  regarded  as  mere  descriptio  per- 
S071CB,  and  the  individual  is  the  payee.  This  view  has  been 
taken  of  a  note  payable  to  "  J.  G.  M.,  Treasurer  R.  I.  &c. 
R.  R.  Co. ;"^  of  a  note  payable  to  "A.  B.  for  value  received 
of  the  Providence  Hat  Man.  Co.,  as  agent  thereof."  * 


'  Slawson  v.  Loiing,  5  Allen,  341  (1862).  The  bill  was  headed  "  Office  Port- 
age Lake  Maimfactiiring  Company,"  was  addressed,  in  capital  letters,  to  "  E.  T. 
I.ORING,  AGENT,"  the  address  being  printed  as  was  the  heading  on  a  prepared 
form  for  company  drafts.  It  was  signed  "  charge  the  same  to  account  of  this 
company.  I.  R.  Jackson,  Agent."  The  court  thought  it  clear  that  Jackson  was 
not  personally  liable  as  drawer,  but  that  Loring  who  had  accepted  by  writing 
"E.  T.  Loring,  Agent,"  across  the  face  of  the  bill,  was  clearly  liable  as  acceptor. 
After  stating  that  the  disclosure  of  the  principal  on  the  heading  of  the  paper 
was  only  a  disclosure  of  the  drawer's  principal.  Bigelow,  J.,  said:  ''What,  then, 
is  left  on  the  face  of  the  paper  to  show  that  the  defendant  is  not  liable  as  accep- 
tor? Nothing,  except  the  single  circumstance  that  the  address  to  him  as  drawee 
is  printed  in  large  capital  letters  at  the  top  of  the  instrument,  with  the  addition 
thereto  of  the  word  agent.  This,  certainly,  does  not  necessarily  or  even  prima 
facie  indicate  that  he  is  the  agent  of  the  drawers.  It  is,  to  say  the  least,  equally 
consistent  with  the  idea  that  he  is  the  agent  of  some  third  person  not  named  on 
the  face  of  the  bill.  Nor  can  we  give  any  great  effect  to  the  fact  that  the  de- 
fendant's name  as  drawee  is  printed  as  part  of  the  blank  used  by  the  company. 
A  draft  or  bill  in  like  form  might  be  used,  if  their  course  of  business  was  to  deal 
with  him  as  the  agent  of  some  other  person  or  company."  The  bill  was  sued  on 
by  an  indorsee. 

^  Walker  v.  Bank  of  State,  9  N.  Y.  582.  But  see  Amison  v.  Ewing,  2  Cold. 
361. 

2  Chadsey  v.  McCreery,  27  111.  2.53.  To  same  effect,  see  Vater  v.  Lewis,  36 
Ind.  288. 

*  Buffiim  V.  Chadwick,  8  Mass.  10;J. 


INTERPRETATION    OF   THE   INSTRUMENT.  341 

In  New  York  n  different  doctrine  prevails.  There  where 
a  note  was  payable  to,  and  indorsed  by  "  R.  Beman,  Treas- 
urer," and  was  delivered  by  Beman  to  the  plaintiff  on  account 
of  a  debt  due  by  the  manufacturing  company  of  which  he 
was  treasurer,  it  was  held  that  he  was  not  individually  bound. ^ 

§  416.  Where  a  note  is  payable  to  a  corporation  by  its 
corporate  name,  and  is  then  indorsed  by  an  authorized  agent 
or  official,  with  the  suffix  of  his  ministerial  position,  it  will 
be  regarded  that  he  acts  for  his  principal  who  is  disclosed  on 
the  papev  as  the  payee,  and  who,  therefore,  is  the  only  per- 
son who  can  transfer  the  legal  title.  It  was  so  held  whei-e  a 
note  i^ayable  to  the  Berkshire  Bank  was  indoi'sed  "  Simon 
Larned,  Attorney,"  Larned  being  president  of  the  bank,  and 
authorized  as  its  attorney  to  indorse  it.^  So  likewise  where 
a  note  was  payable  to  the  "  Globe  Mutual  Insurance  or  or- 
der," and  was  indorsed  "  L.  Gregory,  President."  ^ 

§  417.  An  exception  to  the  general  rules  of  interpreta- 
tion, which  have  been  stated,  has  been  made  in  respect  to 
the  cashiers  of  banks.  They  are  the  chief  financial  agents 
of  their  institutions,  and  when  a  bill  or  note  is  made  pay- 
able to  an  individual  with  the  suffix  of  "  Gas.,"  ''  Cash.,"  or 
"  Cashier,"  to  Ms  name,  it  has  been  generally  decided  to  be 
really  payable  to  the  corporation  of  which  such  party  is  the 
cashier,  and  so  to  i'mport  upon  its  face,  the  officer's  name 
being  used  as  that  of  his  principal,  which  may  not  be  dis- 
closed on  the  face  of  the  paper.  It  has  been  so  held  wliere 
a  bill  was  drawn  payable  to  the  order  of  "  D.  C.  C,  Cashier," 
no  corporation  being  named.'*  So  where  a  bill  was  drawn 
payable  to  the  order  of  "  S.  B.  Stokes,  Gas.,"  and  was  in  like 
manner  indorsed,  the  undisclosed  l)ank  was  held  bound  by  the 
indorsement.^  So  where  a  note  was  indorsed  "  P.  H.  Folger, 
Cashier,"  Wilde,  J.,  saying:  "As  to  the  objection,  that  the 


'  Babcock  v.  Beman,  1  Ker.  209. 
'  Nuithanipton  Bank  v.  Pepoon,  11  Mass.  288. 
'  Elwell  V.  Dodge,  33  Barb.  336  (1861). 

*  Bank  of  N.  Y.  v.  Bank  of  Ohio,  29  N.  Y.  619  (1864);  First  National  Bank 
Hall,  44  N.  Y.  395  (1871). 
'  Bank  of  Genesee  v.  Patcbin  Bank,  19  N.  Y.  313  (1859) ;  3  Kern.  309  (1855). 


342  PRIVATE  CORPORATIONS  AS  PARTIES. 

indorsement  is  not  made  in  the  name  of  the  corporation,  we 
think  that  the  indorsement  by  the  cashier  in  his  official 
capacity  sufficiently  shows  that  the  indorsement  was  made 
in  behalf  of  the  bank,  and  if  that  is  not  sufficiently  certain 
the  phiintiffs  have  the  right  now  to  prefix  the  name  of  the 
corporation,"^  And  where  a  note  was  indorsed  "pay  to  E. 
O.,  Cashier,  or  order,"  and  was  signed  "E.  C.  K.,  Cashier," 
it  was  held  a  sufficient  indorsement  by  one  bank  to  another.^ 
So  where  a  bill  was  drawn  on  "  John  A.  Welles,  Cashier, 
Farmers',  &c.  Bank,"  and  the  acceptance  was  "John  A. 
Welles,  Cashier,"  the  bank  alone  was  held  bound.'^ 

§  418.  W7ie7i  jKirol  or  other  extraneous  evidence  is  ad- 
missible.— While  It  is  true,  as  a  general  lule,  that  the  liabil- 
ity of  the  principal  or  agent  must  be  gathered  from  an  in- 
spection of  the  paper  itself,  there  are  nevertheless  some  cases 
in  which  doubtful  expressions  are  used,  or  the  instrument 
is  so  inaptly  put  together,  that  the  precise  meaning  to  be 
collected  from  its  face,  is  left  so  ambiguous  or  obscure  as 
to  render  its  interpretation  per  se,  too  difficult  and  uncer- 
tain for  just  and  sound  construction.  When  the  instrument 
is  of  this  description,  that  is,  when  its  language  or  terms 
are  so  unintelligible  as  to  admit  of  no  rational  interpreta- 
tion of  the  meaning,  or  are  not  sufficiently  decisive  of  the 
intention  of  the  parties,  but,  on  the  contrary,  are  equivocal 
and  uncertain,  extraneous  proof,  parol  or  written,  may  be 
admitted  as  between  the  original  parties  to  show  the  true 
character  of  the  instrument,  and  what  party — the  ])rincipal, 
or  the  agent,  or  both — is  liable.  Thus  where  a  due  bill 
was  expressed  to  be  "  in  full  of  labor  performed  on  cottage 
lot  of  the  K.  R.  Co.,"  saying  nothing  of  what  company,  and 
was  signed  by  the  president  with  the  simple  signature  "  Ed. 
Robinson,"  parol  evidence  was  held  admissible  to  show  that 
it  was  really  the  company's  obligation  ;  ^  and  so  where  a  prom- 
issory note  read,  "  We,  the  President  and   Directors  of  the 

'  Folger  V.  Chase,  18  Pick.  67. 

'  Watervliet  Bank  v.  White.  1  Denio,  009. 

'  Farmers',  &c.  IJank  v.  Troy  City  Bank,  1  Doiifir.  (Mich.)  473. 

♦  Richmond,  Pot.  &  Fred.  R.  R.  Co.  v.  Snead,  19  Grat.  354. 


INTERPRET ATION   OF  THE  INSTRUMENT.  343 

Delancey's  Valley  and  Sweet  Air  Turnpike  Company,  prom- 
ise, <fec.,"  and  was  signed  by  C.  T.  H.,  "  President,"  I.  N.  H. 
and  J.  G.  D.,  "  Directors,"  and  E.  R  S.,  "Secretary,"  the 
same  rule  was  applied  to  admit  evidence  to  show  that  the 
note  was  signed  and  accepted  as  the  note  of  the  company.^ 
So  in  Missouri  where  the  note  ran,  "  I  promise  to  pay  A. 
&  B.  $645  for  building  a  school-house  in  School  District 
No.  3,  township  51,  range  21,"  signed  "P.  T.  Keynolds, 
Local  Director."  2  So  in  New  York  where  the  note  ran, 
"  we  promise,"  and  was  signed  by  five  persons  who  added  : 
"  Trustees  of  St.  John's  Ev.  Lutheran  Church,  Hudson,  N.  Y.," 
and  attached  the  corporate  seal,  the  Court  saying :  "  The 
case  was  within  the  authorities  admitting  of  proof  of  the 
circumstances  mider  which  it  was  given  with  a  view  to  de- 
termine the  defendant's  liability.  In  addition  to  what  ap- 
peared on  the  face  of  the  paper,  it  was  proved  that  the  cor- 
poration was  indebted  to  the  payee,  that  the  latter  made 
claim  therefor  to  the  corporation ;  that  it  was  recognized 
and  allowed  by  the  trustees,  its  only  officers;  he  requested 
a  note,  and  the  note  in  suit  was  given  him.  *  *  *  The 
plaintiffs  here  stand  in  no  better  position  on  this  question 
than  would  the  payee,  inasmuch  as  the  note  on  its  face  dis- 
closed the  fact  that  this  defense  here  interposed  existed,  or 
that  the  proof  to  establish  it  was  admissible."  ' 

§  419.  The  Supreme  Court  of  the  United  States  has  gone 
very  far  in  admitting  parol  evidence  to  ascertain  whether  the 
principal  or  agent  was  intended  to  be  bound,  and  the  course 
of  dealing  between  the  parties,  and  the  particular  circum- 
stances of  the  case  were  allowed  to  come  before  the  court.* 

•  Haile  v.  Peirce,  32  Md.  327. 

'  McClellau  v.  Reynolds,  49  Mo.  314.     See  also  Pra,tt  v.  Beaupre,  13  Minn. 
190.  '  Hood  V.  Hullenbeck,  14  N.  Y.  S.  0.  (7  Hun),  367  (1876). 

*  Mechanics'  Bank  v.  Bank  of  Columbia,  5  Wheat.  336.     The  check  in   this 
case  was  as  follows  : 

No,  18.  Mechanics'  Bank  of  Alex.\ndria, 

June  25,  1817. 
Cashier  of  the  Bank  of  Colnmbia, 

Pay  to  the  order  of  P.  II.  Minor,  Esq.,  ten  thousand  dollars. 
$10,000.  WM.  PATON,  Jon. 

It  was  proved  that  the  payee,  Minor,  was  the  teller  of  the  Mechanics'  Bank ; 


344  PRIVATE   CORPORATIONS  AS  PARTIES. 

that  the  check  was  an  official  check  cut  out  of  the  check  book  of  the  bank,  and 
noted  on  the  margin;  that  the  money  was  drawn  in  behalf  of  and  applied  to  the 
use  of  the  Mechanics'  Bank ;  and  that  other  checks  had  been  drawn  by  the 
cashier  on  behalf  of  the  bank  in  the  like  form,  in  all  respects  save  that  he  usu- 
ally added  "  Cas."  or  "  Ca."  to  his  name. 

Johnson,  J.,  said:  "It  is  by  no  means  true,  as  was  contended  in  argument, 
that  the  acts  of  agents  derive  their  validity  from  professing,  on  the  face  of  them> 
to  have  been  done  in  the  exercise  of  their  agency.  In  the  more  solemn  exercise 
of  derivative  powers,  as  applied  to  the  execution  of  instruments  known  to 
the  common  law,  rules  of  form  have  been  prescribed.  But  in  the  diversified 
exercise  of  the  duties  of  a  general  agent,  the  liability  of  the  principal  depends 
upon  the  facts,  1.  that  the  act  was  done  in  the  exercise,  and  2.  within  the  limits 
of  the  powers  delegated.  These  facts  are  necessarily  inquirable  into  by  a  court 
and  jury;  and  this  inquiry  is  not  confined  to  written  instruments  (to  which  alone 
the  principle  contended  for  could  apply),  but  to  any  act,  with  or  without  writ- 
ing, within  the  scope  of  the  power  or  confidence  reposed  in  the  agent ;  as,  for 
instance,  in  the  case  of  money  credited  in  the  books  of  a  teller,  or  proved  to  have 
been  deposited  m  ith  him,  though  he  omits  to  credit  it." 


CHAPTER  XIV. 

MUNICIPAL   COEPORATIONS   AS    PARTIES    TO    NEGOTIABLE   INSTRU- 
MENTS. 

§  420.  As  to  piiUic  or  municipal  corporations. — In  a 
subsequent  portion  of  this  work  the  subject  of  the  power  of 
puV)lic  corporations  to  execute  negotiable  instruments  will  be 
considered  in  detail,  in  connection  with  the  matter  of  coupon 
bonds,  which  constitute  by  far  the  most  important  branch  of 
public  obligations. 

There  is  no  doubt,  however,  that  public  corporations  may- 
have  the  power  conferred  on  them  to  execute  bills,  notes, 
checks,  and  indeed  all  varieties  of  negotiable  instruments. 
But  the  better  opinion  is,  that  such  power  does  not  exist, 
unless  expressed  or  clearly  implied.^  The  ordinary  orders, 
warrants,  certificates  of  indebtedness,  and  obligations  to  pay 
issued  by  munici2:)al  corporations,  if  negotiable  in  form,  will 
in  general  enable  the  holder  to  sue  in  his  own  name.  But 
they  are  not  negotiable  instruments  so  as  to  exclude  inquiry 
into  the  legality  of  their  issue,  or  preclude  defenses  which 
are  available  as  against  the  original  payees.^  Powers  con- 
ferred on  municipal  corporations  which  cannot  be  carried 
into  execution  without  borrowing  money,  and  giving  obliga- 
tions payable  in  future,  have  been  considered  sufficient  to 
carry  implied  power  to  issue  negotiable  instruments ;  but 
such  powers  are  not  implied  from  the  usual  powers  of  ad- 
ministration conferred  in  specific  matters,  and  the  power  to 
levy  taxes  to  defray  necessary  corporate  expenditures.^    It  is 


'  Knapp  V.  Mayor  of  Hoboken,  39  N.  J.  (Law")  394;  City  of  Williamsport  v. 
Commonwealth,  84  Penn.  St.  487  ;  Dively  v.  Cedar  Falls,  21  Iowa,  566;  Clarke 
Des  Moines,  19  Iowa,  200. 

"  Knapp  V.  Mayor  of  Hoboken,  39  N.  J.  L.  R.  397;  1  Dillon  on  Municipal 
Corporations,  §  4(iC  ;  see  post,  §  427,  435. 

'  Police  Jury  v.  Britton,  15  Wall.  572,  post,  §  422;  Clemens  on  Corporate  Se- 
curities, 26,  27.     See  also  Mayor  v.  Ray,  19  Wall.  468. 


346  MUNICIPAL  CORPORATIONS  AS  PARTIES. 

tlioiiglat  in  Pennsylvania,  tliat  whenever  the  municipality- 
has  authority  to  contract  a  debt  by  J)orrowing  money  or 
otherwise,  so  that  the  legislature  must  have  contemplated  its 
giving  securities  of  some  sort  in  payment,  it  has  then  by  im- 
plicati'on  authority  to  evidence  the  same  by  bill,  note,  bond, 
or  other  negotiable  instrument.^  But  we  do  not  perceive 
that  mere  authority  to  contract  a  debt  carries  with  it  neces- 
sarily the  idea  that  money  must  be  borrowed,  or  the  author- 
ity to  execute  negotiable  instruments.^  Municipal  corpora- 
tions in  order  to  exercise  municipal  functions,  such  as 
opening  streets,  &c.,  must  come  under  obligation  to  pay 
those  who  do  the  work.  Taxation  is  the  ordinary  method 
of  raising  revenue  for  such  purposes,  and  debts  so  contracted 
should  be  paid  out  of  the  municipal  revenues  raised  by  tax- 
ation. This  subject  is  elsewhere  discussed  in  this  work,  and 
it  is  not  necessary  here  to  elaborate  it.'"^  The  views  of  Judge 
Dillon,  as  expressed  in  a  recent  essay  on  the  Law  of  Munici- 
pal Bonds,  seem  to  us  eminently  sound,  and  worthy  of  ap- 
probation.* 

§  421.  Officers  empoiDered  to  act  for  public  corporations. 
— ^The  common  council  of  a  city  or  town  is  the  legislative 
branch  of  the  municipal  government ;  and  when  the  city  or 
town  has  the  power  to  execute  tlie  instrument,  that  body 
would  be  the  proper  agency,  by  whom,  or  under  whose 
directions,  it    should    be    exercised,    and  would    have   the 

'  City  ©f  Williamsport  v.  Commonwealth,  84  Ponn.  St.  501. 

■  See  post,  Vol.  2,  §  1530.  =  See  post,  Vol.  2,  §  1527  et  seq. 

*  See  Dillon  on  Municipal  Bonds,  §  6,  p.  12-13  et  seq.,  -where  it  is  said  : 
"  There  is  no  resemblance  between  private  and  public  or  municipal  corporations 
in  this  regard.  The  latter  are  not  organized  for  trading,  commercial  or  business 
purposes.  They  have  in  general  but  one  mode  of  meeting  their  liabilities,  and 
that  is  by  taxation,  and  it  is  upon  this  resource  that  creditors  must  be  taken  to 
rely.  For  hundreds  of  years  in  England,  such  corporations  have  existed,  with- 
out it  ever  being  contended  that  they  could,  without  express  authority,  issue 
ccmimercial  paper.  *  *  *  ^e  regard  as  alike  unsound  and  dangerous  the 
doctrine  tlint  a  public  or  municipal  corporation  possesses  the  implied  power  to 
l)orrow  money  for  its  ordinary  purposes,  and  as  incidental  to  that,  the  power  to 
issue  commercial  securities.  The  cases  on  this  subject  are  conflicting,  but  tlie 
tendency  is  toward  the  view  above  indicated." 


MUNICIPAL  CORPORATIONS  AS  PARTIES.  347 

implied  authority  to  execute  the  power  of  the  corporation. 
But  tlie  executive  officers  of  cities  and  towns,  and  the 
supervisors,  trustees,  or  representative  officers  of  a  county, 
parish,  or  other  local  jurisdiction,  invested  with  the  usual 
powers  of  administration  in  specific  matters,  and  the  i)0wer 
to  levy  taxes  to  defray  the  necessary  expenditures  of  the 
jurisdiction,  have  no  implied  authority  to  issue  negotiable 
securities  of  such  a  kind  as  to  be  unimpeachable  in  the  hands 
of  bona  fide  holders. 

§  422.  Thus,  it  has  been  held  that  the  mayor  of  a  city 
could  not  execute  the  bond  of  the  city,  although  he  had  re- 
ceived express  authority  from  the  council  to  borrow  money 
from  a  bank,  and  to  execute  a  note  therefor.^  So  it  has 
been  held  that  county  supervisors  had  no  implied  power  to 
execute  negotiable  instruments.  Field,  J.,  saying :  "  Were  it 
otherwise,  it  is  easy  to  see  that  the  county  would  be  entirely 
at  the  mercy  of  the  board."  ^  Nor  have  the  trustees  or 
supervisors  of  towns,  villages,^  and  townships;*  nor  the 
selectmen  of  towns  and  villages ;  ^  nor  the  auditors  of  cities, 


'  Little  Rock  v.  State  Bank,  3  Eng.  (Ark.)  237. 

"  People  V,  Supervisors  El  Dorado  Co.  11  Cal.  175.  To  same  effect,  see  Hub- 
bard V.  Town  of  Lyndon,  28  Wis.  675 ;  Cliemung  Canal  Bank  v.  Supervisors,  5 
Den.  517. 

'  Lake  v.  Trustees,  4  Den.  520;  Hubbard  v.  Town  of  Lyndon,  28  Wis.  G74. 

*  Inhabitants  v.  Weir,  9  Ind.  224. 

*  Rich  V.  Errol,  51  N.  H.  350.  In  Smith  v.  Inhabitants  of  Cheshire,  13  Gray, 
318,  it  was  held  that  an  order  or  draft  of  the  selectmen  of  Cheshire  on  the  treas- 
urer of  the  town,  payable  to  Westcott  or  bearer,  was  not  negotiable;  and  that 
an  action  could  not  be  brought  in  any  name  but  that  of  the  party  to  whom  it  was 
issued.  Bigelow,  J.,  after  saying  that  such  orders  were  common,  but  tlie  right 
of  the  holder  to  sue  depended  on  the  question,  whether  the  selectmen  had  power 
by  virtue  of  their  oflBce,  and  without  special  authority  from  the  town,  to  issue 
to  persons  having  claims  on  the  town  negotiable  notes,  bills  of  exchange,  or 
orders,  on  wliich  a  town  can  be  held  liable  to  indorsers  or  holders  other  than 
those  to  whom  they  were  originally  issued,  continued:  ''  The  powers  and  duties 
of  selectmen  are  not  very  fully  defined  by  statute.  Many  of  the  acts  usually 
performed  by  them  on  behalf  of  towns,  and  which  are  recognized  as  within 
their  appropriate  sphere,  have  their  origin  and  foundation  in  long-continued 
usage.  The  management  of  the  prudential  affairs  of  towns  necessarily  requires 
the  exercise  of  a  large  discretion,  and  it  would  be  quite  impossible  by  positive 
enactment  to  place  definite  limits  to  the  powers  and  duties  of  selectmen  to  whom 


348  MUNICIPAL  CORPORATIONS  AS  PARTIES. 

who  are  mere  executive  agents.^  And  it  has  recently  been 
held  l)y  the  United  States  Supreme  Court  that  there  was  no 
implied  power  to  execute  a  negotiable  bond  in  the  police 
jury  of  a  parish,  Bradley,  J,,  saying:  "It  would  be  an 
anomaly  justly  to  be  deprecated,  for  all  our  limited  territorial 
boards  charged  with  certain  objects  of  necessary  local  admin- 
istration, to  become  fountains  of  commercial  issues,  capable  of 
floating  about  in  the  financial  whirlpools  of  our  large  cities."  ^ 
So  there  is  no  such  implied  powder  in  the  clerks  of  county 
courts,  thouo^h  such  courts  constitute  the  auditins;  boards  of 
the  counties;^  nor  in  the  clerks  of  boards  of  supervisors  to 
issue  a  negotiable  warrant.*  Nor  in  county  judges,  who  are 
special  limited  agents;  ^  nor  in  the  mayor  and  recorder  of  a 
city ;  ®  nor  in  the  mayor  alone.^ 

§  423.  Difference  hetiveeu  Public  and  Private  Gorporor 
tions. — If  private  corporations,  to  increase  their  profits,  em- 

the  direction  and  control  of  such  affairs  are  intrusted.  Speaking  generally,  it 
may  be  said  that  they  are  agents  to  take  the  general  superintendence  of  the  busi- 
ness of  a  town,  to  supervise  the  doings  of  subordinate  agents,  and  the  dis- 
bursement of  money  appropriated  by  vote  of  the  town  to  take  care  of  its  prop- 
erty and  perform  other  similar  duties.  But  they  are  not  general  agents.  They 
are  not  clothed  with  the  general  powers  of  the  corporate  body  for  which  they 
act.  They  can  only  exercise  such  powers  and  perform  such  duties  as  are  neces- 
sarily and  properly  incident  to  the  special  and  limited  authority  conferred  on 
them  by  their  office.  They  are  special  agents  empowered  to  do  only  such  acts  as 
are  required  to  meet  the  exigencies  of  ordinary  town  business.  *  *  The  rule 
of  law  is  well  settled  that  a  special  agent  has  no  authority  to  bind  his  principal 
by  a  promissory  note,  bill  of  exchange,  or  other  negotiable  paper.  Such  power 
can  be  conferred  only  by  the  direct  authority  of  the  party  to  be  bound." 

Taft  V.  Pittsford,  38  Vt.  289  (which  seems  to  overrule  Dalrymple  v.  Whiting- 
ham,  26  Vt.  245).  But  see  Andover  v.  Grafton,  7  N.  0.  302,  and  Great  Falls 
Bank  v.  Farmington,  41  N.  H.  33. 

'  Dana  v.  San  Francisco,  19  Cal.  486;  People  v.  Gray,  23  Cal.  125;  Keller  v. 
Weeks,  22  Cal.  460. 

■  Police  Jury  v.  Britton,  15  Wall.  566  (1872).  To  same  effect,  see  Bearman 
V.  Board  of  Police,  42  Miss.  238. 

^  Parcel  v.  Barnes,  25  Ark.  261.  *  Clark  v.  Polk  Couuty,  19  Iowa,  248. 

'  Hyde  v.  County  of  Franklin,  27  Vt.  186 ;  Daviess  County  Court  v.  Howard, 
13  Bush.  (Ky.)  102. 

•  Chirke  v.  Des  Moines,  19  Iowa,  200. 

'  Short  V.  City  of  New  Orleans,  4  La.  Ann.  281 ;  Goldschmidt  v.  New  Orleans, 
5  La  Ann.  436. 


MUNICIPAL  CORPORATIONS  AS  PARTIES.  349 

bark  in  enterprises  not  authorized  by  their  charter,  still,  as 
to  third  persons,  and  when  necessary  for  the  advancement  of 
justice,  the  stockholders  will  be  presumed  to  have  assented, 
since  it  is  in  their  power  to  restrain  their  officers  when  they 
transgress  the  limits  of  their  chartered  authority.^  But 
municipal  corporations  stand  upon  a  diiferent  ground.  They 
are  not  organized  for  gain,  but  for  the  purpose  of  govern- 
ment ;  and  debts  illegally  contracted  by  their  officers  cannot 
be  made  binding  upon  the  taxpayers  from  the  presumed  as- 
sent of  the  laj;ter.^ 

The  principle  is  applicable  to  both  public  and  private 
corporations,  as  it  is  to  individuals,  that  where  they  borrow 
money  from  a  bank  or  other  institution,  it  does  not  lie  in 
their  mouth  to  show  that  the  transaction  was  of  a  character 
prohibited  by  the  charter  of  such  bank  or  other  institution.' 

'  Lloyd  V.  West  Branch  Bank,  15  Penn.  St.  174.  It  was  held  that,  although 
a  bank  had  no  authority  to  receive  certain  notes  on  deposit,  yet,  if  received,  it 
was  liable  for  them.  Coulter,  J.,  said:  "The  recognized  and  known  function- 
aries, and  especially  the  officers  of  a  bank,  are  held  out  to  the  world  as  having 
authority  to  act  according  to  the  general  usage,  practice,  and  course  of  the  busi- 
ness of  such  institutions." 

"  If  it  were  otherwise,  there  would  be  no  safety  for  the  public  in  doing  busi- 
ness with  any  one  of  such  institutions;  because  their  charters  differ  in  some  re- 
spects, and  individuals  cannot  be  presumed  to  carry  these  documents  in  their 
pockets  as  a  vade  mecum.  Their  acts,  therefore,  within  the  scope  of  such  usage, 
practice,  and  course  of  business,  will  bind  the  corporation  in  favor  of  third  per- 
sons transacting  business  with  tliem,  and  who  did  not  know  at  the  time  that  the 
officer  was  acting  beyond  and  above  the  scope  of  his  authority.  The  property 
of  stockholders  is  not  bound  by  the  irregular,  unauthorized  transactions  or  dec- 
hxrations  of  their  officers,  beyond  the  just  sphere  of  their  legal  action.  But  if 
stockholders,  without  objection  or  interference,  witness  a  course  of  business, 
usage,  and  practice  on  the  part  of  their  officers,  this  justifies  third  persons  in 
l)t'lieving  that  such  usage  of  the  officers  is  sanctioned  by  the  principle  and  author- 
ized by  law." 

-  Bradley  v.  Ballard,  55  111.  430. 

'  Township  of  Pine  Grove  v.  Talcott,  19  Wall.  619,  and  cases  therein  cited. 


CHAPTER    XV. 

DRAFTS  OR  WARRANTS  OF  ONE  CORPORATE  OFFICER  UPON  ANOTHER. 


SECTION  I. 

DRAFTS    OR   WARRANTS    OF    PRIVATE   CORPORATIONS. 

§  424.  In  the  first  place^  as  to  drafts^  order%^  or  warrants 
of  'private  corporations. — Sometimes,  in  dealing  with  corpora- 
tions, one  agent  or  officer  draws  upon  another,  and  in  respect 
to  private  corporations  the  doctrine  may  be  regarded  as  set- 
tled by  weight  of  authority,  and  by  principle,  that,  provided 
the  act  be  not  tdtra  vires,  an  instrument  so  drawn  is,  in  effect, 
the  draft  of  the  corporation  upon  itself,  and  may  be  treated 
either  as  an  accepted  bill,  or  as  a  promissory  note.  Such 
drafts  come  within  a  statutory  provision  respecting  "  bills 
and  notes  for  the  direct  payment  of  money."  ^  They  are 
frequently  given  for  mere  convenience  in  keeping  accounts, 
and  providing  concurrent  vouchers,  and  as  it  is  not  necessary, 
when  l)ills  and  notes  are  drawn  payable  at  a  particular  place 
to  aver  or  })rove  presentment  there  as  a  condition  precedent 
to  binding  the  acceptor  or  maker,  so  it  is  considered  that 
it  is  not  necessary  to  aver  or  prove  presentment  to  the 
drawee  in  person,  or  at  his  place  of  business  or  residence,  or 
to  give  notice  of  non-payment,  before  suing  the  corporation, 
which  is  regarded  as  acceptor  or  maker.'^  This  view  has 
been  applied  in  numerous  cases:  where  the  president  and 
secretaiy  of  a  water  company  drew  upon  its  treasurer,  and 
the  corporation  executed  a  mortgage  signed  in  like  manner 
to  secure  the  draft ;  ^  where  the  secretary  of  a  railroad  com- 

1  Gilstrah  v.  St.  Louis,  &c.  R.  R.  Co.  50  Mo.  491. 
•^  See  1  Parsons,  N.  &  B.  63. 

'  Dennis  v.  Table  Mountain  Water  Co.  10  Cal.  369  (1858).     A  similar  case  is 
Hasey  v.  White  Pigeon  Beet  Sugar  Co.  1  Doug.  Mich.  193  (1843). 


OF  PRIVATE  CORPORATIONS.  351 

pany  drew  upon  its  treasurer;'  where  the  president  of  a 
railroad  company  drew  upon  its  treasurer  for  a  specified  sum, 
stated  as  being  amount  due  the  payee  for  work  done  as  con- 
tractor ;  "^  where  the  agent  of  a  trading  corporation  drew  upon 
its  treasurer,  who  accepted  the  draft.^ 

§  425.  The  contrary  doctrine  to  that  of  the  text  at  one 
time  prevailed  in  Indiana,*  but  was  subsequently  overruled 
by  the  cases  already  quoted.  It  has  prevailed  also  in  Ala- 
bama, where  it  is  held  that  a  company  draft  of  the  railroad 
corporation  on  the  treasurer,  signed  by  the  president,  must 
be  presented,  and  notice  given  of  dishonor  (unless  such  prece- 
dent steps  be  excused)  before  action  can  be  sustained.^ 

§  426.  In  England,  where  the  directors  of  an  assurance 
company  drew  on  its  cashier,  Wilde,  C.  J.,  said :  "  The  com- 
pany indicate  that  they  mean  to  pay,  by  a  direction  to  their 
ofiicer  to  pay,  and  they  point  out  to  whom  payment  is  to  be 
made.  It  appears  to  me  that  the  instrument  contains  all  that 
is  essential  to  constitute  a  promissory  note."  ^ 

» Indiana,  &c.  R.  R.  Co.  v.  Davis,  20  Ind.  6  (1863);  Maux  Ferry  Gravel  R. 
Co.  V,  Branegan,  40  Ind.  361,  overruling  earlier  cases. 

'■■  Fairchild  v.  Ogdensburgh,  &c.  R.  R.  Co.  15  N.  Y.  337  (1857) ;  approved  in 
Mobley  v.  Clark,  28  Barb.  391  (1858). 

'  Shaw  V.  Stone,  1  Cush.  256,  Shaw,  C.  J. :  "  The  right  of  the  holders  to  pro- 
ceed against  the  company  as  drawer  was  perfect,  without  demand  on  the  accep- 
tor or  notice  to  the  indorsers.  Walwyn  v.  St.  Quintin,  1  Bos.  &  Pul.  652.  Nor, 
supposing  them  to  be  foreign  bills,  would  a  protest  be  necessary." 

*  Marion,  «&c.  R.  R.  Co.  v.  Dillon,  7  Ind.  404  (1856).  The  President  of  u  rail- 
road company  drew  upon  its  treasurer.  There  was  no  allegation  of  presentment. 
Perkins,  J.,  said:  "  If  a  man  drew  a  bill  or  order  directly  upon  himself  payable 
immediately,  it  is  his  promissory  note,  and  may  be  sued  on  accordingly.  In  such 
case  he  is  the  payer  as  well  as  drawer,  and  by  the  very  act  of  drawing  admits  he 
is  to  pay,  and  that  he  has  not  tlien  the  money  with  which  to  make  payment. 
But  where  the  debt  is  due  from  a  company,  and  it  is  the  duty  of  one  officer  or 
set  of  othcers  to  allow  demands,  and  draw  upon  another  officer  wlio  has  the 
custody,  and  is  charged  witli  the  duty  of  the  disbursement  of  the  company's 
funds  for  payment,  such  order  must,  as  a  general  rule,  be  presented  in  a  reason- 
able time  for  payment."  See,  also,  the  overruled  cases,  Marion  v.  Logansport  R. 
R.  Co.  7  Ind.  648  (1856);  English  v.  Trustees,  «  Ind.  438(1855) ;  Marion,  &c.  R. 
R.  Co.  V.  Hodge,  9  Ind.  163  (1857). 

'  Wetumpka,  &c.  R.  R.  Co.  v.  Bingham,  5  Ala.  663  (1843). 

•  Allen  V.  Sea,  Fire  &  Life  As.  Co.  9  C.  B.  574. 


352  DRAFTS    OR  WARRANTS 

SECTION  II. 

DRAFTS    OR   WARRANTS    OF  •SlUNIGIPAL    CORPORATIONS. 

§  427.  1)1  the  second  place,  as  to  municijxd  drafts,  orders, 
or  ivarrants. — Frequently  a  draft,  order,  or  warrant  is  drawn 
by  one  officer  of  a  municipal  corporation  upon  another ;  or 
by  the  selectmen  of  a  town,  or  supervisors  of  a  county,  upon 
an  officer,  for  the  payment  of  corj^orate  indebtedness  to  the 
payee.  The  intention  in  such  case  is,  as  a  general  rule,  to 
furnish  vouchers  to  the  proper  disbursing  officer,  and  not  to 
put  negotiable  instruments  in  circulation.  And  it  has  been 
generally,  and  as  we  think  justly,  considered  that  such  drafts, 
orders,  or  w^arrants  are  not  negotiable  instruments,  and  can- 
not be  regarded  either  as  bills  of  exchange  or  promissory 
notes,  cutting  out  equities  as  against  the  corporation — on  the 
ground  that  there  is  no  implied  authority  in  such  officers  to 
execute  negotialde  instruments.  It  has  been  so  held,  where 
the  selectmen  of  a  town  drew  an  order  on  the  treasurer  pay- 
able to  bearer;*  where  the  auditor  of  a  county  drew  upon 
the  treasurer ;  ^  where  the  auditor  of  the  city  of  San  Fran- 
cisco drew  a  warrant  upon  the  treasurer,  purporting  on  its 
face  to  be  for  a  certain  sum  "as  ordered  by  the  board  of  su- 
pervisors;" '^  where  county  judges  drew  a  warrant  upon  the 

'  Smith  V.  Cheshire,  13  Gray,  318;  ante,  §  1. 

'  People  V.  Gray,  23  Cal.  135;  to  same  effect  see  Clark  v.  Polk  County,  19 
Iowa,  248 ;  Keller  v.  Hicks,  23  Cal.  460. 

'  Dana  v.  San  Francisco,  19  Cal.  490  ;  Baldwin,  J.,  saying:  '•  We  think  that 
the  plaintiff,  counting  alone  upon  the  county  scrip  or  warrants,  as  negotiable  in- 
struments, evidencing  of  themselves  an  indebtedness  on  the  part  of  the  county, 
cannot  maintain  his  pretensions.  This  seems  to  be  decided  by  the  case  of  The 
People  V.  Supervisors  of  El  Dorado  County,  11  Cal.  170.  The  reason  is,  that  the 
auditor  had  no  authority  to  draw  a  bill  of  exchange,  but  he  can  only,  in  certain 
cases,  issue  warrants  upon  the  order  of  the  supervisors,  or  the  allowance  by  the 
board,  of  an  account  which  is  chargeable  as  a  debt  upon  the  county.  The  warrant 
is  not  intended  to  constitute  a  new  debt,  or  evidence  of  a  new  debt,  against  the 
county,  but  is  the  prescribed  means  the  law  has  devised  for  drawing  money  from 
the  county  treasury.  It  may  be  very  true,  that  the  warrant,  as  an  open  ac- 
count, may  be  assigned,  and  the  assignee  be  protected  as  a  holder  of  a  claim 
against  the  county.     But  this  would  he,  not  because  the  indorsement  of  the  war- 


OF  MUISICIPAL  CORrORATIONS.  3,")3 

treasurer;^  where  the  mayor  and  recorder  of  a  city  drew  a 
warrant  on  the  treasurer  payable  to  ''  A.  II.  W.  or  bearer, 
out  of  any  moneys  in  the  general  fund  not  otherwise  appro- 
priated i'"^  where  the  supervisors  of  a  county  drew  upon  tlio 
treasurer;^  where  the  clerk  of  the  township  board  of  educa- 
tion drew  upon  the  township  treasurer;*  where  the  direc- 
tors of  a  school  district  drew  upon  the  township  treasurer.* 
So  it  has  been  held  that  the  mayor  and  recorder  of  a  city 
have  no  implied  power  to  execute  negotiable  warrants." 

§  428.  It  has  been  held,  however,  in  a  number  of  cases 
that  where  corporate  authorities  are  empovv^ered  by  law  to 
draw  warrants,  or  orders  in  payment  of  debts,  that  they  will 
be  deemed  negotiable  if  phrased  in  negotiable  words,  and 
may  he  sued  upon  by  a  transferee,  like  any  other  negotkble 
instrument.  Thus  where  the  charter  of  the  city  of  Brook- 
lyn required  an  order  or  warrant  of  the  common  coujicil  on 
the  treasurer,  for  dra\ving  money  from  the  treasury,  a  draft 
on  the  treasurer  running,  "  Pay  Alexander  Lynn,  oi"  order, 
fifteen  hundi'ed  dollars  for  award  No.  7,  and  charge  to  Bed- 
ford Road  Assessment,"  and  signed  by  the  mayor  and  the 
clerk  of  the  common  council,  was  held  to  be  a  negotiable  bill 
of  exchange." 


rant  carried  with  it  the  legal  title  of  the  scrip  to  tlie  as.-iigrhcei  as.  an  indorsee 
under  the  law  merchant,  but  because  the  transaction  would  be,  in  equity,  the  as- 
signment of  the  debt  on  which  tlie  scrip  issued,  and  an  authority  to  the  assignee 
to  receive  the  money.  The  question  here  is,  not  whether  the  county  had  the 
power  to  make  a  bill  of  exchange,  but  whether  the  auditor,  when  under  the 
statute  he  issues  a  warant,  has  the  power  to  give  it  the  form  and  qualities  of 
such  an  instrument.  We  think  he  has  not,  and  that  the  paper,  as  here  pre- 
sented, has  no  such  effect,  if  indeed  it  was  so  designed  " 

"If  the  plaintiff  has  a  valid  claim  upon  the  county,  it  (xiglit  to  be  paid;  but 
he  must  proceed  to  enfotce  it  in  some  other  mode." 

'  Hyde  v.  County  of  Franklin,  27  Vt.  186. 

'  Clark  V.  Des  Moines,  19  Towa,  200. 

'  Chemung  Canal  Bank  v.  Supervisors,  5  Denio,  517.. 

*  Steinbeck  v.  Treasurer,  &2.  23  Oiiio  St.  R.  144;  sec  State  v.  HuflF;63  Mo.  3^8. 
»  School  Directors  v.  Fogleman,  76  111.  ISO. 

*  Clark  v.  Des  Moines,  19  Iowa,  301. 

'Kelly  V.   Mayor  of  Brooklyn,   4   Hill.    365,  Cowen.  J.:    "The   draft   was 
signed,  and  countersigned  according  to  the  statute,  by  tlic  mayor  and  clerk. 
Vol.  I.— 23 


354  DRAFTS  OR   WARRANTS 

So,  where  the  clerk,  under  the  order  of  court,  drew  a 
wai'rant  payable  to  A.  B.  or  bearer,  according  to  statutory 
forii),  it  was  held  that  it  was  negotiable  by  delivery,  and  the 
creditor  could  not  recover  against  the  county  without  pro- 
ducing it.^ 

§  429.  Indorsements. — When  a  municipal  corporation  war- 
rant is  deemed  a  commercial  instrument,  neiiotiable  like  an 
ordinary  bill  of  exchange,  the  party  who  transfers  it  with  his 
indorsement  is  subject  to  the  liabilities  and  entitled  to  the 
privileges  of  an  ordinary  indorser  of  a  negotiable  instrument.^ 
But  when  such  an  instrument  is  regarded  as  a  mere  voucher, 
and  not  a  bill  or  note,  the  transferrer  by  indorsement  is  not 
deemed  an  "  indorser,"  in  the  commercial  sense  of  the  term, 
and  could  not  be  held  liable  as  such,  though  the  form  of  the 
paper  be  negotiable.^  He  would  be  liable,  however,  to  re- 
fund the  consideration  if  the  instrument  were  not  valid  and 
legal  according  to  its  purport.* 

§  430.  Presentment. — In  the  case  of  municipal  corporations, 
it  has  been  considered  that  an  order  by  an  officer  or  repre- 
sentative upon  the  disbursing  authorities  must  be  presented 
before  the  corporation  can  be  sued,  though,  perhaps,  no  no- 
tice of  dishonor  would  be  necessary.     This  view  was  applied 


There  is  nothing  in  the  statute  expressing  or  implying  an  inliibition  to  make  the 
warrants  negotial>le." 

"^Independently  of  any  statute  provision,  a  corporation  may  issue  negotiable 
paper  for  a  debt  contracted  in  the  course  of  its  proper  business.  Moss  v.  Oak- 
ley, 2  Iliil,  2G5.  This  is  a  power  incident  to  all  corporations,  and  no  provision 
in  its  charter  or  elsewhere,  merely  directing  a  certain  form  in  aflirmative  words, 
should  1)C  so  construed  as  to  take  away  tiie  power.  The  draft  in  question  was 
Issued  by  the  agents  of  the  defendants,  acting  according  to  the  usual  course  in 
such  matters.  A  disavowal  by  the  corporation,  if  allowed,  might  operate  as  a 
fraud  upon  plaintiff,  and  upon  others.  The  money,  when  drawn  for,  or  soon 
after,  was  in  the  possession  of  the  corporation;  and  it  stood  a  debtor  to  the 
pliiintifTs/;!?'*?  tauto.''''  But  see  contra,  Clark  v.  Dts  Moines,  19  Iowa,  200;  Short  v. 
New  Orlean?^  4  La.  Ann,  281 ;  Goldschniidt  v.  New  Orleans,  5  La.  Ann.  430. 

'  Crawford  County  v.  Wilson,  7  Ark.  (2  English)  219;  see  Sweet  v.  Carver 
County,  IG  Minn.  107 ;  Comm'rs  of  Floyd  County  v.  Day,  19  Ind.  451. 

^  Bull  V.  Sims,  23  N.  Y.  571.  "  Keller  v'  Hicks,  22  Cal.  460. 

♦  Keller  V.  Hicks,  22  Ca!.  400. 


OF  MUNICIPAL  CORrORATIONS.  355 

in  Maine  and  in  Vermont,  where  the  selectmen  of  a  town 
drew  upon  its  treasurer.^ 

But  otlier  authorities,  following  the  analogies  of  private 
corporations,  regard  such  orders  like  bills  of  exchange  di'awn 
by  a  party  upon  himself,  and  which  may  be  treated  either  as 
accepted  bills  or  as  promissory  notes;  and  hold,  therefore, 
that  the  corporation  is  bound  absolutely  for  the  debt  without 
either  presentment  or  notice.^ 

§  431.  When  the  warrant  or  order  has  been  refused  pay- 
ment, the  creditor  may  sue  upon  the  original  indebtedness  of 
the  corporation.^  Where  there  was  no  express  or  imj)lied 
j)ower  in  the  officer  who  executed  it  to  issue  the  warrant,  the 

'  Varner  v.  Nobleborongh,  2  Greenl,  126  (1832),  Mellen,  C.  J.:  ''The  select- 
men were  the  agents  of  the  town,  drawing  the  order  on  their  account  on  the 
iown'a  banker.  The  case  may  be  justly  compared  to  that  of  a  draft  l)y  a  man  on 
bis  banker,  or  a  note  payable  at  his  banker's,  or  by  his  agent.  In  which  cases  it 
seems  settled  that  the  draft  or  note  must  be  presented  at  the  place  appointed. 
But,  in  addition  to  the  authority  of  decided  cases,  so  nearly  resembling  this  in 
prir.ciple,  a  strong  argument  against  the  present  action  arises  out  of  the  general 
— perhaps  we  may  say  universal — mode  of  conducting  the  affairs  of  a  town  in  the 
settlement  of  accounts  and  payment  of  debts  due  from  the  corporation  to  individ- 
uals. Persons  transacting  business  according  to  an  established  and  well-known 
usage,  are  presumed  to  assent  to  such  usage  and  contract  in  reference  to  it. 
Now,  it  is  universally  understood  that  selectmen,  who  draw  an  order  on  l>eh;df 
of  the  tawn  in  favor  of  any  of  their  creditors,  have  not  the  funds  of  the  town  in 
their  hands,  but  that  they  are  in  the  possession  of  the  treasurer.  When  any  cred- 
itor of  the  town  receives  an  order  on  the  treasurer  for  the  amount  due  to  him,  he 
must  be  considered  as  understanding  these  facts  and  assenting  to  this  mode  of 
receiving  payment,  and  as  accepting  the  order  under  an  implied  engagement  to 
conform  to  the  established  usage,  and  present  the  order  to  the  treasurer  for  pay- 
ment. Good  faith  requires  him  to  do  this,  and  the  law  considers  him  as  promis- 
ing so  to  do.  If,  on  presenting  the  order,  payment  be  refused,  the  town  whicli 
drew  the  order  on  itself  must  be  answerable  instanter,  for  the  reason  before 
assigned.  But  no  sound  reason  can  be  given  why  a  town  should  be  subjected  to 
the  perplexity  and  costs  of  an  action,  bcfoi'e  the  payee  of  an  order  will  g^ve  him- 
self the  trouble  to  do  his  duty  and  request  payment  of  tlie  money  due  him  accord- 
ing to  tl'.e  terms  of  it.  We  have  no  reason  to  believe  but  that  the  contents  of  the 
order  would  have  been  promptly  p  lid  on  api)lication  at  the  treasury.  Justice,  as 
well  as  law,  are  against  ihe  plaintiffs  according  to  the  facts  before  us."  Pease  v. 
Cornish,  19  Me.  193;  Dalrymple  v.  Whitingham,  26  Vt.  3i6;  see  Kelley  v.  Mayor 
of  Brooklyn,  4  Hill,  265. 

-  Steel  V.  Davis  County,  2  G.  Greene  (Iowa),  469. 

'  Short  V.  City  of  New  Orleans,  4  La.  Ann.  281 ;  Goldschmidt  v.  The  Same.  5 
La.  Ann.  436. 


3a()  DRAFTS   OR   WAREAKTS 

plaintiff  cannot  make  it  even  the  prima  facie  ground  of  re- 
covery, and  must  resort  to  the  original  consideration;^  but 
when  issued  by  an  officer  having  a  geneial  power  to  issue 
warrants,  it  will  be  presumed  to  be  upon  a  consideration,  and 
if  there  be  any  defense,  it  must  be  pleaded  and  proved  by  the 
defendant." 

§  432.  It  is  not  incumbent  upon  a  creditor  to  take  a 
town  order  in  discharge  of  a  debt  due  him,  although  it  is 
the  usage  of  the  town  to  settle  its  indebtedness  by  giving  an 
order  of  its  selectmen  on  the  treasurer,  similar  to  that  offered.^ 
But  if  he  takes  such  order,  he  cannot  recover  the  amount  of 
the  debt,  as  it  seems,  without  producing  it.*  And  if  once 
paid,  it  cannot  l)e  the  subject  of  recovery  even  by  a  hona  fide 
holder,  at  least  where  it  is  not  deemed  a  negotiable  instrument.'^ 

When  such  warrants  or  orders  are  issued  as  vouchers,, 
they  do  not  bear  interest  after  demand  and  refusal  to  pay  ;  ^ 
but  some  of  the  authorities  which  reo-ard  them  as  neo-otiahle 
instruments,  hold  that  interest  is  recoverable  after  dishonor.'' 

§  433.  P ay ahleont  of  'particular  fund. — Where  a  warrant 
or  order  is  made  payable  out  of  a  particular  fund,  it  creates  no 
general  charge  against  the  corporation,  but  only  against  the 
fund  which  is  designated.^  It  has  been. so  held  where  the 
order  contained  the  memorandum,  "  and  charge  the  same  to 
account  of  Union  avenue ; "  ^  and  where  it  was  payable  out 
of  "the  road  and  canal  fund."^'' 

But  if  the  memorandum  merely  indicate  the  considera- 
tion, or  the  source  of  reimbursement,  it  would  be  different. 


'  Allison  V.  Juniata  County,  50  Penn.  St.  353;  see  Dana  v.  San  Francisco,  19 
Cal.  491. 

*  Comm'rs  of  Floyd  County  v.  Day,  19  Ind.  451. 

'  Benson  v.  Carmel,  8  Greenl.  110;  Willey  v.  Greenfield,  30  Me.  453;  Dillon 
on  Municipal  Clorporations,  1st  ed.  p.  398,  §  410. 

•*  Sweet  V.  Carver  County,  16  Minn.  107;  Crawford  County  v.  Wilson,  7  Ark. 
219. 

''  Chemung  Canal  Bank  v.  Supervisors,  5  Den,  517. 

"Allison  V.  Juniata  County,  59  Penn.  St.  353  (1865);  Dyer  v.  Covington 
Township,  19  Penn.  St.  200  (1852.) 

'  Com'rs  of  Leavenworth  v.  Keller,  G  Kans.  518. 

«  Lake  v.  Trustees,  4  Den.  530  ;  Kingsbcrry  v.  Pettis  County,  48  Mo.  207. 

°  Lake  y.  Trustees,  supia.  '°  Kingsoeiry  v.  Pettis  County,  sxqira. 


OF  MUNICIPAL  COIirORATlONS.  357 

So  held  wlicre  there  was  written,  "  it  being  his  proportionate 
part  of  the  surplus  revenue  fund;"^  so  where  it  ran,  "for 
award  No.  7,  and  charge  to  Bedford  Road  assessment;"^  so 
where  it  was  payable  "  out  of  any  funds  belonging  to  the  city 
not  before  specially  appropriated."  ^ 

§  434.  Suit  Inj  Transferee. — Whether  or  not  the  indorsee 
or  assignee  of  a  corporation  warrant  or  order  drawn  by  one 
officer  upon  another,  can  sue  the  county  or  city  in  his  own 
name,  is  another  question  which  has  frequently  arisen. 
Where  such  papers  are  deemed  negotiable,  an  indorsee  or 
transferee  may  of  course  sue  upon  them  as  upon  any  other 
negotiable  instrument.*  But  where  they  are  regarded  as 
mere  vouchers  drawn  by  one  officer  upon  another  for  con- 
venience in  disbursing  funds,  the  contrary  view  has  generally 
•prevailed — that  the  transferee  cannot  sue  upon  them  in  his 
own  name.^ 

§  435.  By  some  authorities  it  is  considered  that  though 
town  or  country  orders  payable  to  bearer,  or  payable  to 
order  and  indorsed,  are  not  commercial  paper  in  the  hands  of 
bona  fide  indorsees  or  transferees  for  value,  so  as  to  exclude 
evidence  touching  the  legality  of  their  inception,  or  so  as  to 
cut  out  defenses  which  would  be  good  against  the  payee; 
yet  they  may  be  sued  upon  by  the  indorsee  or  transferee  in 
his  own  name,  in  like  manner  as  the  assignee  of  a  non-nego- 
tiable instrument.*^ 

'  Pease  v.  Cornish,  19  Me.  191.  "  Kelly  v.  Mayor,  4  Hill,  263. 

'  Ball  V.  Sims,  23  N.  Y.  570. 

*  Kelly  V.  Mayor,  4  Hill,  263;  Dalrymple  v.  Town  of  Whittingham  26  Vt. 
345  (but  sec  Hyde  v.  County  of  Franklin,  below);  Crawford  County  v.  Wilson, 
7  Ark.  (2  English)  219;  Commissioners  of  Leavenworth  v.  Keller,  6  Kans.  510; 
see  Greut  Falls  Bank  v.  Farmington,  41  N.  H.  33. 

'  Hyde  v.  County  of  Franklin,  27  Vt.  185;  Allison  v.  Juniata  County,  50  Penn. 
St.  353.  Thompson,  J. :  '*  It  was  distinctly  said  in  that  case  (Dyer  v.  Covington 
Township,  7  IIarr.[19  Penn.  St.]  200,  that  an  action  does  not  lie  on  such  paper, 
and  in  this  I  entirely  concur.  It  is  neither  a  bill,  note,  check,  nor  contract,  nor 
is  it  a  satisfaction  of  the  original  indebtedness,  and  the  suit  should  ordinirily  be 
on  that,"     See  Sndth  v.  Cheshire,  13  Gray,  318. 

"  Emory  v.  Mariaville,  56  Me.  316;  Sturtevant  v.  Liberty,  46  Me.  459;  Clark 
V.  Polk  County,  19  Iowa,  24S;  Andover  v.  Grafion,  7  N.  H.  303,  overruled  by 
Great  Falls  Bank  v.  Farmington,  41  N.  H.  33.  This  view  is  taken  by  Judge 
Dillon.    Dillon  on  Municipal  Corporations,  Ist  ed.  p.  394,  §  40S.    See  ante,  §  420. 


CHAPTER  XVI. 

THE    FEDEEAL    AND    STATE  GOVEKKIMEKTS    AS    PAllTIES  TO    NEGO- 
TIABLE   INSTRUMENTS. 


SECTION    I. 

GENEKAL    PEINCIPLES   AS   TO    GOYEKKMEKTAL    LIABILITY,    AND    LIABILITY 

OF   AGENTS. 

§  436.  There  is  no  doubt  that  when  an  officer  of  the  gov- 
ernment, Federal  or  State,  who  is  authorized  to  bind  the  gov- 
ernment as  drawer,  maker  or  acceptor  of  a  negotiable  instru- 
ment, draws  or  accepts  a  bill,  or  makes  a  note  in  behalf  of 
the  United  States,  or  the  State  which  he  represents,  its  va- 
lidity cannot  be  questioned  when  it  lias  passed  into  the  hands 
of  a  hona  fide  holder  for  value,  without  notice  of  any  defect. 
The  government  w^ould  then  be  bound  by  its  negotiable 
paper  just  as  an  individual.  This  doctrine  was  laid  down 
by  the  United  States  Supreme  Court  in  a  case  where  the 
Bank  of  the  Metropolis,  being  sued  for  a  balance  due  the 
United  States,  pleaded  as  a  set-off  a  draft  drawn  })y  Edwin 
Porter  on  Richard  C.  Mason,  treasurer  of  the  post-office  de- 
partment, at  ninety  days,  and  accepted  by  him  as  treasurer; 
and  also  four  drafts,  at  ninety  days,  drawn  by  James  Reeside 
on  Amos  Kendall,  Postmaster  General,  and  •'  accepted  on  con- 
dition that  his  contracts  be  coinidied  with."  The  right  of 
the  officers  to  accept,  on  behalf  of  the  government,  was  not 
questioned,  and  the  court  held  them  valid,  declaring  that: 
"  When  the  United  States,  by  its  autliorized  officer,  becomes  a 
party  to  a  negotiable  paper,  they  have  all  the  lights,  and  incur 
all  the  responsibilities,  of  individuals  who  are  parties  to  such 
instruments ; "  and  that  all  the  bank  had  to  look  to  "  was 


GOVERNMENTAL    LIABILITY.  359 

the  genuineness  of  the  acceptance  and  the  authority  of  the 
officer  to  give  it."  ^  At  the  present  time  there  seems  to  be 
no  officer  of  the  Federal  Government  who  has  authority  to 
bind  it  as  a  party  to  a  bill  or  note.^ 

§  437.  In  the  case  of  The  Floyd  Acceptances,  1  Wall. 
667,  before  the  United  States  Supreme  Court,  the  authority 
of  government  officers  to  draw  or  accept  bills  was  discussed 
in  a  suit  upon  the  following  instrument : 

Washington,  November  28,  1859. 
$5,000. 

Ten  months  aftor  date,  for  value  received,  pay  to  our  own  order,  at  tho 
Bank  of  the  Republic,  New  York  city,  five  thousand  dollars,  and  charge  to 
account  of  our  contract  for  supplies  for  the  army  in  Utah. 

Russell,  Majors  &  Waddell. 

Hon.  J.  B.  Floyd,  Secretary  of  War. 
[Indorsement.] 
Russell,  Majors  &  Waddell. 

[Acceptance.] 
War  Department,  November  28,  1859. 
Accepted  : 

John  B.  Floyd, 

Secretary  of  War. 

Suit  was  brought  by  a  bona  fide  indorsee  for  value,  but 
the  court  held  that  he  could  not  recover,  although  it  was 
proved  that  the  army  in  Utah  was  in  imminent  danger  from 
cold  and  starvation  at  the  time  when  the  secretary  accepted 
the  bill  in  order  to  secure  supplies  to  save  it,  on  the  ground 
that  there  was  no  usage  or  practice  by  which  the  Secretary 
of  War  was  authorized  to  accept  such  bills  in  behalf  of  the 
United  States;  and  that  although  it  was  then  and  had  been 
the  practice  of  the  heads  of  departments  to  accepts  drafts  or 
bills  for  the  transmission  of  funds  to  disbursing  officers,  or 
for  the  payment  of  those  serving  in  distant  stations,  or  for 
services  rendered — such  practice  did  not  extend  to  cases  of 

'  Unitetl  States  v.  Bank  of  Metropolis,  15  Pet.  377.     See  this  case  explained 
in  The  Floyd  Acceptances,  7  Wa'l.  G66. 
=■  The  Floyd  Acceptances,  7  Wall.  666. 


3G0  GOVERNMENTS  AS  TARTIES. 

tills  kind,  and  there  was  no  express  authority  to  any  office  of 
the  government  to  draw  or  accept  bills  of  exchange.^ 

§  438.  A  wai'i'ant  issued  by  the  auditor  of  a  State  upon 
the  treasurer  for  an  amount  due  a  creditor  is  not  a  negotiable 
instrument.^  And  it  has  been  held  by  the  United  States 
Suj)reme  Court  that  an  order  drawn  by  the  government  of 
the  United  States  upon  the  government  of  France,  for  an 
amount  due  by  treaty  stipulation,  was  not  a  bill  of  exchange 
in  the  sense  of  the  law  merchant.^ 

§  439.  Foreign  governments  may  also  be  parties  to  nego- 
tiable instruments.  In  a  case  before  the  U.  S.  Supreme 
Court,  the  bills  in  suit  were  signed  :  "  Le-Tombe,  Le  Consul 
General,"  and  directed:  "  Au  citoyen  Payeur  General  des 
defenses  du  Departetnent  de .  A  la  Tresorerie  Na- 
tion ale  a  Paris."  They  l)ore  a  certificate  showing  that  they 
had  been  registered  at  the  consulate  of  France  for  the  port 
of  Philadelphia,  and  a  declaration  by  Adet,  the  minister 
plenipotentiary  of  the  French  Kepublic,  that  the  faith  of  the 
French  nation  was  pledged  for  their  payment,  and  requesting 
the  proper  officer  of  the  treasury  to  pay  them.  The  Court 
was  unanimously  of  opinion  that  the  bills  ^vere  drawn  upon 
account  of  the  French  government,  and  that  Le  Tombe  was 
not  personally  bound.* 

'  The  Floyd  Acceptance.s,  7  Wall,  6GC,  Nelson,  Grier,  ancl  Clifford,  JJ.,  dis- 
sented. Miller,  J.,  who  delivered  tlie  opinion  of  the  court,  said:  "The  United 
States  V.  J3ank  of  Metropolis  is  the  case  mainly  relied  on  as  establishing  the  doc- 
trine contended  for  by  plaintiffs,  and  is  confidently  asserted  to  be  conclusive  of 
the  cases  under  consideration,  unless  overruled.  *  *  *  f\^(,  opinion  «f  the 
court,  after  stating  the  facts,  opens  \vith  the  declaration  that,  '  when  the  United 
States,  by  its  authorized  officer,  becomes  a  party  to  negotiable  pajjcr,  they  have 
nil  the  rights,  and  incur  all  the  responsibilities,  of  individuals  v;lio  are  parties 
to  such  instruments.'  And  further  on  it  is  said,  that  '  an  unconditional  accept- 
ance was  tendered  to  it  (the  bank)  for  discount;  *  *  *  all  it  had  to  look  to 
was  the  genuineness  of  the  acceptance,  and  the  auth.ority  of  the  officer  to  give 
It.'  If  this  language  has  any  significance,  it  is  that  the  authority  of  the  officer, 
like  the  genuineness  of  the  signature,  is  always  to  be  inquired  into  at  the  peril  of 
the  party  taking  an  aeccptunce  purporting  to  biud  the  goveriunent." 

'  State  V.  Dubuclct,  23  La.  Ann.  2G7. 

*  United  States  v.  Barker,  12  Wheat.  559. 

*  Jones,  Indorsee  v.  Lc  Tombe,  3  Dall.  384. 


GOVERNMENTAL   LIABILITY.  3G1 

§  440.  Governmental  and  private  agents. — In  dealing 
with'  the  officers  and  agents  of  government,  whether  Federal 
or  State,  it  is  important  to  remember  that  they  stand  in  a 
different  relation  to  their  principals  from  private  agents. 
Private  agents,  wlio  are  held  out  as  such  by  their  principals 
to  the  public,  will  bind  them  whenever  they  act  within  the 
apparent  scope  of  their  authority.  And  although  they  vio- 
late instructions,  it  will  be  no  defense  to  the  principal,  who, 
having  clothed  them  with  the  semblance  of  authority,  cannot 
deny  its  reality.  But  with  public  agents  it  is  entirely  differ- 
ent. Their  powers  and  duties  are  defined  by  statute,  which 
is  notice  to  the  world  of  the  limitations  to  their  authority; 
and  no  pretension  of  authority,  or  customary  action,  can  am- 
plify that  authority  beyond  the  statutory  limitation.^  This 
rule  is  absolutely  necessary  to  protect  the  public  inter- 
est against  losses  and  injuries  arising  from  the  fraud,  mis- 
take, or  rashness,  or  indiscretion  of  public  agents.^  "  It 
is  better  that  an  individual  should  occasionally  suffer  from 
the  mistakes  of  public  officers  or  agents,  than  to  adopt  a  rule, 
which  through  improper  combinations  or  collusion,  might  be 
turned  to  the  detriment  and  injury  of  the  public."  ^  The  dif- 
ference in  the  statement  of  the  rule  as  applicable  to  public 
and  private  agents  is,  however,  rather  a  difference  arising 
from  the  customary  difference  of  facts  in  the  circumstances 
under  which  they  act,  than  in  the  principle  applicable  to 
them.  For  even  as  to  private  agents,  the  principal  is  not 
bpund  by  their  acts  in  excess  of  authority,  wlien  the  party 
dealing  with  them  has  an  opportunity  to  inspect  that  au- 
thority, and  observe  its  limitations.  This  opportunity  is 
rarely  afforded  in  private  agencies ;  whereas  the  statute  of 
public  record  is  a  conspicuous  notice  to  the  world  of  the 
public  agent's  power. 

§  441.  Coupon  bonds  issued  by  the  Federal*  and  State 

'  Piprco  V.  United  State?,  1  N.  H.  270;   The  Floyd  Acceptances,  7  Wall.  G63. 
-  State  of  Missouri  v.  Bank  of  Missouri,  45  Mo.  038,  Wagner,  J. 
'  WlHteside  v.  U.  S.  93  U.  S.  (3  Otto),  257;    Mayer  v.  Escliback,  17  Md.  282. 
*  Texas  V.  Ilardenberg,  10  Wall.  58;  Texas  \.  White,  7  Wall.  700;  Seybel  v. 
National  Currency  Bank,  54  N.  Y.  288;  Spooner  v.  Holmes,  102  Mass.  503. 


3G2  GOVERNMENTS  AS  PARTIES. 

governments/  are  establislied  as  in  all  respects  negotiable 
instruments;  and  the  rights  of  parties  are  ascertained,  as  a 
general  rule,  l>y  the  same  principles  wliich  apply  to  like  in- 
struments issued  by  corporations.  The  treasui-y  notes  of  the 
United  States  are  deemed  negotiable  instruments,  and  their 
negotiability  is  not  affected  by  the  foct  that  they  are  issued 
under  the  treasuiy  seal,  nor  l)y  the  fact  that  when  issued  the 
name  of  the  payee  is  left  blank.^  A  clause  in  such  a  note  giv- 
ing the  holder  the  option,  upon  maturity,  to  convert  it  into 
bonds,  does  not  destroy  its  negotiability  so  long  as  the  option 
is  not  exercised,  nor  is  negotiability  destroyed  by  d^  clause 
reserving  the  option  to  the  government  to  pay  in  coin  or  in 
paper  money.  But  when  the  holder  exercises  the  option 
given  him,  as  by  indorsing  on  the  note,  "  Pay  Secretary  of 
the  Treasury  for  redemption,"  the  negotiability  of  the  note 
is  desti'oyed.^  In  a  recent  case  involving  these  questions, 
Dwight,  Commissioner,  said :  "  There  is  nothing  to  prevent 
the  holder  from  taking  bonds  at  any  tiiuc?,  though  the  notes 
cannot  be  actually  converted  into  bonds  until  maturity. 
Until  an  election  is  exercised  they  remain  treasury  notes; 
when  that  occurs  their  function  is  at  an  end,  and  the  holder 
has  only  a  claim  against  the  United  States  for  the  proper 
amount  of  bonds.  This  is  a  chose  in  action,  and  not  negotia- 
ble."* If  the  government,  instead  of  the  holder,  had  the 
option  to  pay  or  convert  notes  into  bonds,  they  would  not 
be  negotiable.^  In  a  recent  case,  the  United  States  Supreme 
Court  described  the  character  of  these  notes ;  and  held  that 
after  maturity  the  purchaser  took  them  subject  to  the  rights 
of  antecedent  holders,  to  the  same  extent  as  in  other  dishon- 
ored commercial  paper. '^ 

'  state  of  Illinois  v.  Ddafield,  8  Paige,  Ch.  527;  Arcuts  v.  Commonwealth,  18 
Grat.  750. 

-  Din3m()re  v.  Duncan,  57  N.  Y.  573;  Vermilye  v.  Adams  Express  Company, 
21  Wall.  138. 

'  Id.  *  Dinsmore  v.  Duncan,  57  N.  Y.  580. 

''  Vermilye  v.  Adams  Express  Co.  21  Wall.  138. 

"  Vermilye  v.  Adams  Express  Co.  supra,  Miller,  J.,  sa'^ing:  "  The  first  tiling 
which  ])rcsents  itself  on  this  state  of  facts  is  to  determine  the  character  of  those 
notes  as  it  affects  the  law  of  their  transferability  at  the  time  they  were  purchased 


GOVERNMENTAL   LIABILITY.  .'303 

If  a  treasury  note  be  drawn  payable  to  order,  and  in- 
dorsed specially  to  a  certain  person,  a  thief  or  finder  cannot 
acquire,  or  pass  a  title  valid  against  the  indorser,  or  the  true 
owner — as  every  person  taking  it  would  have  notice  by  the 
special  indorsement,  that  only  the  indorsee  could  give  title.^ 

by  appellants,  for  notwitlistanding  some  testimony  about  the  erasure  oP  an  in- 
dorsement on  some  of  the  notes,  \\c  are  of  opinion  that  it  was  so  skillfully  done 
as  not  to  attract  attention  Avith  the  usual  care  in  examining  such  notes  given  by 
bankers. 

"  They  v/ere  the  ordinary  form  of  negotiable  instruments,  payable  at  a  definite 
time,  and  that  time  had  passed  and  they  were  unpaid.  This  was  obvious  on  the 
face  of  the  paper.  The  fact  that  the  hwlder  had  an  option  to  convert  them  into 
other  bonds  docs  not  change  their  character. 

"That  this  option  was  to  be  exercised  by  the  holder,  and  not  by  the  United 
States,  is  all  that  saves  them  from  losing  their  character  as  negotiable  paper; 
for  if  they  had  been  absolutely  payable  in  other  bonds  or  in  bonds  or  money  at 
the  option  of  the  maker,  they  would  not,  according  to  all  the  authorities,  bs  prom- 
issory notes,  and  they  can  lay  claim  to  no  other  form  of  negotiable  instrument. 
As  it  is,  they  were  negotiable  promissory  notes  nine  months  overdue  when  pur- 
chased by  appellants.  They  were  not  legal  tenders,  made  to  circulate  as  money, 
which  must,  from  the  nature  of  the  functions  they  are  to  perform,  remain  free 
from  the  liability  attaching  to  ordinary  promises  to  pay  after  maturity.  Nor 
were  they  bonds  of  the  class  which,  having  long  time  to  run,  payable  to  holder, 
have  become  by  the  necessities  of  modern  usage  negotiable  paper,  with  all  the 
protection  that  belongs  to  that  class  of  obligations.  These  were  simply  notes, 
negoti  d)le  it  is  true,  having  when  issued  three  years  to  run,  which  three  years 
had  long  expired,  and  the  notes  were  due  and  unpaid. 

"  We  cannot  agree  with  counsel  for  appellants,  that  the  simple  fact  that  they 
were  the  obligation  of  the  government  takes  them  out  of  the  rule  which  subjects 
the  purchaser  of  overdue  paper  to  an  inquiiy  into  Ihe  circumstances  under 
which  it  was  made,  as  reg;:rcis  the  rights  of  antecedent  holders.  The  govern- 
ment pays  its  obligations  according  to  their  terms  with  far  more  punctuality  than 
the  average  class  of  business  men.  The  very  fact  that  when  one  of  its  notes  is 
due  the  money  can  certainly  be  had  for  it,  if  payable  in  money,  should  be  a 
warning  to  the  purchaser  of  such  an  obligation  after  its  maturity  to  look  to  the 
source  from  which  it  comes,  and  to  be  cautious  in  paying  his  money  for  it.  In 
the  case  of  Texas  v.  White  (7  Wall.  700),  the  bonds  of  the  government  issued  to 
the  State  of  Texas  were  dated  July  1,  1851,  and  were  redeemable  after  the  31st 
day  of  December,  1864.  This  court  held  that  after  that  date  they  were  to  be 
considered  as  overdue  paper,  in  regard  to  tlu-ir  negotiability,  observing  that  in 
strictness,  it  is  true,  they  were  not  payable  on  the  day  when  they  became  re- 
deemable, but  the  known  usage  of  the  United  States  to  pay  all  bonds  as  soon  as 
the  right  of  payment  accrues,  except  when  a  distinction  between  rcdcemability 
and  payability  is  made  by  law  and  shown  on  the  face  of  the  bends,  requires  the 
application  of  the  rule  respecting  overdue  obligations  to  bonds  of  the  United 
States  which  have  become  redeemable,  and  in  respect  to  which  no  such  distinc- 
tion is  made." 

'  Myers  v.  Friend,  1  Rand.  13.     Sec  post.  §  441. 


}G4  GOVERNMENTS  AS  PARTIES. 


§  442.  When  a  State  borrows  money  on  bonds  issned  for 
that  purpose  and  pledges  a  certain  fund  for  the  interest  to 
accrue  tliereon,  such  pledge  has  been  deemed  a  part  of  the 
contract  with  the  holders  of  the  bonds,  and  that  to  divert  it 
would  impair  the  obligation  of  the  contract, — which  it  is 
beyond  the  power  of  the  State  to  do/ — if  the  legislature  of  a 
State  authorize  its  officers  to  borrow  money  and  sell  its 
bonds  or  stocks  for  that  purpose  at  par  value,  a  sale  at  a  rate 
less  than  par  value  would  be  void ;  and  a  sale  of  bonds  or 
stocks  which  draw  interest  from  the  day  of  sale,  but  which 
are  to  be  paid  for  in  future  instalments  only,  and  without 
interest,  is  a  sale  at  less  than  par  value.*^ 

§  443.  Whenever  a  public  officer  makes  a  contract  or  en- 
gagement, which  is  fairly  within  the  scope  of  his  authority, 
the  ])resumption  of  law  is  that  he  made  it  officially,  and  in  his 
public  character,  unless  tlie  conti-ary  appears  ]:)y  satisf^ictory 
evidence.'^  Accordingly,  where  bills,  notes  or  other  evidences 
of  debt  are  made  payable  to  an  officer  of  the  United  States, 
and  it  appears,  either  from  their  face  or  extraneous  evidence, 
that  they  were  for  the  benefit  of  the  United  States,  the  ac- 
tion should  be  brought  in  the  name  of  the  United  States, 
and,  under  like  circumstances,  if  payable  to  a  State  officer, 
suit  should  be  brought  in  the  name  of  the  State.  These  doc- 
trines were  enforced  where  a  bill,  payable  to  "Thomas  T. 
Tucker,  Treasurer  of  the  United  States,"  was  sued  on  in  the 
name  of  the  United  States ;  *  where  a  note  was  payable  to 
"  I.  E.  R,  U.   S.  Indian  Agent,  his  successors  in  office,  or 


'  State  V.  Cardozo,  8  "Ricliardson  (S,  C.)  71 ;  see  2>ost,  §  446,  448. 

-  State  of  Illinois  v.  Delatid.l,  8  Paige  Ch.  527. 

'  Park  V.  Ross,  11  How.  374;  Balcouibe  v.  Northrup,  9  Minn.  17(3. 

*  Dugan  V.  U.  S.  3  Wheat.  172.  Marshall.  C  J.,  said:  "  If  it  be  generally 
true  that  when  a  bill  is  indorsed  to  the  agent  of  another  for  the  use  of  his  prin- 
cipal, an  action  cannot  be  raaiutained  in  the  name  of  such  principal  (on  which 
point  no  opinion  is  given),  the  government  should  form  an  exception  to  such 
rule,  and  the  United  Stales  be  permitted  to  sue  in  their  own  name,  whenever  it 
appears  not  only  on  the  lace  of  the  instrument,  but  from  all  the  evidence,  that 
they  alone  were  interested  in  the  subject-matter  of  the  controversy."  See  also, 
U.  S.  V.  Boyce,  2  McLean,  352. 


LIABILITY  OF   GOVERNMENTAL  AGENTS.  3G5 

ortler,  for  tbe  use  of  the  Winnebago  Tribe,  etc. ; "  ^  where  a 
note  was  payable  to  "James  Irish,  Land  Agent  of  Maine."  ^ 

§  444.  No  official  or  agent  of  the  government,  Federal 
or  State,  can  ratify  a  contract,  save  one  capable  of  making 
it  for  the  government.  Thus,  the  legislature  of  Illinois, 
havini^  nutliorized  the  issue  of  bonds  in  a  particular  way, 
the  recognition  of  the  governor  of  the  validity  of  bonds 
issued  in  a  different  way  could  impart  no  validity  to  them. 
"For,"  said  the  court,  "no  person  can  confirm  an  unauthor- 
ized agreement,  made  by  another,  unless  he  Iiad  himself  the 
power  to  authorize  the  making  of  such  an  agreement.  As 
the  sovereign  power  of  the  State,  by  a  legislative  act,  had 
prohibited  any  of  its  officers  or  agents  from  selling  its  stocks 
below  their  par  value,  it  follows,  of  course,  that  nothing 
short  of  a  law  of  the  State,  proceeding  from  the  same  au- 
thority, can  legalize  such  a  transaction."  ^  But  if  the  legis- 
lature had  the  power  to  authorize  their  issue,  its  ratification 
subsequently  Avould  be  equivalent.''  And  such  ratification 
might  be  absolute,  or  conditioned  upon  a  future  event,  in 
which  case,  the  condition  being  fulfilled,  it  would  become 
absolute.^ 

§  445.  As  to  the  liahilittj  of  puhlic  agents^  a  difl^erent 
rule  prevails  from  that  applicable  to  private  agents.  In  the 
oi-dinary  course  of  things,  an  agent  contracting  on  behalf  of 
the  government  or  of  the  public,  is  not  personally  bound 
by  such  a  contract,  even  though  he  would  be  by  the  terms  of 
the  contract,  if  it  were  an  agency  of  a  private  nature.  The 
reason  of  the  distinction  is,  that  it  is  not  to  be  presumed  eith- 
er that  the  public  agent  means  to  bind  himself  personally  in 
acting  as  a  functionary  of  the  government,  or  that  the  party 
dealing  with  him  in  his  public  character  means  to  rely  on  his 
individual  responsibility .°     If,  however,  a  functionary  of  the 

'  Balcombe  v.  Northrup,  9  Pilhin.  173. 

'  State  V.  Boicd,  2  Fairf.  474;  Irish  v.  Webster,  5  Grecnl.  171. 

'  State  of  Illinois  v.  Dclafield,  8  Paige  Cli.  (N.  V.)  542. 

*■  Opinion  of  Court  to  the  Governor,  49  Mo.  225. 

'  Butler,  Treasurer  v.  Dubois,  Auditor,  29  111.  105. 

•  Walker  v.  Christian,  31  Grat.  397;  Hodgson  v.  Dexter,  1  Crunch,  S.  C.  345; 


3G(J  GOVERNMENTS  AS  PARTIES. 

govei-nment,  witlioiit  disclosing  his  official  character,  or  the 
public  nature  of  the  transaction  in  the  instrument,  issued  a 
negotiable  instrument  in  his  own  name,  it  would  seem  clear 
that  a  bona  fide  holder,  without  notice,  might  hold  him  indi- 
vidually responsible. 

SECTION  II. 

STATK    SECURITIES    MADE    KECKIVABLE    FOR    TAXES. 

§  446.  By  section  10,  art,  1,  of  the  Constitution  of  the 
United  States,  it  is  provided  that  no  State  shall  j^^iss  any  law 
"impairing  the  obligations  of  contracts."  This  provision 
was  intended  to  prevent  interferences  by  State  legislatures 
witli  the  relations  of  debtors  and  creditors ;  and  it  has  been 
urged  w^ith  great  force,  that  it  \vas  not  designed  to  apply  to 
undertakings  of  States  themselves,  and  that  one  legislature 
could  not  pass  any  act  which  a  subsequent  one  could  not 
repeal,  although  such  repeal  would  abrogate  or  impair 
engagements  entered  into  under  pre-existing  legislation.  But 
it  has  .been  decided  that  a  State  may  be  a  contracting  party 
within  the  meaning  of  the  Constitution,  and  that,  if  a  legis- 
lative body  make  a  contract  on  behalf  of  the  State,  no  sub- 
sequent session,  and  no  new  legislative  body,  can  repeal  the 
law  by  which  it  was  made,  so  as  to  impair  the  obligation 
contracted.^ 

§  447.  These  principles  have  an  immediate  bearing  on 
State  and  corporation  securities,  and  have  been  applied  to 
them  in  a  number  of  cases.  In  183(3,  the  legislature  of 
Arkansas  chartered  "  The  Bank  of  the  State  of  Arkansas," 
the  whole  capital  of  which  belonged  to  the  State.  Its 
charter  provided  "  that  the  bills  and  notes  of  said  institution 
shall  be  received  in  all  i)ayments  of  debts  due  to  the  State 
of  Arkansas,"  but  this  provision  was  repealed  by  the  legis- 
lature in  184.5.     At  the  time  of  its  repeal  a  large  amount  of 

Machcath,  v.  IIaldini:uKl,  1  T.  R.  173;  Story  on  Agency,  §§306-312;  see  Edwards 
on  Bills,  90. 

'  New  Jersey  v.  W^ilson,  Cnmch,  1G4. 


STATE  SECURITIES  MADE  RECEIVABLE   FOR  TAXES.       307 

tlie  issues  of  tlie  Ijank  were  in  circulation,  and  a  judgment 
debtor  of  the  State,  after  the  repeal,  tendered  the  amount 
due  by  him  in  bank  notes  to  the  collecting  officer,  who  re- 
fused to  receieve  them.     The  Sujii-eme  Court  of  the  United 
States  held   that  the  legislation  aforesaid  constituted  a  con- 
tract which  no   subsequent    legislation    could    impair;  and 
that  the  collecting  officer  might  be  compelled  by  mandamus 
to  receive  the  notes  tendered.^     In  a  subsequent  case  which 
went  up  from  Tennessee,  a  similar  decision  was  rendei-ed  by 
the  same  tribunal,  which  held  the  contract  of  the  State  to 
receive  the  bank  notes  for  all  public  dues  irrepealable.    This 
guaranty  was  thought  in  no  sense  a  personal  one,  but  at- 
tached to  the  notes  themselves  as  much  as  if  wiitten  on  the 
back  thereof;  that  it  went  with  them  everywhere  as  long 
as  they  existed,  and  was  a  standing    invitation  to  all  per- 
sons to  receive  them,  even  though,  after  the  notes  were  is- 
sued, the    law  declaring   their   receivability  should    be    re- 
pealed.    "The  quality  of   negotiability  is    annexed   to  the 
notes  in  words  that  cannot  be  misunderstood,  and  which 
indicate  the  purpose  of  the  legislature,  that  they  should  be 
used  by  every  one  indebted  to  the  State."  ^ 

§  448.  In  Virginia,  the  decisions  of  the  United  States 
Supreme  Court  have  been  followed.  It  appeared  in  the 
case  presented  that  the  State  of  Virginia,  by  her  legislature, 
had  undertaken  to  issue  coupon  bonds  for  two-thirds  of  her 
entire  indebtedness,  the  remaining  third  being  assumed  to 
be  the  proportion  which  should  be  discharged  by  West 
Virginia,  which  had  been  forcibly,  and  without  Virginia's 
consent,  torn  out  of  her  boundaries.  It  was  provided  in 
the  act  of  the  Virginia  Assembly  that  the  coupons  of  the 
new  issue  of  bonds  should  be  receivable  "  at  and  after 
maturity  for  all  taxes,  debts  and  demands  due  the  State." 
Some  of  her  creditors  accepted  this  adjustment  of  their 
bonded    debt,  and  a  holder   of  some    of  the    coupons  ten- 


'  Woodruff  V.  Trapnall,  10  How.  190. 
'  Furmau  v.  Nicbol,  8  Wall.  44. 


308  GOVERNMENTS  AS  PARTIES. 

dered  tlicm  to  the  slieiiff  of  Richmond  in  payment  of  taxes. 
In  the  meantime,  the  law  authorizing  the  receipt  of  the  cou- 
pons for  taxes  and  other  demands  had  been  repealed,  and 
the  Assembly  had  passed  an  act  prohibiting  the  collecting 
officers  of  the  State  from  receiving  the  coupons  in  discharge 
"  of  taxes  or  other  demands  of  the  State  now  due,  or  that 
shall  hereafter  become  due."  The  Supreme  Court  of  Ap- 
peals held  that  the  prior  act  constituted  a  contract  between 
Virginia  and  her  creditors  who  accepted  its  terms,  and  was 
upon  sufficient  considerations;  and  that  no  subsequent  legis- 
lative act  could  repeal  the  provision  that  the  coupons  issued 
should  be  receivable  for  taxes ;  and,  accordingly,  sustained 
the  peremptory  mandamus  which  had  been  awarded  com- 
pelling the  sheriff  to  receive  them.^  But  in  subsequent  cases 
the  Court  held  that  the  legislature  had  full  power  to  repeal 
the  funding  act  as  against  all  creditors  who  had  not  accepted 
its  terms  at  the  time  of  such  repeal.^ 


'  Antoni  v.  Wright,  22  Grat.  833.  Bouldin,  J.,  with  whom  concurred  Mon- 
cure  and  Christian,  JJ.,  delivered  the  opinion  of  the  Court,  which  is  a  model  of 
judicial  style.  Staples,  J.,  dissented.  The  current  of  decisions  is  so  strong  in 
favor  of  the  views  stated  in  the  text  that  they  may  be  regarded  as  settling  the 
law.  Many  learned  lawyers  believe,  however,  that  they  rest  upon  a  mistaken  no- 
tion— that  States  were  never  contemplated  as  contracting  parties,  in  that  clause 
of  the  Constitution  which  prohibits  the  passage  of  laws  by  States  which  impair 
the  obligation  of  contracts;  and  we  can  but  think  that  the  decisions  quoted  iiavc 
sacrificed  the  spirit  J:o  the  letter  of  the  law,  and  shorn  States  of  their  sover- 
eignty, under  color  of  a  constitutional  provision  only  designed  to  exact  good 
faith  from  individuals  in  their  dealings  with  one  another.  See  also  Clarke,  Ex 
parte,  S.  C.  of  Va..  reported  in  Va.  Law  Journal  for  April,  1878,  where  it  is  held 
that  coupons  attached  to  bonds  issued  under  the  Virginia  Funding  Act,  aio 
receivable  for  fines. 

"  Wise  v.  Rogers.  24  Grat.  1G9;  Maury  v.  Rogers,  Id. 


BOOK  ITI. 

THE  :n^egotiation  op  the  instrument. 


CHAPTER  XVH. 

PRESENTMENT   FOR    ACCEPTANCE. 


SECTION    I. 

NATURE   OF    AND   NECESSIfY     FOR     PRESENTMENT    FOR   ACCEPTANCE. 

§  449.  It  is  the  rif^lit  of  the  holder  of  a  bill  to  pre- 
sent  iT  for,  and  insist  on  its  acceptance,  even  so  late  aa 
the  day  before  it  falls  due.  If  not  presented  for  accept- 
ance until  the  day  it  falls  due,  the  right  to  demand  ac- 
ceptance becomes  merged  in  the  right  to  demand  pay- 
ment. If  the  bill  be  presented  for  acceptance  before  it 
falls  due,  it  beomes  dishonored  if  acceptance  be  refused ; 
and  notice  must  be  forthwith  given  to  the  parties  whom  it 
is  intended  to  charge.*  And  suit  may  at  once  be  instituted 
against  the  drawer,  and  against  the  indorsers.^  This  rule  of 
commercial  law  is  so  general  and  bindiu":  that  a  statute  of  a 
State  which  forbids  a  suit  from  being  brought  in  such  a  case 
until  after  the  maturity  of  the  bill,  can  have  no  effect  upon 
suits  brought  in  the  United  States  courts.  The  requisition 
of  a  State  statute  like  this  would  be  a  violation  of  the  gen- 
eral commercial  law,  which  a  State  has  no  power  to  impose, 
and  which  the  courts  of  the  United  States  would  be  bound 


'  Chitty  on  Bills  (13th  Am.  ed.),  309;  Goodall  v.  Dolley,  1  T.  R.  713;  seo 
Chapter  XXIX,  on  Notice,  vol.  2;  Bank  of  Washington  v.  Triplett,  1  Pet.  35; 
Townslcy  V.  Sumrall,  2  Pet.  170;  Smith  v.  Roach,  7  B.  Mon.  17;  Landrum  v. 
Trowbridge,  3  Mete.  281. 

Md.;  Woodward  v.  Row,  Keb.  R.  133  (1666);  sec  also  Lucas  v.  Ladcw. 
28  Mo.  343:  Edwards  on  Bills,  387;  Pilkinton  v.  Woods,  10  Ind.  432;  Kinney  v, 
Heald,  17  Ark.  397. 

Vol.  I.— 24 


370  PRESENTMENT  FOR  ACCEPTANCE. 

to  disregard.^  So  also,  if  the  State  statute  seeks  to  make  the 
right  of  recovery,  in  a  suit  brought  in  case  of  non-acceptance, 
dependent  upon  proof  of  subsequent  presentment,  protest 
and  notice  for  non-payment.^ 

§  450.  Presentment  to  the  drawee,  it  has  been  held,  is 
necessary,  even  though  the  drawer  has  requested  him  not  to 
accept ;  ^  but  the  holder  is  not  bound  to  present  again  after 
refusal  to  accept  and  notice  given,  even  though  the  drawer 
requests  him  to  do  so,  and  promises  that  the  bill  shall  be 
honored.* 

The  only  cases  in  which  the  holder  of  a  bill  which,  ac- 
cording to  its  tenor,  should  be  presented  for  acceptance,  can 
charge  the  drawer  without  presenting  it  for  acceptance,  arise 
when  the  relations  between  the  drawer  and  drawee  are  such 
as  to  constitute  the  drawing  of  the  bill  a  fraud  upon  the 
holder.^  When  the  bill  is  presented  the  acceptance  must  be 
according  to  its  tenor  to  pay  in  money.  If  it  be  to  pay 
by  another  bill,  it  is  no  acceptance,  and  the  bill  should  be 
protested.^ 

§  451.  Effect  of  acce])tance. — Before  acceptance  the  drawee 
is  under  no  liability  to  accept,  unless  he  has  specially  con- 
tracted to  do  so,  and  the  holder  cannot  sue  him,  even  though 
he  have  funds  of  the  drawer  in  his  hands.^  But  an  accept- 
ance operates  as  a  full  legal  assignment  of  the  amount  to  the 
holder,  and  the  acceptor  is  bound  to  pay  it.  It  has  been 
much  debated  whether  or  not  a  bill  before  acceptance  ope- 
rates as  an  assignment  when  drawn  upon  funds  of  the 
amount  it  calls  for;  and  it  seems  to  be  settled  by  the  au- 
thorities that  if  drawn  for  the  whole  amount  it  operates  as 

'  Watson  V.  Tarpley,  18  How.  517.  '  Id. 

'  H=ll  V.  Heap,  Dow  &  R.  N.  P.  57 ;  see  1  Parsons  N.  &  B.  338. 

*  Hickligg  V.  Harcley,  7  Taunt.  312. 

'  Smith's  Mercantile  Law  (Holcombe  &  Gholson's  cd.)  304;  Bank  of  Wash- 
ington V.  Triplett,  1  Pet.  25. 

•  Russell  V.  Phillips,  14  Q.  B.  891. 

'  Mandevillc  V.  Welch,  5  Wheat.  277;  Schimmelpcnnich  v.  Bayard,  1  Pet. 
264;  Ticrnan  v.  Jackson,  5  Pet.  580.  The  case  of  Corser  v.  Craig,  1  Wash.  C, 
C.  R.  424,  has  been  overruled.  Luff  v.  Pope,  5  Hill,  413;  7  Id.  577;  N.  Y.  and 
Va.  S.  Bank  v.  Gibson,  5  Duer,  574  ;  Harris  v.  Clark,  3  Comst.  93. 


NATURE  OF   AND  NRCESSTTY  FOR.  371 

an  eqiiitJiMe  assignment,  wliich  will  take  proce(lence  of  any 
subsequent  lien  or  eliarge  upon  tlieni ;  ^  and  that  after  n(jtice 
to  the  drawee  it  will  bind  him.*^  And  it  has  been  so  held  of  a 
draft  non-negotiable.^  But  when  tlie  bill  is  for  only  a  part 
of  the  drawer's  funds,  it  is  said  that  it  does  not  operate  as 
an  assignment  against  the  drawee,  unless  he  acce])ts,  for  the 
reason  that  the  creditor  cannot  be  permitted  without  the 
debtor's  assent  to  split  up  one  eause  of  action  into  several/ 
Where  the  draft  is  not  negotiable,  the  weight  of  authority 
is  to  this  effect.^ 

§  452.  Effect  of  failure  to  present  for  acceptance. — When- 
ever it  is  incumbent  on  the  holder  to  present  the  bill  for  ac- 
ceptance or  payment,  if  he  fails  to  do  so  at  the  proper  time, 
he  will  lose  not  oidy  his  remedy  on  the  bill,  but  also  on  the 
consideration  or  debt,  in  respect  of  which  it  was  given  or 
transferred.*'  This  doctrine  is  well  settled,  and  was  well  ex- 
pressed in  an  Arkansas  case,  where  Scott,  J.,  said  :  "  In  case 
a  plaintiff  has  lost  by  his  own  laches  his  legal  recourse 
against  the  defendant  U])on  the  bill  or  note,  it  is  in  vain  that 
he  brings  it  into  court  and  offers  to  cancel  it,  with  the  expec- 
tation of  being  allowed,  after  cancellation,  to  proceed  to  re- 
cover on  the  original  consideration.  As  well  might  he  hope, 
by  such  means,  to  revive  a  cause  of  action  that  had  been 
barred  by  the  statute  of  limitations."  "^ 

'  Mandeville  v.  Welch,  5  Wlieat.  277;  Anderson  v.  De  Soer,  6  Grat.  3G4;Gib- 
Bon  V.  Cooke,  20  Pick.  15.     See  ante^  Chap.  I,  Section  III. 

Mil. 

'  Cuttsv.  Perkins,  12  Mass.  209;  Morton  v.  Naylor,  1  Hill,  583, 

'Story,  J.,  iu  Mandeville  v.  Welch,  5  Wheat.  277;  Gibson  v.  Cooke,  20 
Pick.  15. 

'  1  Parsons  N.  &  B.  334. 

•Adams  v.  Darby,  28  Mo.  183;  Smith  v.  Miller,  43  N.  Y.  171  (1870);  53 
N.  Y.  546  (1873);  Camidge  v.  Ailenby,  6  B.  &  C.  373;  Darrach  v.  Savage,  1 
Show.  155  (1691). 

'  Gracic  v.  Sandford,  9  Ark.  238  (1848). 


372  PRESENTMENT  FOR  ACCEPTANCE. 

SECTION  II. 

FOKMAT.TTIES    OF    PRKSKNTMENT    FOIi    ACCEPTANCE. 

§  453.  In  order  that  every  step  in  the  procedure  may  be 
properly  taken,  it  is  important  to  consider:  (1)  What 
bills  must  be  presented  for  acceptance ;  (2)  By  and  to 
whom  such  presentment  should  be  made ;  (3)  The  place 
where,  such  presentment  should  be  made ;  and  (4)  The  man- 
ner of  making  presentment  for  acceptance. 

§  454.  In  the  first  place^  as  to  what  hills  should  he  pre- 
sented for  acceptance. — Bills  payable  on  demand  (which  are 
immediately  payable  on  presentment),  or  ])ayable  at  a  certain 
number  of  days  after  date,  or  after  any  other  certain  event, 
or  payable  on  a  day  certain,  need  not  be  presented  for  ac- 
ceptance at  all,  but  only  for  payment.  And  the  fact  that 
such  bills  are  payable  at  a  bank,  or  other  particular  place, 
does  not  alter  the  rule  on  the  subject.^  But  it  is  usual  and 
best  wben  the  bill  is  payable  at  a  future  day,  to  present  it 
for  acceptance,  in  order  to  ascertain  whether  it  will  certainly 
be  honored,  and  to  procure  the  assurance  of  the  acceptor's 
liability.^  And  in  such  cases,  if  acceptance  be  refused,  the 
holder  must  make  protest,  and  give  notice  in  the  same  man- 
ner as  if  the  bill  were  payable  at  so  many  days  after  sight.^ 

'  Bank  of  Washington  v.  Triplelt,  1  Pet.  25 ;  Townsley  v.  Sumrall,  2  Pet. 
170;  AUeu  v.  Siiyclam,  20  Wend.  321;  Batchcllor  v.  Priest,  12  Pick.  399;  Bank 
of  Bennington  V.  Rayuiond,  12  Vt.  401;  Smith  v.  Roach,  7  B.  Mon.  17;  Car- 
nnchael  v.  Bank  of  F'enn.  4  IIow.  (Miss.)  5G7;  Glasgow  v.  Copelant],  8  Mo.  268; 
Orr  V.  Maginuis,  7  East,  302;  Dunn  v.  O'lvecfc,  5  M.  &  S.  282;  AValker  v.  Stet- 
son, 19  Ohio  St.  400;  Story  on  Bills,  §  228. 

It  not  being  necessary  to  present  a  bill  payable  on  a  day  certain  for  accept- 
ance, an  agreement  not  to  present  it  for  acceptance  will  not  discharge  an  in- 
dorser,  although  tlie  drawee  says  it  will  not  be  accepted  or  paid.  Fall  River 
Bank  v.  Willard,  5  Mete.  210. 

=■  U.  S.  V.  Barker,  4  Wash.  C.  C.  R.  464;  Story  on  Bills,  §  228. 

'  Glasgow  V.  Copeland,  8  Mo.  208;  Allen  v,  Suydam,  20  Wend.  821 ;  U.  S.  v. 
Barker,  4  Wash.  C.  C.  R.  464;  Landrum  v.  Trowbridge,  2  Mete.  281. 

Philpott  V,  Bryant,  3  Car.  &  P.  244,  in  which  case  Park  J.,  said:  "I  should 
destroy  half  the  trade  of  the  city  of  London,  if  I  were  to  hold  that  bills  made 
payable  so  many  days  after  date  must  be  presented  for  acceptance." 


FORMALITIES   OF.  373 

Bills  payable  at  siglit,  or  at  so  many  days  after  sight,  or 
after  demand,  or  aftej-  any  other  event  not  absolutely  fixed, 
must  be  presented  to  the  drawee  for  acceptance  and  pay- 
ment, or  for  acceptance  only,  without  unreasonable  delay,  or 
the  drawer  and  indorsers  will  be  discharged,  for  they  have 
an  interest  in  having  the  bills  accepted  immediately  in  oi-der 
to  shorten  the  time  of  payment,  and  thus  put  a  limit  to  the 
period  of  their  liability ;  and  also  enable  them  to  protect 
themselves  by  other  means  before  it  is  too  late,  if  the  bill  is 
not  accepted  and  paid  within  the  time  originally  contem- 
plated by  them.^  When  the  words  "  acceptance  waived,"  are 
embodied  in  a  bill,  the  ordinary  proceedings  in  acceptance 
are  dispensed  with,  and  merged  into  those  of  payment  or 
non-payment.^ 

§  455.  Li  the  second  i^lace^  as  to  the  jperson  hy  and  to 
whom  jyresentmeat  for  acceptance  should  be  made. — The  bill 
must  be  presented  by  the  holder  or  his  authorized  agent, 
and  to  the  drawee,  or  his  authorized  agent.  The  party 
in  possession  of  the  bill  is  presumed  to  be  the  holder,  and  to 
have  the  right  to  make  presentment  for  acceptance  or  pay- 
ment.^ The  drawee  may  accept  without  risk,  and  if  he  re- 
fuse the  protest  will  inure  to  the  benefit  of  the  rightful 
holder.*  If  the  drawee  cannot  be  found,  and  any  person  has 
been  indicated  to  be  resorted  to  in  case  of  need  {ate  besoin), 
the  bill  should  be  presented  to  that  person.^ 

'  Allen  V.  Suydam,  20  Wend.  321;  Aymar  v.  Beers,  7  Cow.  705;  Robinson  v. 
Ames,  20  Johns.  146  ;  Wallace  v.  Agry,  4  Mason,  336;  5  Mason,  llS;  Mitchell  v. 
Degrand,  1  Mason,  176;  Story  on  Bills,  §  228.  Whether  or  not  bills  payable  at 
sight  are  entitled  to  grace,  is  a  question  about  which  authorities  differ,  though 
preponderating  in  favor  of  the  allowance  of  grace.  See,  on  this  subject,  Cliapter 
XX,  on  Presentment  for  Payment,  Section  IV. 

-  Webb  V.  Mears,  9  AVright,  222;  Deneyre  v.  Milno,  10  La.  Ann.  321;  English 
V.  Wall,  12  Rob.  (La.)  132;  Liggett  v.  Weed,  7  Kan.  276;  Carson  v.  Russell,  26 
Tex.  472. 

'  Bank  of  Utica  v.  Smith,  18  Johns.  230  ;  Freeman  v.  Boynton,  7  Mass.  483; 
Agncw  V.  Bank  of  Gettysburg,  2  liar.  &  Gill,  478.  See  Chapter  XX,  on  Present- 
ment lor  Payment,  Section  L 

♦  Chitty  on  Bills  (13th  Am.  ed.)  311. 

'  Story  on  Bills.  §  229  ;  Edwards,  402. 


374  PRESENTMENT  FOR  ACCEPTANCE. 

If  the  bill  be  drawn  upon  two  persons  not  partners,  it 
seems  that  it  must  be  presented  to  botli,  if  not  j)aid  by  the 
first ;  ^  but  this  has  been  doubted,  for  the  reason  that  the 
liolder  would  not  be  bound  to  take  the  single  acceptance  of 
the  other — and  if  he  did,  it  would  be  at  his  own  risk,  if  the 
bill  were  not  protested.'^  But  if  the  bill  be  drawn  upon  a 
firm,  presentment  to  any  partner  is  sufficient,'^  and  the  fact 
that  the  firm  has  been  dissolved  by  bankruptcy  does  not  ren- 
der it  necessary  to  present  the  bill  to  both."* 

§  45G.  The  liolder  must  be  careful,  when  he  does  not  find 
the  drawee  in  person,  to  assure  himself  that  the  party  to 
whom  he  j)resents  the  bill  for  acceptance  is  his  authorized 
agent.  And  though  in  the  case  of  a  presentment  for  pay- 
ment it  may  suffice  to  demand  payment  at  the  residence  of 
the  acceptor,  yet  in  case  of  a  presentment  for  acceptance,  the 
holder  must  endeavor  to  see  the  drawee  or  his  authorized 
agent,  personally.  And  therefore,  where  in  an  action  against 
the  drawee  on  a  refusal  to  accept,  it  appeared  that  the  wit- 
ness had  carried  the  bill  to  a  place  which  was  described  to 
him  as  the  drawee's  house,  and  that  he  offered  it  to  a  person 
in  a  tan  yard,  who  refused  to  accept  it ;  and  the  witness  did 
not  know  the  drawee's  person,  nor  could  he  swear  that  the 
person  to  whom  he  offered  the  bill  was  he,  or  represented 
himself  to  be  so,  it  was  held  that  the  evidence  of  presentment 
to  the  drawee  for  acceptance,  was  insufficient.^ 

§  457.  There  is  no  doubt  that  a  clerk  found  at  the 
drawee's  counting-room  is  a  competent  party  for  the  bill  to 
be  presented  to,  and  to  refuse  acceptance  of  it ;  and  it  seems 
that  it  is  not  necessary  to  show  that  such  clerk  was  the  clerk 
of  the  drawee  authorized  to  accept  or  refuse  acceptance  of 

'  Willis  V.  Green,  5  Hill,  232;  Story  on  Bills,  §  229.  See  Union  Bank  v.  Wil- 
lis, 8  Mete.  504 ;  Arnold  v.  Dresser,  8  Allen,  435  ;  Gates  v.  Beccher,  CO  N.  Y.  523; 
American  Law  Register,  July,  1875,  p.  440. 

'  Story  on  Bills,  §  229,  note  9.  See  on  this  subject,  Harris  v.  Clark,  10  Ohio, 
C;  and  Grecnough  v.  Smead,  3  Ohio  St.  415. 

'  Greatlakc  v.  Brown,  2  Cranch  C.  C.  541 ;  Story  on  Notes,  §  239;  1  Parsons 
N.  &  B.  135;  Holtz  v.  Boppe,  37  N.  Y.  634. 

*  Gates  V.  Beecher,  60  N.  Y.  523.  '  Cheek  v.  Roper,  5  Esp.  175. 


FORMALITIES  OF.  .375 

bills  ;  but  j)arol  evidence  is  admissible  to  prove  that  tlie 
clerk  was  authorized  to  refuse  acceptance.^ 

§  458.  Cliitty  says,  and  Byles  quotes  liis  words  with  aj>- 
proval,  that  "  if  on  presentment  it  appear  that  the  drawee  is 
dead,  the  liolder  should  inquire  after  his  personal  representa- 
tive, and,  if  he  live  within  a  reasonable  distance,  sliould  pre- 
sent the  bill  to  him."  ^  Story  states  that  the  drawee's  death 
will  be  "no  excuse  for  the  omission  of  presentment  of  the 
bill  for  acceptance,"  ^  and  Roscoe  considers  that  "  the  cases 
with  regard  to  presentment  of  bills  where  the  party  is  dead, 
&c.,  apply  also  to  presentment  for  acceptance."  *  But  it  has 
been  well  observ^ed  on  tbis  subject  by  Edwards  that  "  upon 
principle,  it  is  not  easy  to  see  upon  what  ground  the  holder 
is  bound  to  present  a  bill  drawn  upon  the  deceased  to  his 
executor  or  administrator  for  acceptance.  An  acceptance  by 
the  representative,  binding  himself  personally,  is  not  accord- 
ing to  the  tenor  of  the  bill ;  neither  is  an  acceptance  qualified 
so  as  to  render  him  responsible  to  pay  out  of  the  assets  that 
may  come  into  his  hands."  ^  The  holder  could  not  be  bound 
to  take  tlie  representative's  acceptance  in  either  form,  and  it 
would  be  reasonable  to  bold  that  where  the  drawee  was 
dead  the  bill  might  be  protested,  and  recourse  had  against 
the  other  parties. 

§  459.  In  the  third  place^  as  to  the  place  cohere  2^resent- 
merit  for  acceptance  may  he  made. — It  was   at   one   time  a 

'  Nelson  v.  Fotterall,  7  Leigh,  180;    Stainback  v.  Bank  of  Virginia,  11  Grat. 

260. 

'  Chitty  on  Bills  (13  Am.  cd.)  [*280]  318,  citing  Molloy,  ch.  2,  c.  10,  s.  34; 
Pothicr  PI.  14G;  Byles  (Sharswood's  ed.),  [*177]  303;  Story  on  Bills,  §  236. 

'  Story  on  Bills,  §§  230.  230.  *  Roscoe  on  Bills,  146,  147. 

'  Edwards  on  Bills,  401 ;  see  also  Id.  454,  note  2.  In  Thomson  on  Bills,  282. 
it  is  said:  '•  It  has  been  said  that  if  the  drawee  is  dead  the  holder  should  pre- 
sent it  to  his  nearest  heirs,  and  protest  it  on  their  refusal  to  accept,  though  they 
have  not  yet  taken  up  his  succession.  This  should  certainly  be  done  where  tha 
drawee's  heirs  have  taken  up  his  succession.  But  otherwise,  there  is  no  person 
representing  liim,  as  to  the  bill,  and  the  presentment  of  it  then  appears  as  futile 
as  if  made  to  a  stranger.  In  such  'a  case,  it  seems  necessary  that  a  holder  should, 
•within  a  reasonable  time,  notify  to  the  other  parties  the  drawee's  death,  by  which 
presentment  has  become  impossible." 


376  PRESENTMENT  FOR  ACCEPTANCE. 

question  much  litigated  in  England,  whether,  if  a  bill  paya- 
ble generally — that  is,  without  specification  of  a  place  of 
payment — was  accepted  payable  at  a  pai'ticular  place,  such 
an  acceptance  \vas  a  qualified  one.  It  was  decided  in  the 
House  of  Lords  (contrary,  however,  to  the  opinion  of  eight 
of  the  twelve  judges  to  whom  the  question  was  referred), 
that  such  an  acceptance  was  a  qualified  one,  and  that  a  de- 
mand at  the  particular  place  named  was  a  condition  preced- 
ent to  a  recovery  against  the  acceptor,  as  well  as  against  the 
draw^er  and  indorser.^  This  decision  led  to  the  passage  of 
the  statute  of  1  <fe  2  Geo.  IV,  c  78  (called  Sergeant  Onslow's 
act),  in  which  it  was  recited  that  the  practice  and  understand- 
ing of  merchants  had  been  different;  and  enacted  that  an 
acceptance  payable  at  a  particular  place  without  further  ex- 
pression, should  not  be  deemed  a  conditional  acceptance;  but 
if  it  were  payable  at  a  specified  place  "  only,  and  not  other, 
wise,  or  elsewhere,"  it  should  be  deemed  conditional. 

§  460.  In  many  of  the  States  of  the  United  States  the 
English  stvitute  has  been  substantially  enacted ;  and  the 
courts,  with  few  exceptions,  have,  independently  of  statute 
followed  the  judgment  of  the  eight  judges  against  the  House 
of  Lords.  Therefore,  by  the  American  law,  it  is  settled  that 
demand  of  payment  at  the  place  specified  need  not  be  averred 
by  the  plaintiff;  but  if  the  acceptor  was  at  the  place  at  the 
time  specified,  and  ready  to  pay  the  money,  it  was  a  matter 
of  defense  to  be  pleaded  on  his  part;  which,  defense,  how- 
ever, is  no  bar  to  the  action,  but  goes  only  in  reduction  of 
damages,  and  in  prevention  of  costs.^  This  subject  will  be 
more  fully  discussed  when  we  come  to  consider  presentment 
for  payment. 

But  at  any  rate,  the  presentment  of  the  bill  or  note  for 
acceptance  should  be  at  the  place  of  the  domicile  of  the 

»  Rowe  V.  Younjr,  2  Brod.  &  B.  165;  3  Bligh,  891. 

»  See  1  ParRona  N.  &  B.  305-311 ;  Story  on  Bills,  §§  355-357;  Byles  on  Bills 
(Sharswood's  ed.),  318,  319,  and  341-346;  Edwards  on  Bills,  426,428;  Bayley, 
X15.  In  Indiana,  the  House  of  Lords  has  been  fo-llowed:  see  Presentment  for 
Payment,  Chapter  XX,  Section  V. 


FORMALITIES  OF.  377 

drawee,  wlietlier  it  Le  payable  generally,  or  at  a  particular 
place — the  place  of  payment  being  immaterial  until  after  ac- 
ceptance.^ If  the  drawee  has  removed  his  residence  from  the 
place  to  which  it  is  addressed — or  really  resided  at  a  differ- 
ent i)lace— the  bill  should  be  presented  at  his  new  or  real 
place  of  domicile,  if  the  holder  can  ascei'tain  it  by  diligent  in- 
quiries.^ If  by  such  inquiries  the  drawee's  place  of  domicile 
cannot  be  ascertained,  or  if  he  has  absconded,  the  bill  may 
be  treated  as  dishonored.^ 

§  461.  Presentment  for  acceptance  may  he  either  at  the 
dwelling  or  the  place  of  business  of  the  drawee. — If  the  drawee 
has  his  dwelling-house  in  one  part  of  the  town  or  city,  and 
his  place  of  business  at  another,  it  may  be  made  at  either 
place ;  and  if  the  drawee  resides  in  one  town,  and  has  his 
place  of  business  at  another,  the  holder  may  present  the  bill 
at  either.^ 

§  462.  How  presentment  for  acceptance  should  he  made. 
— The  holder  of  the  bill  should  have  it  in  his  possession, 
make  an  actual  exhibit  of  it  to  the  drawee,  and  request  its 
acceptance.^  ''  The  term  presentment  imports  not  a  mere 
notice  of  the  existence  of  a  draft  which  the  party  has  in  his 
possession,  but  the  exhibiting  of  it  to  the  person  on  whom  it 
is  drawn,  that  he  may  see  the  same,  and  examine  his  accounts 
or  correspondence,  and  judge  what  he  shall  do ;  whether  he 
shall  accept  the  draft  or  not."^  But  while  it  is  better  in  all 
cases  to  avoid  all  question  by  observance  of  the  formality  in- 
dicated, the  drawer  and  indorsers  may  be  charged  by  due 
protest  and  notice  where  the  bill  is  not  thus  actually  exhib- 
ited to  the  drawee,  but  he  is  enabled  by  seeing  it  or  other- 
wise to  give,  and  does  give,  an  intelligent  response  to  the 
request  to  accept  it.'^ 

'  Chitty  on  Bills  (IStli  Am.  ed.),  316. 

'  Anderson  v.  Drake,  14  Johns.  114  ;  Freeman  v.  Boyton,  7  Mass.  483;  Batc- 
man  v.  Joseph,  13  East,  433. 

=  Id.  •,  Chitty.  31G.  *  Story  on  Bills,  §  23G. 

'  1  Parsons  N.  &  15.  348. 

«  Fall  River  Union  Bank  v.  Willard,  5  Mete.  216;  Edwards  on  Bills,  505. 

'  Fisher  v.  Beckwith,  19  Vt.  31;  Carmichael  v.  Bank  of  Penu.  4  How.  (Miss.) 
567. 


378  PRESENTMENT  FOR  ACCEPTANCE. 

§  463.  If  tlio  holder  does  not  produce  the  bill,  the  drawee 
may  require  him  to  do  so,  and  decline  accepting,  save  in  the 
proper  form  by  writing  his  name  on  its  face ;  and  then  unless 
the  holder  produces  it  the  drawer  cannot  be  charged  with 
the  penalties  of  non-acceptance,  but  if  the  drawee  makes  no 
Buch  requinnnent  and  does  what  is  equivalent  to  acceptance 
he  cannot  afterward  refuse  to  be  held  on  the  ground  that 
he  did  not  see  the  bill.^ 

If  the  holder  leave  the  bill  with  the  acceptor,  and  by  his 
negligence  enable  a  thiid  party  to  get  possession  of  it,  he 
cannot  hold  the  acceptor  liable  in  an  action  of  trovei'." 

Either  one  of  a  set  of  bills  may  be  presented  and  ac- 
cepted; and  the  indorsement  of  one  of  a  set  carries  all,  and 
indorsee  may  maintain  trover  for  the  rest.^ 

SECTION  III. 

TIME    OF    PEESENTMENT   FOE   ACCEPTANCE. 

§  4G4.  In  connection  with  the  time  of  presentment  for 
acceptance,  we  shall  consider  (1)  the  time  of  day  for  such 
presentment,  and  (2)  the  period  of  time  within  which  such 
payment  must  be  made. 

And  in  the  first  place  :  presentment  for  acceptance  should 
in  all  cases  be  made  during  the  usual  hours  of  business,  and 
such  hours,  except  where  presentment  must  be  at  a  bank, 
generally  range  through  the  whole  day  to  hours  of  rest  in 
the  evening.'*  Eight  o'clock  in  the  evening  would  not  be  too 
late  to  present  a  bill  for  acceptance  to  a  tradesman.*'''  And  it 
matters  not  at  what  hour  it  is  made,  provided  an  answer  be 
given  by  an  authorized  person.*'     But  it  is  a  mere  nullity  if 


•  Fall  River  Union  Bank  v.  Willard,  5  Mete.  21G. 
^  Morrison  v.  Buchanan,  6  Car.  &  P.  18. 

'Downes  &  Co.  v.  Cluircli,  13  Pet.  205;  Walsh  v.  Blatchlcy,  G  Wis.  422; 
Pcrreira  v.  Jcpp,  11  B.  «fc  C.  4-19;  Edwards  on  Bills,  304  and  1G.>. 

*  EUord  V.  Tccd,  1  M.  &  S.  28;  G  Id.  44;  Parker  v.  Gordon,  7  East,  385; 
Cayuga  County  Bank  v.  Hunt,  3  Hill,  G35;  see  Chapter  XX,  on  Presentment  lor 
Payment,  Section  III;  Edwards  on  Bill?,  899. 

'  Chitty  on  Bills  [*ai3j.  "  Chitty  on  Bills  [*31G1. 


TIME  OF.  379 

made  at  an  unreasonable  liour — after  bed-time  or  l>usnies3 
hours — if  no  such  answer  be  given.^  If  there  is  a  known 
custom  or  usage  in  a  town  or  city,  which  regulates  business 
hours,  that  should  govern  in  determining  the  proper  hour  for 
presentment  at  the  di'awee's  place  of  business.^ 

§  465.  Within  what  period  of  time  presentment  for  ac- 
ceptance must  he  made. — It  seems  to  be  the  general  commercial 
law  of  the  civilized  world  that,  when  a  bill  is  payable  at  a 
day  certain — as,  for  instance,  on  a  day  named,  or  a  fixed  day 
after  date — it  need  not  be  presented  until  the  day  of  pay- 
ment, in  order  to  charge  the  drawer  or  an  indorser/'  The 
reason  of  this  is  that  the  drawer,  by  fixing  a  day  certain  for 
payment,  assumes  the  responsibility  of  providing  funds  at 
that  time,  whatever  may  have  been  his  previous  credit  with 
the  drawee.  And  as  to  the  indorser,  by  the  very  act  of  in- 
dorsement he  draws  a  new^  bill  on  the  same  terms;  and,  be- 
sides, he  waives  his  right  of  immediate  acceptance  by  not 
enforcing  it  himself,  but  putting  his  bill  into  circulation  with- 
out acceptance."^  Tliere  are,  however,  two  exceptions  to  this 
general  rule  that  it  is  not  necessary  to  present  a  bill  payable 
at  a  fixed  time  for  acceptance,  but  only  at  maturity  for  pay- 
ment :  First,  when  there  is  an  express  direction  to  the  payee 
or  holder  of  a  bill;  and,  second,  when  it  is  put  into  the  hands 
of  an  agent  for  negotiation.  If  payable  at  sight,  or  at  a  cer- 
tain time  after  sight,  or  on  demand,  the  only  rule  which  can 
be  laid  down  is  that  it  must  be  presented  within  a  reason- 
able time,^  unless  there  be  some  w^ell  established  usage  of 
trade  which  fixes  a  definite  time  for  such  ])resentment,  in 
which  case  such  usage  would  control.*'  If  the  bill  be  not 
presented  within  a  i-easonable  time,  the  drawee  is  discharged, 

•  story  on  Bills,  §  237. 

'  Story  on  Bills,  §§  230,  349;  Story  on  Notes,  §  135. 

'  Townslcy  v.  Sumrall,  3  Pet.  178;  Goupy  v.  Harden,  7  Taunt.  159;  Bachellor 
V.  Priest,  12  Pick.  399. 

*  Vcrplauck,  Senator,  in  Allen  v.  Siiydara,  17  Wend.  3G8:  20  Wend.  321. 

'  Wallace  v.  Agry,  4  Mas;m,  33G;  ]Mullick  v.  Radakisscn,  9  Moore,  P.  C.  GG ; 
Bridgeport  Bank  v.  Dyer.  19  Conn.  13G. 
'  Mdlish  V.  Kawdou,  9  Bing.  K.  416. 


380  PRESENTMENT  FOR  ACCEPTANCE. 

althongli  all  the  parties  continue  solvent,  and  tLere  is  no 
damage  caused  by  the  delay.^ 

§  466.  General  rule  as  to  reasonable  time — xolien  question 
of  laio  and  ivlien  question  of  fact. — "What  reasonable  time 
is,"  said  Story,  J.,  in  a  case  before  the  U.  S.  Circuit  Court,** 
depends  upon  the  circumstances  of  each  particular  case,  and 
no  definite  rule  has  been  as  yet  laid  down,  or  indeed  can  be 
laid  down  to  govern  all  cases.  The  question  is  a  question  of 
fact  for  the  jury,  and  not  of  law  for  the  abstract  decision  of 
the  court.  Such,  I  take  it,  is  the  doctrine  of  the  authorities."  * 
A  more  accurate  statement  of  the  rule,  as  we  conceive,  is 
that  of  Bigelow,  J.,  in  a  Massachusetts  case;'*  "Ordinarily," 
says  he,  "■  the  question  whether  a  presentment  was  within  a 
reasonable  time,  is  a  mixed  question  of  law  and  fact,  to  be 
decided  by  the  jury,  under  proper  instructions  from  the 
court.  And  it  may  vary  very  much,  according  to  the  partic- 
ular circumstances  of  each  case.  If  the  facts  are  doubtful 
or  in  dispute,  it  is  the  clear  duty  of  the  court  to  submit 
them  to  the  jury.  But  when  they  are  clear  and  uncontra- 
dicted, then  it  is  competent  for  the  court  to  determine 
whether  the  time  required  by  law  for  the  presentment  has 
been  exceeded  or  not."  ^ 

"  In  this  State"  (New  York),  says  Edwards  on  Bills,  391, 
"  the  question  is  considered  one  of  law  to  be  decided  by 
the  court,"  quoting  Aymar  v.  Beers,  7  Cow.  705.     The  cases 


'  Mullick  V.  Radakisscn,  9  Moore  P.  C.  66;  28  E.  \i.  &  Eq.  8;');  Carter  v. 
Flower,  16  M.  &  W.  743. 

-  W;iHace  v.  Agry,  4  Mason,  336, 

'Fry  V.  Hill,  7  Taunt.  397-,  Goupy  v.  Harden,  7  Taunt.  159;  Muilman  v. 
D'Eguino,  2  H.  Bl.  565;  Fernandez  v.  Lewis,  1  McCord,  323;  Nichols  v.  Black- 
more,  27  Tex.  586. 

*  Prescott  Bank  v.  Cavcrly,  7  Gray,  217. 

''  The  rule  as  stated  by  Professor  Parsons,  Vol.  1  N.  &  B.  340,  is  substantially 
this:  He  says,  "Where  the  facts  are  lew  and  simple  and  the  acts  or  admissions 
of  parties  clear  and  unequivocal,  the  question  is  one  of  law  for  the  court.  But 
where  the  rights  and  liabilities  of  parties  depend  on  contracts,  and  a  variety  of 
transactions  and  dealings  arising  therefrom,  or  v/here  the  facts  are  contradictory 
and  complicated,  it  is  a  question  for  the  jury  to  detenaine."  See  also  Shute  v. 
Robins,  3  Car.  &  P.  80  (E.  C.  L.  P.) ;  Straker  v.  Graham,  4  M.  &  W.  721 ;  Mul- 
lick V.  Radakisscn,  28  E.  L.  &  Eq.  86;  Chambers  v.  Hill,  26  Tex.  472. 


TIME  OF.  381 

cited  in  Aymar  v.  Beers  in  support  of  this  doctrine  related 
to  notice.  The  principle  of  the  text  seems  to  us  far  more 
reasonable. 

§  467.  Due  diligence  must  he  exercised. — It  is  not  neces- 
sary for  the  holder  to  take  the  first  opportunity  to  present 
for  acceptance"^  though  to  avoid  question  in  case  of  loss  it  is 
advisable  to  do  so — due  diligence — that  is,  presentment 
within  a  reasonable  time,  is  all  that  is  necessary.  "  The  dis- 
tinction is,"  as  was  said  by  Gibbs,  C.  J.,  "  between  bills  pay- 
able at  a  certain  number  of  days  after  date,  and  bills  payable 
at  a  certain  number  of  days  after  sight.  In  the  former,  the 
holder  is  bound  to  use  all  due  diligence,  and  present  the  bill 
at  maturity ;  but  in  the  latter  case,  he  has  a  right  to  put  tbe 
bill  into  circulation  before  he  presents  it,  and  then,  of  course, 
it  is  uncertain  when  it  will  be  presented  to  the  drawee.  It 
is  to  the  prejudice  of  tlie  holder  if  he  delays  to  do  it,  and  he 
loses  his  money  and.  interest."  ^ 

§  468.  There  are  certain  circumstances  which  may  affect 
the  question  of  reasonable  time,  such,  for  instance,  as  :  (1) 
The  passing  of  the  bill  into  circulation;  (2)  The  fluctuations 
of  the  rate  of  exchange ;  and  (3)  The  facilities  of  communi- 
cation between  the  parties. 

§  469.  x\nd^  in  the  first  place^  a  larger  latitude  is  allowed 
for  presentment  for  acceptance  when  tlie  holder  ti-ansfers  the 
bill  and  it  passes  into  circulation.  In  such  cases  a  long  de- 
lay, say  of  a  year  or  more,  would  not  be  negligence ;  but  if 
the  transferrer  came  again  in  possession  of  the  bill,  a  more 
stringent  rule  would  be  applied  to  him  than  to  transferees.^ 
But  if  the  holder  retains  possession  of  the  bill  for  an  un- 
reasonable time,  and  thus  locks  it  up  from  circulation,  he 
makes  it  his  own,  and  will  have  no  remedy  against  anteced- 
ent parties  fron\  or  through  whom  he  derived  title.* 

'  Muilman  v.  D'Eguino,  2  IT.  Bl.  565;  Prescott  Bank  v.  Cavcrly,  7  Gray.  217. 

'  Goupy  V.  Harden,  7  Taunt.  159.  '  Muilman  v.  D'Eguino,  2  U.  Bl.  565. 

'Byles  (Sharswood's  ed.)  [*176].  3C2.  Baylcy  on  Bills,  p.  227;  Chitty 
[*375-0j,  31? ;  Story  on  Bills,  §  231 ;  Robinson  v.  Ames,  20  Johns.  146;  Gowan  v. 
Jackson,  Id.  176;  Fry  v.  Hill,  7  Taunt.  397. 


382  PRESENTMENT  FOR  ACCEPTANCE. 

§  470.  As  illustrations :  where  A,  of  Calcutta,  drew  a 
bill,  payable  sixty  days  after  sight,  on  B,  of  Hong  Kong,  and 
indorsed  it  to  C,  of  Calcutta,  and  the  latter,  finding  bills  on 
China  unsalable,  without  the  prospect  of  improvement,  kept 
the  bill  five  months,  and  then  indorsed  it  to  C,  who  for- 
warded it  for  acceptance,  which  was  refused,  it  was  held  that 
the  drawer  was  discharged  by  the  unreasonable  delay,  al- 
though the  pnrties  were  solvent,  and  he  had  sufi*ered  no 
damage.^  In  South  Carolina,^  it  appeared  that  a  bill  drawn 
in  Charleston,  South  Carolina,  on  New  York,  at  three  days 
was  not  presented  for  two  and  a  half  months.  The  holder 
lived  several  days  in  the  same  bouse  with  the  drawee ;  and 
it  was  held  that  the  drawer  was  discharged  by  the  delay. 
In  another  case,  one  month's  delay  was  held  too  much,  the 
distance  between  the  residence  of  the  drawer,  and  the  drawee 
being  only  eighteen  miles,  with  communication  three  times  a 
week  between  them.^ 

In  Louisiana,* -it  appeared  that  a  bill  drawn  in  New  Or- 
leans on  Liverpool,  at  thirty  days,  was  sent  by  way  of  New- 
York,  and  a  delay  of  two  and  a  half  months  in  presentment 
was  held  no  laches ;  and  it  has  been  frequently  held  that, 
while  a  holder  would  hardly  be  warranted  in  sending  the 
bill  to  a  remote  place  ^vholly  out  of  the  course  of  trade,  yet 
he  may  put  it  in  circulation,  or  send  it  to  any  other  place 
within  reasonable  mercantile  re2:ulations  for  remittance  or 
sale.  A  bill  drawn  in  Havana  on  London  may  be  forwarded 
by  way  of  the  United  States — one  drawn  in  London  by  way 
of  Paris  and  Genoa;  and  one  drawn  in  New  Orleans  on 
Liverpool,  by  way  of  New  York.^ 

'  Mullick  V.  Radakisden,  28  Eng.  L.  &  Eq.  R,  8G ;  9  Moore  P.  C.  66. 

'  Fernandez  v.  Lewis,  1  McCord,  323.  '  Dumont  v.  Pope,  7  Blackf.  367. 

*  Bolton  V.  Ilarrod,  U  Mart.  (La.)  326. 

'  In  Wallace  v.  Agry,  4  Mason,  333,  Story,  J.,  said  :  "  It  has  been  said  that 
the  plaintifT  was  bound  to  send  it  (the  bill)  directly  from  Havana  to  England  by 
some  regular  conveyance,  and  had  no  right  to  remit  it  to  Boston  for  sale.  I  am 
of  a  different  opinion.  The  party  who  receives  a  negotiable  bill  payal)le  after 
eight  has  a  right  to  sell  it  in  the  market  where  he  resides,  or  to  send  it  to  any 
other  place  for  sale.  He  is  not  boimd  personally  to  make  a  remittance  of  it,  or 
to  send  it  directly  to  the  country  oa  which  it  is  drawn.     He  is  at  full  liberty  to 


TIME  OF.  383 

§  471.  Bills  drawn  in  London  on  Calcutta  at  ninety  days, 
were  circulated  seventy-eiglit  days  in  England,  and  the  delay 
was  held  no  laclies ;  ^  and  like  decisions  were  rendered  where 
a  bill  was  drawn  in  London  on  Lisbon  at  thirty  days,  circu- 
lated through  Paris  and  Genoa,  and  presented  after  a  delay 
of  three  months  and  ten  days;"  where  a  bill  was  drawn  in 
Plymouth  on  London  at  twenty  days'  sight,  and  was  not  pre- 
sented for  nine  days;^  where  one  was  drawn  in  Windsor  on 
London,  and  was  not  presented  for  four  days  (Sunday  inter- 
vening) ;  *  where  a  bill  was  drawn  at  sixty  days  at  Augusta, 
Geoi'gia,  on  New  York,  and  was  put  in  circulation  and  not 
presented  for  two  months  and  a  half;^  and  where  a  bill 
drawn  in  Antigua  on  London  at  ninety  days,  was  circulated 
for  six  months — a  packet  leaving  Antigua  for  London  once  a 
month.*' 

§  472.  Where  a  sight  draft  on  New  York  was  indorsed 
to  the  plaintiff  in  Wisconsin,  and  was  not  mailed  to  New 
York  for  presentment  for  fourteen  days,  it  was  held  prima 
facie  evidence  of  laches,  but  might  be  rebutted.''^  But  pre- 
sentment in  Boston  on  Wednesday,  during  banking  hours,  of 
a  bill  at  sight,  indorsed  to  the  holder  in  Lowell  after  bank- 
ing hours  the   previous   Saturday,  and   forwarded   by  the 


put  it  in  circulation,  or  to  send  it  to  any  other  place  for  sale  or  remittance ;  and 
the  only  limitation  upon  this  right  is,  that  he  shall  have  it  presented  within  a 
reasonable  time,  be  the  conveyance  direct  or  indirect.  To  be  sure,  the  usage  of 
trade  is  to  be  consulted  on  tins,  as  on  other  occasions.  The  holder  of  such  a  bill 
is  not  at  liberty  to  send  it  to  very  remote  places,  wholly  out  of  the  course  of 
trade,  if  there  be  unreasonable  delay  thereby,  in  the  presentment  for  acceptance ; 
and  thus  to  fix  the  drawer  with  an  indefinite  responsibility.  Hut,  on  the  other 
hand,  the  transmission  in  a  direct  trade  is  not  necessary.  No  one  can  doubt  that, 
by  the  course  of  trade,  many  bills  of  exchange  drawn  in  Havana  on  England  are 
sent  to  the  United  States  for  remittance  or  sale.  The  very  testimony  in  this  case 
establishes  this  fact.  It  would  be  a  most  inconvenient  rule  to  iiold  that  such  a 
negotiation  of  bills  was  at  the  sole  peril  of  the  holder.  I  know  of  no  rule  of 
law  reaching  to  such  extent.  In  my  judgment,  the  remittance  of  the  bill  to  Bos- 
ton for  sale  was  not  a  disiharge  of  the  defendants." 

'  Muilman  v.  D'Eguino,  2  II.  Bl.  5G5.       '  Goupy  v.  Ilardcu,  7  Tauut.  397. 

*  Shute  V.  Robins,  iMoody  &  .M.  133;  3  Car.  &  \\  80. 

*  Fry  V.  Hill,  7  Taunt.  397. 

'  Robinson  v.  Ames,  20  Johns.  14G;   Edwards  on  Bills,  389. 

*  Gowan  v.  Jackson,  20  Johns.  17G.  '  Walsh  v.  Dart,  23  Wis.  334. 


384  PRESENTMENT   FOR  ACCEPT A.NCE. 

holder  to  Boston  on  Tuesday,  was  held  sufficient  to  charge  an 
indorser.^  Dehiy  of  twenty-one  days  to  forward  sight  di-afts 
received  at  Detroit,  Michigan,  on  Chicago,  Illinois,  was  held 
too  long." 

Where  a  draft  was  drawn  on  New  York  by  a  hank  in 
Erie,  Pennsylvania,  in  favor  of  a  traveling  agent,  who,  in 
pursuance  of  his  business,  did  not  return  to  his  home  in  New 
Jersey,  where  he  had  the  first  opportunity  to  negotiate  it, 
until  ten  days  after  its  date,  it  was  held  that  the  delay  was 
not  unreasonable  under  the  circumstances.^  In  an  Illinois 
case  where  an  inland  bill  drawn  at  sight  on  a  Chicago  bank, 
was  mailed  on  the  day  of  its  date  to  the  payee's  address  in 
Dakota  Territory,  and  was  received  by  him  after  some  delay 
in  the  mail,  and  by  him  at  the  first  opportunity  put  in  circu- 
lation, and  no  delay  was  suffered  other  than  that  incident  to 
the  transaction  of  business  in  a  sparsely  populated  territory ; 
and  the  bill  was  presented  for  payment  thirty-five  days  after 
date,  and  protested  for  non-payment — it  was  held  that  the 
drawer,  who  was  duly  notified  was  bound,  the  bank  having 
failed  in  the  meantime.^ 

§  473.  Ill  the  second  place:  TJte  falling  or  rising  of  the 
rate  of  exchaiige  in  the  place  of  residence  of  the  drawee, 
should  be  taken  into  consideration  in  determining  whether 
or  not  there  was  unreasonable  delay  ;  and  if  exchange  were 

•  Prescotfc  Bank  v.  Cavcrly,  7  Gray,  217. 

"  Phoenix  Ins.  Co.  v.  Allen,  11  Mich.  30;  Phoenix  Ins.  Co.  v.  Gray,  13  Midi. 
191 ;  see  Chambers  v.  Hill,  26  Tex.  585,  where  two  and  a  half  years  was  held 
a  fatal  delay. 

'  National  Newark  Banking  Co.  v.  Second  National  Bank,  63  Penn.  St  404. 

*  Montelius  v.  Charles,  76  111.  305.  Scott,  J.,  saying  :  "  Bills  both  inland  and 
foreign,  having  the  quality  of  negotiability,  are  intended,  in  some  degree,  to  be 
used  as  a  part  of  the  circulation  of  the  country,  and  are  indispen?able  in  the  con- 
duct of  extended  commercial  transactions.  They  afford  a  safe  and  convenient 
mode  of  making  payments  of  indebtedness  between  distant  points.  Bonking 
houses  that  for  a  consideration  issue  such  bills,  must  be  understood  to  do  so  in 
accordance  with  the  known  custom  of  the  country- — that  they  will  be  put  in  cir- 
culation for  a  limited  period.  If  this  were  not  so,  their  value  would  be  greatly 
depreciated,  and  their  utility  in  commercial  transactions  would  be  destroyed." 
Bee  also  Shute  v.  Robins,  3  C.  &  P.  80;  Jordan  v.  Wheeler,  20  Tex.  698;  Nichols 
V.  Blackmorc,  27  Tex.  586. 


TIME  OF.  385 

steady,  without  prospect  of  cliaiiQ:e,  or  were  rising,  a  shorter 
and  less  extended  period  of  time  would  be  thought  reason- 
able, while  if  the  exchange  fell  immediately  after  the  sale  of 
the  bill,  the  jury  might  then  think  a  more  extended  period 
might  fairly  and  reasonably  be  allowed  the  holder,  in  order 
to  enable  him  hona  fide  to  endeavor  to  make  a  fair  profit,  or 
at  all  events  to  endeavor  to  secure  him  from  loss/  In  an 
English  case  the  bill  was  drawn  in  Calcutta  on  Hong  Kong, 
at  sixty  days,  and  the  indorsee  kept  the  bill  five  months. 
Held,  no  laches.  Parke,  B.,  saying :  The  court  "  thought  that 
the  evidence  proved  that,  for  the  whole  of  the  time,  a  period 
of  more  than  five  months,  bills  on  China  were  altogether  un- 
salable in  Calcutta ;  that  such  was  the  permanent  and  regular 
state  of  the  market ;  and  that  although,  if  there  was  a  reason- 
able prospect  of  the  state  of  things  being  better  in  a  short 
time,  the  holder  would  have  had  a  right,  with  a  view  to  his 
own  interests,  to  keep  the  bill  for  some  time,  he  had  no  such 
right  when  there  was  no  hope  of  the  amendment  of  that 
state  of  things;  and  we  are  of  opinion  that  the  evidence  fully 
justified  this  conclusion  from  it,  and  that  the  court,  deciding 
on  facts  as  a  jury,  were  perfectly  right."' 

§  474.  Ill  the  third  place :  The  facility  of  communication 
between  the  places  should  be  considered,  in  determining  the 
question  of  laches,  when  the  party  who  presents  the  bill  has 
had  it  in  his  possession  for  some  length  of  time ;  ^  as  also  the 
distance  between  the  places.*  In  an  English  case,^  the  bill 
was  drawn  in  Carbonear,  Newfoundland,  on  Poole,  England, 
at  ninety  days,  and  was  not  presented  until  three  months 
after  date.  Carbonear  is  twenty  miles  from,  and  was  in  daily 
communication  with  St.  Johns,  from  which  the  mails  were  sent 
to  England  three  times  a  week.     The  average  length  of  the 

'  Mellish  V.  Rawdon,  9  Bing.  416;  2  Moore  &  S.  500;  Wallace  v,  Agry,  4  Ma- 
son, 336 ;  Mullick  t.  Radakissen,  28  Eug.  L.  &  Eq.  8. 

'  Mullick  V.  Radakissen,  28  E.  L.  &  Eq.  86. 

'  Sbutc  V.  Robins,  Moody  &  M.  133  ;  3  Car.  &  P.  80;  Straker  v.  Graham,  4  M. 
&  W.  721;  Mullick  v.  Radakissen,  9  Moore  P.  C.  66;  28  E.  L.  &  Eq.  86; 
Dumont  v.  Pope,  7  Blackf.  3G7. 

*  Nichols  V.  Blackmore,  27  Tex.  586.  *  Straker  \.  Graham,  5  M  &  W.  721. 

Vol.  I. —25 


38G  PKESENTMENT  FOR  ACCEPTANCE. 

voyage  was  eighteen  days.  No  excuse  l:)eing  shown  for  delay,  it 
was  held  that  the  bill  was  not  presented  in  a  reasonable  time. 

g  475.  The  question  vot  affected  by  solvency  of  the  drawer. 
— But  tlie  continued  solvency  of  the  drawer,  and  the  want  of 
proof  of  actual  loss  by  laches,  are  not  circumstances  to  be 
considered  in  answer  to  the  objection  of  delay  in  present- 
ment ;  the  simple  question  being,  whether  or  not  the  delay 
was  reasonable  under  the  circumstances  of  the  case.  In  an 
English  case,  where  this  subject  ^v'as  considered,  it  was  said :  ^ 
"It  remains  to  consider  only  one  ])oint,  which  was  insisted  on 
in  the  court  below  and  also  argued  at  the  bar  before  us, 
namely  :  that  as  the  drawers  remained  perfectly  solvent  from 
the  date  of  the  bill  to  the  present  time,  the  rule  as  to  pre- 
senting in  a  reasonable  time  did  not  apply,  and  that  there 
was  no  laches  which  would  constitute  a  defense  by  the 
drawers  unless  they  had  incurred  a  loss  by  that  laches.  The 
court  below  decided  that  the  solv^ency  of  the  drawers,  and 
the  want  of  actual  loss  by  laches,  constituted  no  answer  to 
the  oljjection  of  laches.  We  think  they  were  right.  "'  ''^  * 
This  point  was  fully  considered  in  the  case  of  Carter  v. 
Flower  (IG  M.  <fe  W.  743),  and  we  believe  admits  of  no 
doubt;  and  we  agree  with  the  court  below,  that  the  con- 
tinued solvency  of  the  drawers  does  not  J3revent  the  applica- 
tion of  the  rule  that  the  bill  must  be  presented  in  a  reasona- 
ble time,  with  reference  to  the  interest  of  the  drawer  to  put 
the  Ijill  into  circulation,  or  the  interest  of  the  drawee  to  have 
the  bill  speedily  presented." 

§  476.  Agenfs  duty  iii  presenting  for  acceptance. — It  has 
been  already  seen  that  there  are  two  exceptions  to  the  gen- 
eral rule  that  it  is  not  necessary  to  present  a  bill  payable  at 
a  time  certain  for  acceptance  before  it  becomes  due — the  first 
arising  when  there  is  an  express  direction  to  the  payee  or 
holder  of  the  bill,  and  the  second,  when  the  bill  is  put  in  the 
hands  of  an  agent  for  negotiation.  In  Allen  v.  Suydam  (17 
Wend.  308,  confirmed  in  20  Wend.  321),  it  was  held  that  an 

'  Mullick  v.  Radakissen,  9  Moore  P.  C.  4G ;  28  E.  L.  &  Eq.  8G. 


TIMK   OF.  387 

agent  who  received  a  hill,  jxiyable  after  date,  for  collection, 
and  which  had  not  been  accepted,  was  bound  to  present  it 
without  unreasonable  delay ;  and  li;iving  delayed  for  seven- 
teen days  to  do  so,  he  was  liable  to  his  principal  for  all  dam- 
ages he  might  have  sustained  by  his  delay.  This  is  a  leading 
case,  and  was  decided  upon  thorough  argument  and  consid- 
eration. It  is,  however,  criticised,  and  dissented  from  by 
Professor  Parsons,^  on  the  gi'ound  that  as  it  w'ould  not  be 
negligence  in  the  principal  to  delay,  it  would  be  unjust  to 
consider  it  such  in  the  agent,  and  the  latter  should  not  be 
held  responsible  without  some  express  or  implied  instruction 
to  present  immediately.  But  we  are  inclined  to  coincide 
with  the  case  cited, '^  which  is  supported  by  the  analogy  of 
the  Scotch  law,^  and  by  English  authority.* 

§  477.  A  case  remarkable  for  its  similarity  to  the  New 
York  case  above  quoted  was  decided  by  the  Scotch  Court  of 
Session  in  like  manner.  A  bill,  payable  at  Glasgow  three 
days  after  date,  was  sent  to  agents  at  that  city  for  collec- 
tion. Before  the  day  of  payment  the  drawer  failed,  and  the 
Glasgow  bank  refused  to  accept.  It  was  not  clear  whether 
the  bank  would  have  accepted  the  draft  if  it  had  been  imme- 
diately presented,  for  the  bank  had  no  funds  of  the  drawer, 
and  the  practice  had  been  to  make  provision  for  such  drafts 
at  the  day  of  payment.  In  an  action  against  the  agents,  the 
court  held  "  that,  as  agents,  they  were  bound  immediately  to 
present  the  bill  for  acceptance."  ^ 

§  478.  Effect  of  wcir^  sichaess^  inevitable  accident^  and 
oilier  reasonable  causes  of  delay. — Any  reasonable  cause,  such 
as  sickness,®  inevitable  accident,  or  intervention  of  war,  or 

'  1  Parsons  N.  &  B.  846-7. 

'  See  RedQeld  &  Bigelow's  Leading  Case?,  pp.  34,  35;  and  ante^  §  330. 

*  Thomson  on  Bills  (Wilson's  ed.)  277. 

*  Vanwart  v.  Wooley,  3  B.  &  C.  439;  5  Dow.  &  R.  374;  Chitty  on  Bills  (13 
Am.  ed.)  311:  Byles  (Sharswood's  cd.)  299;  Roscoe  on  Bills,  141,  note  26. 

'  Bank  of  Scotland  v.  Hamilton,  1  Bell's  Commentaries,  409. 

'  In  Aymar  v.  Beers,  7  Cow.  705,  the  defendant  sought  to  excuse  delay  in  pre- 
senting lor  acceptance  on  account  of  the  payee's  sickness.  The  court  belo^v  re- 
jected the  evidence;  but  the  court  above  held  that  sickness  was  an  excuse,  and 
ordered  a  new  trial.     See  Byles  on  Bills  (Sharswood's  ed.)  [*176],  302. 


388  PRESENTMENT  FOR  ACCEPTANCE. 

other  circumstances  beyond  the  holder's  control,  will  excuse 
delay  in  presentment  for  acceptance.^  But  these  and  other 
circumstances,  excusing  delay  or  failure  to  make  due  present- 
ment for  acceptance,  will  be  hereafter  considered  in  connec- 
tion with  the  consideration  of  the  excuses  which  may  be 
made  for  like  delay  or  failure  in  respect  to  presentment  for 
payment,  and  giving  notice  of  dishonor. 

'  U.  S,  V.  Barker,  1  Paine,  C.  C.  156.  In  this  case,  a  bill  drawn  in  the  United 
States  on  Liverpool  was  presented  three  months  from  date.  War  existing  between 
the  two  countries,  it  was  held  no  laches.  The  decision  in  this  case  as  to  the 
validity  of  the  bill  cannot  be  sustained.     See  ante,  Chapter  VIII,  Section  II, 


CHAPTER  XVIII. 

ACCEPTANCE     OF    BILLS    OF    EXCHANGE. 


SECTION    I. 

THE   NATURE   OF   ACCEPTANCE. 

§  479.  The  drawer  of  a  bill  undertakes  that  when  it  is 
presented  to  the  drawee  he  will  accept  it ;  and  by  acceptance 
is  meant  an  undertaking  on  his  part  to  pay  it  according  to 
its  tenor.^  The  acceptor,  by  his  act,  ^engages  to  pay  the 
holder,  w^hether  payee  or  indorsee,  the  full  amount  of  the 
bill  at  maturity;  and  if  he  does  not,  the  holder  may  sue 
him.^ 

If  the  drawee  have  funds  in  his  hands  belonging  to  the 
drawer,  it  is  his  duty,  according  to  mercantile  usage,  to  honor 
the  bill  by  accepting  it ;  but  he  is  not  legally  bound  to  do 
so  by  the  mere  fact  that  he  holds  such  funds,  any  more  than 
a  debtor  is  legally  bound  to  execute  a  promissory  note  to  his 
creditor  for  the  amount  due  upon  his  request  to  do  so.^  But 
there  may  be  relations  between  the  drawer  and  drawee  which 
make  it  incumbent  on  the  latter  to  honor  the  bill.  Thus  if 
the  drawee  has  been  supplied  with  funds  for  the  express 
purpose  of  meeting  the  bill ;  or  if  he  have  money  on  deposit 
under  such  circumstances  as  imply  a  contract  on  his  part  to 
accept  the  bill,  as.  for  instance,  if  he  be  a  banker,  and  the 
bill  (or  check)  be    drawn    on  a  cash    account,  be  will  be 

'  Russell  V.  Phillips,  14  Q.  B.  891  (68  E.  C.  L.  R.);  Byles  (Sharswood's  ed.) 
[*178],  304:  Bayley  (3  Am.  ed.),  154;  Story  on  Bills,  §  272. 

'  Hoffman  &  Co.  v.  Milwaukee  Bank,  12  Wall.  181 ;  Bayley  on  Bills,  9G. 

'  Story  on  Bills,  113,  117.  238;  Edwards  on  Bills,  405;  Chitty  (13  Am.  ed.) 
[*281],  318,  319.     See  Chapter  XLIX,  on  Checks,  Sections  X  and  XI,  vol.  II. 


390  ACCEPTANCE  OF   BILLS  OF  EXCHANGE. 

answerable  in  an  action  of  tort  for  not  honoi-ing  the  draft. 
But  nntil  he  lias  accepted  the  bill  lie  is  not  liable  as  a  party 
to  it.^ 

§  480.  Until  he  has  accepted  the  bill,  so  entirely  is  the 
dra\Yee  a  stranger  to  it,  that  he  may  himself  discount  it. 
And  he  may  then  transfer  it  as  the  bona  fide  holder  to 
another,  who  may  sue  and  charge  the  drawer.^  He  may  dis- 
count it  either  for  the  drawer,  the  payee,  or  an  indorsee. 
"  If  the  acceptor  discounts  the  bill  for  the  drawer,  and  then 
indorses  it  away,  the  drawer  will  be  liable  upon  it  to  the 
holder,  and  the  transfer  by  the  drawer  to  the  acce})tor  will 
operate  as  an  indorsement,  although,  at  the  time,  the  drawer 
does  not  intend  to  transfer  by  way  of  indorsement,  being 
under  the  impression  that  the  bill  is  discharged  by  coming 
into  the  hands  of  the  acceptor.  Nor  will  the  payment  of  the 
amount,  less  the  discount,  be  deemed  a  payment  of  the  bill 
by  the  acceptor."  ^  If  the  drawee  comes  into  j)ossession  of  the 
bill  before  its  dishonor,  there  is  no  presumption  that  he  takes 
it  with  the  obligation  to  accept.^ 

§  481.  Sometimes,  though  infrequently,  the  bill  directs 
the  drawee  to  pay  the  amount  specified,  at  a  certain  time, 
"  without  acceptance,"  or  contains  upon  its  face  the  expression 
"  acceptance  waived."  In  such  cases  the  bill  is  not  imj^aired 
in  its  negotiability,  but  the  effect  is  to  merge  the  ordinary 
proceedings  on  acceptance,  or  non-acceptance,  into  those  of 
payment  or  non-payment,  and  the  drawer  is  bound  just  as 
upon  an  accepted  bill.^ 

'  Marzctti  v.  Williams,  1  Barn.  &  Ad.  415  (20  E.  C.  L.  R.) 

^  Attenborougli  v.  McKciizie,  3G  Eng  L.  &  Eq.  5G3;  Dcsba  v.  Stewart,  6  Ala. 
852;  Swope  v.  Ross,  40  Pcnn.  St.  18G;  Story  on  Bills  (Bennett's  ed.),  §  223. 

^  Swope  V.  Ross,  40  Penn.  St.  186,  Strong,  J.  In  Attenborougli  v.  McKenzie, 
tupra,  the  holder  of  the  bill  took  it  by  indorsement  after  it  was  due  from  the 
transfcrree  of  the  acceptor.  The  ruling  goes  to  the  length  that  even  the  accept- 
ing drawee  of  a  bill  may  take  it  as  an  indorsee,  and  as  such  may  issue  it. 

*  Desha  v.  Stewart,  0  Ala.  8J2. 

'  Dcnegre  v.  Milne,  10  La.  Ann.  324;  English  v.  Wall,  12  Rob.  (La.)  132; 
Webb  V.  Mears,  9  Wright,  222 ;  Carson  v.  Russell,  26  Tex.  452  ;  Miller  v.  Thom- 
son, 3  Man.  &  G.  576  (42  E  C.  L.  R.) ;  Rey  v.  Kinnear,  2  M.  &  Rob.  117. 


WHAT  BILLS  REQUIRE   ACCEPTANCE.  391 

SECTION  II. 

WHAT     BILLS     REQUIRE    ACCEPTANCE,    AND     BY    WHOM    AND   WHEN   TnEY 
SHOULD    BE    ACCEPTED. 

§  482.  AVe  come  now  to  consider  the  former  procedure  in 
procuring  acceptance. 

And  in  the  Jirst  place  :  There  are  some  bills,  such  as  are 
drawn  payable  immediately  on  demand,  which  are  not  pre- 
sented for  acceptance,  but  only  for  payment.  They  are  con- 
sidered in  the  preceding  chapter  on  "  Presentment  for  Accept- 
ance." And  there  are  some  bills  which  do  not  need  acceptance, 
in  order  to  bind  the  drawee,  or  rather  in  whicli  the  act  of 
drawing  itself  constitutes  acceptance.  Thus,  a  bill  drawn 
without  being  addressed  to  any  drawee,^  or  drawn  by  a 
party  upon  himself,^  or  by  a  partner  upon  the  firm  of  which 
he  is  a  member,  for  partnership  purposes.^  A  bill  drawn  by 
the  president  of  a  corporation  in  its  behalf,  on  the  treasurer 
thereof,  would  be  a  bill  drawn  by  the  corporation  on  itself, 
and  hence,  not  need  acceptance ;  *  but  if  not  drawn  on  the 
treasurer  in  his  official  character,  it  would  be  otherwise.^ 

§  483.  Either  of  a  set  of  hills  may  he  presented  for  ac- 
ceptance^ and  if  not  accepted,  a  right  of  action  accrues  imme- 
diately upon  due  notice  against  all  the  antecedent  parties  to 
the  bill,  without  any  others  of  the  set  being  presented.^  But 
the  drawee  should  accept  but  one  of  the  set,  for  if  two  or 
more  of  the  set  should  be  accepted,  and  should  come  into  the 
hands  of  diiferent  holders,  and  the  acceptor  should  pay  one, 
he  might  also  be  obliged  to  pay  the  others  also." 

'  Marion,  &c.  R.  Co.  v.  Ilodi^^e,  9  Ind.  163 ;  Dougal  v.  Cowlcs,  5  Day,  511. 

"  Ilasey  v.  White  Pigeon  Company.  1  Doug.  (Midi.)  193;  Cunningham  v. 
Wardvvell,  3  Fairf.  466;  Roach  v.  Ostler,  1  Man.  &  R.  120;  cited,  1  Pars.  K  & 
B.  288.     See  ante,  §  128. 

'  Dougal  V.  Cowles,  5  Day,  511;  Miller  v.  Thompson,  3  Man.  Sc  G.  576. 

*  Ilascy  V.  White  Pigeon  Company,  1  Doug.  (Mich.)  193.     See  ante,  §  129. 

*  Halsted  v.  The  Mayor,  5  Barb.  218. 

*  Downcs  V.  Church,  13  Pet.  207;  Bank  of  Pittsburg  v.  Neal,  22  How.  103. 
'  Bank  of  Pittsburg  v.  Neal,  22  How.  109. 


392  ACCEPTANCE  OF  BILLS  OF  EXCHANGE. 

Where  oue  of  a  set  wbicli  was  made  and  accepted  in 
blank  is  filled  up,  varying  from  the  others,  not  only  in  date 
and  amount,  Ijut  also  as  to  time  and  place  of  payment,  and 
is  negotiated  by  the  correspondent  of  the  accejDtor  to  a  hona 
fide  party,  withont  notice  that  such  act  was  done  without  au- 
thority, the  acceptor  is  liable  to  such  hona  fide  holder.^ 

It  seems  that  if  the  drawee  accept  two  or  more  parts  of  a 
set  of  bills,  and  the  several  parts  come  into  the  hands  of  dif- 
ferent hona  fide  holders  without  notice,  he  will  be  liable  to 
pay  on  each  part.^ 

§  484.  In  the  second  ijlace^  as  to  the  person  who  may  ac- 
cept a  hill. — The  drawing  of  a  bill  imports  a  contract  on  the 
part  of  the  drawer  that  the  drawee  is  a  person  competent  to 
accei)t;  and  therefore,  if  the  holder  upon  presentment  of  the 
bill  ascertains  that  the  drawee  is  incapable  of  contracting — 
for  instance,  is  a  minor,  an  idiot,  or  a  married  woman — he 
may  cause  it  to  be  protested,  and  proceed  against  antecedent 
parties  as  usual  in  cases  of  dishonor. 

§  485.  Except  in  cases  of  acceptance  for  honor,  no  one 
can  accept  a  bill  except  the  party  on  whom  it  is  drawn,  or 
his  authorized  agent.^  Thus,  if  it  be  addressed  to  A.,  an 
acceptance  by  B.,  unless  for  honor,  will  not  bind  him.*  Nor 
can  there  be  a  series  of  acceptors ;  and  if  ^  a  bill  addressed 
to  one  be  accepted  by  two  persons,  the  acceptance  of  the 
first  will  be  vitiated  by  having  been  altered  in  an  essential 
part,^  unless  made  with  the  acceptor's  consent.  But  if  any 
other  person,  after  an  acceptance,  subsequently  accepts  the 
bill  for  the  purpose  of  guaranteeing  its  credit,  at  the  accept- 

'  Bank  of  Pittsburg  v.  Neal,  22  How.  97. 

"  Bank  of  Pittsburg  v.  Neal,  22  How.  96. 

'  Davis  V.  Clarke,  6  Q.  B.  IG;  (51  E.  C.  L.  R.);  Jenkins  v.  Hutchinson,  13  Q. 
B,  744  (66  E.  C.  L.  R.) ;  Polhill  v.  Walter,  3  B.  &  Ad.  114  (23  E.  C.  L.  R.); 
May  V.  Eelly,  27  Ala.  497;  Keenan  v.  Nash,  8  Minn.  409. 

*  Davis  V.  Clarke.  6  Q.  B.  16  (51  E.  C.  L.  R.);  May  v.  Kelly,  27  Ala.  497. 

'Jackson  v.  Hudson,  2  Camp.  447;  Bayley  on  Bills,  100;  Story  on  Bills, 
§  254. 

"  Thomson  on  Bills,  112,  212.  There  being  no  agreement  as  to  any  guar- 
anty. 


WHAT  BILLS  REQUIRE  ACCEPTANCE.  393 

or's  request,  in  tLe  usual  forai  of  an  acceptance,  then,  if  there 
is  a  sufficient  consideration,  he  may  be  bound  thereby  as  a 
guarantor ;  but  he  is  not  liable  as  an  accej)tor.^  And  the 
addition  will  not  be.  a  material  alteration.^ 

In  an  English  case,  where  the  bill  was  addressed  by  John 
Hart  to  "  Mr.  John  Hart,"  payable  to  me  or  order — across 
its  face  was  written,  "  Accepted,  H.  J.  Clarke  " — it  was  held 
that  Clarke  could  not  be  sued  as  acceptor,  and  Coleridge,  J., 
said :  "  Acceptance  can  only  be  made  by  the  party  addressed 
or  for  his  honor.  Here  the  last  is  not  pretended,  and  the 
first  cannot  be  presumed."  ^  A  party  may  be  bound  as  an 
acceptor  by  any  name  or  designation  he  may  see  fit  to  adopt, 
provided  it  clearly  appears  by  extraneous  evidence  who  was 
intended ;  and  if  he  intends  to  contract  by  a  certain  desig- 
nation, he  is  estopped  to  deny  that  the  name  by  which  he 
assumed  to  enter  into  the  contract  was  the  appropriate  ap- 
pellation.    "  The  West  Tennessee  Department  of  the  Life 

*  story  ou  Bills,  §  254;  Chitty  on  Bills  (13th  Am.  ed.),  321 ;  Jackson  y.  Hud- 
son, 2  Camp.  447.  In  tliis  case  the  bill  was  drawn  on  and  accepted  by  I.  Irving. 
Under  his  acceptance  a  defendant  wrote  "  Accepted,  Jos.  Hudson,  payable  at, 
&c."  Hudson  was  sued  as  acceptor;  and  plaintiff  offered  to  prove  that  he  had 
had  dealings  with  Irving,  and  had  refused  to  trust  him  further,  unless  defendant 
would  become  his  surety,  and  the  defendant,  in  order  to  guarantee  Irving's 
credit,  wrote  the  acceptance  in  the  bill.  Lord  EUenborough  said  this  was  no  ac- 
ceptance, but  a  collateral  undertaking,  which  should  have  been  declared  ou  as 
such.  See  Bayley  on  Bills,  100.  In  Thomson  on  Bills,  p.  212,  it  is  said :  "  It 
seems  that  a  second  person  may  accept  a  bill  addressed  to  a  first,  if  he  accept  on 
the  footing  expressed  or  understood  at  the  time  the  bill  was  issued  that  he  was 
to  be  a  cautioner  for  the  first ;  and  if  a  person  in  this  way  become  validly  a  party 
to  a  bill,  he  stands  toward  the  holder  in  the  same  relation  as  if  he  were  a  co- 
principal,  his  rights  as  cautioner  merely  regulating  his  right  of  relief  against  the 
true  principal." 

-  Smith  V.  Lockridge,  8  Bush  (Ky.),  425,  (1871).  In  this  case  the  bill  was 
addressed  to  W.  T.  and  George  Lane,  and  by  them  accepted.  It  was  indorsed 
by  S.  H.  Lane,  H.  -Smith,  and  J.  J.  Anderson,  and  discounted  by  D.  S.  Lock 
ridge.  Smith  and  Anderson,  two  of  the  indorsers,  claimed  that  it  was  accepted 
by  the  Lanes  only  when  tUey  indorsed  it,  and  afterward  that  it  was  altered  by 
being  accepted  by  J.  A.  Blaydes,  without  their  knowledge  or  consent.  Blaydes' 
name  was  written  across  the  face  of  the  bill  as  an  acceptor ;  but  the  Court  held 
that  he  could  not  be  an  acceptor,  and  that  it  was  not  an  alteration  which  dis- 
cliarged  the  indorsers,  because  in  no  wise  changing  their  obligations  or  duties. 

»  Davis  V.  Clarke,  6  Ad.  &  El.  (N.  S.)  16  (51  E.  C.  L.  R.) 


394  ACCEPTANCE  OF  BILLS  OF  EXCHANGE. 

Association  of  America"  would  therefore  be  bound  upon  an 
acceptance  made  by  its  i)roper  officer  of  a  bill  addressed  to 
"The  Western  Department  of  the  Life  Association  of 
America."  ^ 

§  48G.  Where  a  person  other  than  the  one  addressed  as 
drawee  writes  his  name  across  the  face  of  the  bill,  it  would 
be  competent  for  him  to  show  as  between  immediate  parties 
(and  on  account  of  its  ambiguity,  perhaps,  as  to  others)  in 
what  character  he  intended  to  be  bound.^ 

But  if  a  party  accept  a  bill  in  which  no  drawee  is  named, 
it  will  be  reo-arded  as  acknowledo-ins:  that  he  was  tlie  drawee, 
and  will  operate  as  a  com})lete  acccepted  instrument.^ 

§  487.  An  acceptance  may  he  made  hy  an  agent ;  but 
certainly,  the  holder  may  require  the  production  by  him  of 
clear  and  explicit  authority  from  his  princij^al  to  accept  in 
his  name,  and  without  its  production  may  treat  the  bill  as  dis- 
honored;* a)id  it  has  been  doubted  whether  the  holder  is 
bound  to  acquiesce  in  an  acceptance  by  an  agent,  as  sucli  an 
acceptance  w^ould  multiply  the  proofs  of  the  holder's  title.*^ 
But  if  the  agency  were  clear,  we  think  the  holder  would  be 
bound  to  take  the  agent's  acceptance — acceptance  by  procura- 
tion as  it  is  termed.*'  If  the  holder  takes  an  acceptance 
from  one  unduly  alleging  his  agency,  and  without  giving  no- 
tice to  antecedent  parties,  they  will  be  released,  if  the  princi- 
pal refuses  to  ratify  the  act.^ 

If  the  bill  be  drawn  upon  an  agent  in  his  individual 
name,  it  ^vould  seem  clear  on  principle  that  none  but  he,  as 

'  Hascall  v.  Life  Association  of  America,  13  N.  Y.  S.  C.  (5  Han),  153.  See 
vol.  I.  §  309. 

■■'  Curry  v.  Reynolds,  44  Ala.  319. 

'  Wheeler  v.  Webster,  1  E.  D.  Smith,  t ;  1  Pars.  N.  &  B.  389;  Gray  v.  Milner, 
8  Taunt.  739;  3  J.  B.  Moore,  90 ;  Davis  v.  Clarke,  6  Q.  B.  IG  ;  Thomson  on  Bills 
(Wilson's  ed.)  313. 

*  Atwood  V.  Munnings,  7  B.  &  C.  378  ;  (14  E.  C.  L.  R.) ;  Byles  on  Bills  (Shars- 
wood'sed.),  113;  Chitty  (13th  Am.  cd.),  3C0;  Thomson  on  Bills,  211;  Roscoeon 
Bills,  71 ;  Beawcs,  87. 

'  Coore  V.  Callaway,  1  Esp.  115  ;  Byles,  113;  Chitty,  321  ;  Roscoe,  171. 

•  Bcawes,  No.  87  ;  Thomson  on  Bills,  211. 
'  Thomson,  211  ;  Chitty,  321. 


WHAT  BILLS   REQUIRE  ACCEPTANCE.  395 

an  individual,  could  accept.  But  in  Georgia,  where  the 
drawee  was  designated  simply  as  "  William  S.  Scruggs,"  an 
acceptance  by  him  "for the  Opinion  Newspaper,"  was  held  to 
bind  the  fii-ni  doing  business  under  that  name.^  This  view 
could  only  be  sustained  upon  the  theory  that  the  firm  adopted 
and  used  his  name. 

§  488.  Bills  drawn  on  joint  2)arties  and  partners. — If  a 
bill  is  drawn  on  two  persons  not  partners,  both  should  accept, 
and  if  either  refuse,  the  bill  may  be  protested  for  his  non- 
acceptance  ; ^  but  the  party  accepting  will  be  bound  l)y  his 
acceptance.^  If  the  bill  is  addressed  to  two  persons,  "or 
either  of  them,"  acceptance  by  either  is  a  sufficient  compli- 
ance with  its  mandate.* 

If  a  bill  be  drawn  upon  a  firm,  it  may  be  accepted  by  any 
one  of  the  partners  in  the  partnership  name ;  ^  and  it  will  be 
a  good  acceptance  of  the  firm  (as  we  think,  although  the  au- 
thorities are  in  conflict),  if  only  the  uanie  of  the  accepting 
partner  be  signed,  as  it  will  be  understood  to  signify  that  the 
firm  responds  to  the  request  of  the  bill,  and  that  the  signing 
partner  attests  it.*^  But  whether  the  acceptance  be  in  the 
name  of  the  firm,  or  of  the  signing  partner,  it  will  not  bind 
the  firm  as  against  the  drawer  cognizant  of  the  facts,  unless 
the  bill  was  drawn  for  partnership  pui'poses,''  except  in  the 
hands  of  a  bona  fide  holder  for  value,  without  notice,  in  which 
event  it  would  be  valid  whether  drawn  for  partnership  pur- 
poses or  otherwise.^ 

'  Markham  v.  Hazen,  48  Ga.  570. 

=  Chitty  oa  Bills  (13th  Am.  ed.),  73,  331 ;  Dupays  v.  Slicplierd,  Holt,  207. 
=  Owen  V.  Van  Uster,  10  C.  B.  318  (70  E.  C.  L.  R.) ;  Bayley  on  Bills,  40,  101 ; 
Byles  [*180],  300. 

*  Thomson  on  Bills,  212. 

'  Pinknoy  v.  Hull,  1  Sulk,  120  (109G)  ;  .Mason  v.  Rumsey,  1  Camp.  384. 

'  Bylcs  on  Bills  (Sharswood's  cd.),  12G ;  Vinson  v.  Rumsey,  1  Camp.  384  ; 
Chitty  (13th  Am.  ed.),  53-r)4 ;  "Wells  v.  Mastcrmau,  2  Esp.  731.  The  contrary 
doctrine  has  been  held.  See  Heeuan  v.  Nash,  8  Minn.  409;  and  ante,  Chapter  IX, 
on  Partners  as  Parties,  §  362. 

•  Pinkncy  v.  Hall,  1  Salk.  126. 

"  Catskill  Bank  v.  Stall,  15  Wend.  364  ;  Bairs  v.  Cochran,  4  Sergt.  &  R.  397; 
Living-ton  v.  Roosevelt,  4  Johns,  351. 


396  ACCEPTANCE  OF  BILLS  OF  EXCHANGE. 

§  489.  If  a  bill  drawn  on  an  individual  member  of  a  firm 
be  accepted  by  bim  in  tbe  name  of  tbe  firm,  it  will  bind  him 
individually,  but  not  the  firm  ;^  and  if  a  bill  be  drawn  on  a 
firm,  and  accepted  by  a  person  describing  himself  as  manager 
or  agent,  there  may  be  an  action  against  him  as  acceptor, 
although  he  may  have  falsely  aflirmed  his  authority  to  accept, 
and  the  firm  be  not  bound.^  An  acceptance  of  a  bill  drawn 
on  him  by  a  member  of  a  firm  will  bind  him  only,  although 
expressed  to  be  on  account  of  the  firm.' 

If  a  new  partner  be  introduced  into  a  firm,  an  acceptance 
by  the  old  partners  for  an  old  debt  in  the  name  of  the  new 
firm  will  not,  in  the  hands  of  the  party  taking  it  and 
cognizant  of  the  facts,  bind  the  new  partner."* 

§  490.  In  the  tJdrd  jplace^  as  to  the  time  when  acceptance 
may  he  made. — ^The  acceptor  may  write  his  acceptance  before 
the  bill  is  drawn,  and  deliver  it  in  blank  to  be  filled  up ;  and 
in  that  event  it  will  date,  and  tbe  statute  of  limitations  begin 
to  run,  from  the  time  it  is  thus  completed.  It  is  not  neces- 
sary that  the  bill  should  be  drawn  by  the  same  person  to 
whom  the  acceptor  handed,  the  blank  acceptance.^  And 
where  the  blank  acceptance  was  filled  up  after  the  lapse  of 
twelve  years,  and,  as  the  jury  found,  after  the  lapse  of  a  rea- 
sonable time,  the  acceptor  was  held  liable  to  a  bona  fide  in- 
dorsee.'' Furthermore,  the  acceptor  in  blank  will  be  liable 
for  any  amount  for  whicb  the  bill  is  filled  up  when  it  has 
passed  into  the  hands  of  any  honafide  holder,  without  notice 
tbat  his  authority  has  been  exceeded.' 

Acceptance  dates  from  delivery,  until  wliich  time  it  is  re- 
vocable ;  ^  but  if  not  in  the  hands  of  the  acceptor,  and  ac- 
cepted verbally,  this  princij^le  would  have  no  application.^ 

'  Nichols  V.  Diamond,  24  Eng.  Law  &  Eq.  403. 

"  Oweu  V.  Van  Uster,  10  C.  B.  318  (70  E.  C.  L.  R.) 

»  Thomson  on  Bills,  213.  '  Shireflf  v.  Wilks,  1  East,  48. 

"  Schultz  V.  Ashley,  7  C.  &  P.  99  (32  E.  C.  L.  R.)     See  ante,  §  142  et  seq. 

'  Montague  v.  Perkins,  22  Eng.  L.  k  Eq.  516. 

'  Bank  of  Commonwealth  v.  Curry,  2  Dana,  142;  Moody  v.  Threlkeld,  13  Ga. 
55;  Byles  on  Bills  (Sliarswood's  ed.)  308. 

«  Cox  V.  Troy,  5  B.  &  Aid.  474 ;  (but  see  Thornton  v.  Dick,  4  Esp.  270 ;) 
Johnson  on  Bills,  33.  "  1  Parsons  N.  &  B.  291. 


WHAT  BILLS  REQUIRE  ACCEPTANCE.  397 

An  acceptance  may  be  also  after  the  bill  has  been  clis- 
countetl,  and  is  just  as  binding  then  as  if  made  before.^ 

If  there  is  a  settled  usage  on  the  part  of  the  bank  to  which 
a  bill  is  sent  for  collection,  not  to  note  it  as  dishonored,  after 
calling  on  the  drawee  for  acceptance,  it  will  be  a  good  defense 
ayraiust  the  charge  of  neojlisfence.' 

§  491.  There  may  be  acceptance  of  a  bill  after  it  has  be- 
come payable,  and  after  protest,  in  which  case  the  bill  is  re- 
garded as  payable  on  demand.'  And  after  acceptance  has 
been  once  refused,  the  drawee  may  afterward  accept,  and 
bind  himself  as  acceptor — but  he  cannot  bind  the  other  par- 
ties unless  the  bill  was  duly  protested.* 

Death  of  the  drawer  is  no  revocation  of  a  bill  in  the  hands 
of  a  hona  fide  holder ;  and  therefore,  after  his  death,  it  may 
be  accepted  by  the  drawee,  although  he  has  knowledge  of 
that  fact.^  The  presumption  is  that  a  bill  was  accepted  be- 
fore maturity,  and  within  a  reasonable  time  after  date.^ 

§  492.  Drawee  may  deliberate  twenty-four  hours  whether 
or  not  to  accept. — When  the  bill  is  presented  to  the  drawee 
for  acceptance,  he  is  entitled,  if  he  desires  it,  to  a  reasonable 
time  to  examine  into  the  state  of  his  accounts  with  the  drawer, 
and  deliberate  whether  or  not  he  will  honor  the  bill.  To 
afford  him  this  opportunity,  which  it  may  be  very  necessary 
for  him  to  avail  of,  he  is  allowed  twenty-four  hours,  and  it  is 
usual  to  leave  the  bill  with  him  for  that  period ;  ^  though  it 

'  Mechanics'  Bank  v.  Livingston,  33  Barb.  458. 

'  Bank  of  Washington  v.  Triplett,  1  Pet.  25. 

'  Billing  V.  Devaux,  3  Man.  &  G.  565 ;  Christie  v.  Pearl,  7  M.  &  W.  491 ;  Jack- 
son V.  Pigot,  1  Ld.  Raym.  364;  Mitford  v.  AValcot,  Id.  374;  Bayley,  181;  Story, 
§  250;  Williams  v.  Winans,  2  Green,  339;  Stockwell  v.  Bramble,  3  Ind.  428; 
Bank  of  Louisville  v.  EUery,  34  Barb.  630;  Kyd  on  Bills,  73;  Roscoe,  172. 

'  Wynne  v.  Raikes,  5  East,  514;  Thomson  on  Bills  (Wilson's  ed.)  214;  Chitty 
[*286],  324. 

■*  Cutts  V.  Perkins,  12  Mass.  206;  Thomson  on  Bills,  215;  Chitty  [*287],  325; 
Hammond  v.  Barclay,  2  East,  227.  See  pott,  §  498,  and  Chapter  on  Checks, 
§1618,  A. 

«  Roberts  v.  Bethell,  12  C.  B.  778  (74  E.  C.  L.  R.) 

'  Connelly  v.  McKean,  64  Penn.  St.  R.  113;  Case  v.  Burt,  15  Mich.  82;  Over- 
man V.  Hoboken  City  Bank,  31  N.  J.  L.  R.  (3  Vroom)  563 ;  Montgomery  County 


308  ACCEPTANCE  OF  BILLS  OF   EXCHANGE. 

has  l)tcn  said  that  if  the  post  goes  out  in  the  meantime,  the 
bill  shonld  be  protested  immediately  if  not  accepted,  and  no- 
tice of  dishonor  sent.^  But  this  rule  is  too  rigid,^  especially 
in  countries  like  the  United  States,  in  which  the  mail  facili- 
ties are  so  great ;  nor  does  it  consist  with  the  rule  allowing 
a  whole  day  for  preparation  of  notice. 

But  if  the  drawee  refuses  to  accept  within  the  twenty- 
four  hours,  the  bill  must  be  protested  immediately ;  ^  and  if 
at  the  end  of  twenty -four  hours  the  drawee  does  not  signify 
his  acceptance,  protest  must  be  immediately  made,  and  notice 
given.* 

§  493.  Wke)i  acce'ptance  irrevocahle. — When  the  bill  is 
once  accepted  and  issued,  the  acceptance  is  irrevocable.  But 
a  drawee,  although  he  has  written  his  acceptance  on  the  bill, 
may  change  his  mind  and  cancel  it  before  redelivery  of  the 
bill  to  the  holder.^  And  where  a  bill  was  returned  by  the 
drawee  with  an  obliterated  acceptance,  without  evidence  to 
account  for  the  obliteration,  it  was  held  that  there  could  be 
no  recovery  upon  it.^ 

But  after  the  acceptance  has  once  been  communicated  to 
the  holder — as  by  redelivery  of  the  bill,  accepted — it  has 
been  said  that  even  with  the  holder's  consent  the  drawee  can- 
not then  revoke,  because  the  drawer  and  indorsers  have  ac- 
quired an  interest  in  the  acceptance.^     But  if  it  were  discov- 

Bank  v.  Albany  City  Bank,  8  Barb,  399;  1  Parsons  on  Contracts,  2G6;  Bellasis 
V.  Hester,  1  Ld.  Raym.  280;  Ingram  v,  Forster,  2  J.  P.  Smith,  242;  Byles  on 
Bills  (Sharswood's  ed.)  303;  1  Parsons  N.  &  B.  348;  Bayley  on  Bills  (Am.  ed.) 
139;  Story  on  Bills,  §  237;  Kyd,  12G;  Roscoe,  4G;  Edwards,  400;  Cliitty  on 
Bills  (13  Am.  cd.)  317,  821;  Johnson  on  Bills,  30. 

'  Bellasis  v.  Hester,  1  Ld.  Raym.  280;  Thomson  on  Bills  (Wilson's  cd.)  213; 
Beawes,  No.  17 ;  Byles  on  Bills  (Sharswood's  cd.)  303, 

»  Morrison  v.  Buchanan,  G  C.  &  P.  18;  Chitty  on  Bills  (13  Am.  ed.)  317-321. 

'  1  Parsons  N.  &  B.  348;  Chitty  on  Bills  (13  Am.  ed.)  ^279],  317;  Edwards, 
400, 

'  Ingram  v,  Forster,  2  J.  P.  Smith,  242. 

"  Cox  V,  Troy,  5  B.  &  Aid.  474 ;  1  Dow.  &  Ry.  38;  Chitty  on  Bills  [*308],  347; 
Edwards,  418. 

*  Cox  V.  Troy,  5  B.  &  Aid.  474;  1  Dow.  &  Ry.  38.  This  was  previously 
doubted.  Chitty  on  Bills,  [*308],  347.  Thomson  on  Bills,  220;  Byles  (Shars- 
wood's ed.)  [*189],  320.  '  Chitty  [*308],  347. 


WHAT  BILLS  REQUIRE  ACCEPTANCE.  .''>99 

ered  by  the  acceptor  immediately  after  tlie  accepted  Lill  liad 
been  redelivered  to  the  drawee  that  he  was  not  in  funds  as 
he  had  supposed,  so  that  his  acceptance  was,  in  fact,  made 
under  a  mistake,  he  may  recall  and  revoke  it,  provided  there 
be  yet  time  for  the  holder  to  notify  the  drawer  and  indorsers, 
and  save  himself  from  loss.^  If  the  drawee  retain  the  bill 
after  intimating  his  acceptance,  he  cannot  return  and  re- 
voke it.^ 

§  494.  As  to  the  date  of  accejytance. — If  the  acceptance 
bears  a  date,  it  will  be  taken  as  prima  facie  evidence  of  the 
time  when  it  was  made,  even  when  the  date  is  in  a  different 
handwriting  from  the  rest  of  the  acceptance.^  When  the  ac- 
ceptance bears  no  date,  there  is  no  presumption  that  it  was 
made  at  the  date  of  drawing ;  but,  on  the  contrary,  it  will  be 
presumed  that  it  was  made  afterward.^  The  presumj^tion 
is,  that  it  was  made  within  a  reasonable  time  after  drawing, 
and  prior  to  the  term  of  payment.^  It  is  said,  in  Pardessus, 
that  it  may  be  inferred  to  have  been  accepted  on  the  date  of 
the  bill.« 

§  495.  Where  a  bill  (says  Mr.  Chitty)  payable  at  days, 
usances,  or  otherwise,  after  sight,  is  accepted,  it  is  usual  and 
proper  to  require  the  drawee  to  certify  or  write  the  day  of 
the  presentment  and  of  the  accei)tance,  by  which  means,  in 
case  of  dispute,  the  same  evidence  which  will  establish  the 
handwriting  to  the  acceptance  itself  will  also  prove  the  time 
it  was  made."^  But  it  has  been  decided  that  if,  on  production 
of  such  a  bill,  an  acceptance  appears  to  have  been  written 
by  the  defendant  under  a  date  which  is  not  in  his  handwrit- 
ing, the  date  is  evidence  of  the  time  of  acceptance,  because  it 
is  the  usual  course  of  business  in  such  cases  for  a  clerk  to 
write  the  date,  and  for  the   party  to  write  his   acceptance 

»  Irving  Bank  v.  Wetheralcl,  3C   N.  Y.  335 ;  see  Chapter  XLIX,  on  Checks, 
Sect.  II.  Vol.  2.  '  Smith  v.  M'Lurc,  5  East,  476. 

'  Glossup  V.  Jacob,  4  Camp.  227;  1  Stark,  70;  Thomson  on  Bills,  217. 

*  Begin  V.  Levi,  1  C.  &  J.  180. 

'  Kobcrts  V.  Bethel,  22  L.  J.  C,  P.  69. 

*  1  Pardessus,  393.  '  Cbitty  on  Bills  (13  Am.  cd.)  [*292],  33'0. 


400  ACCEPTANCE  OF  BILLS  OF  EXCHANGE. 

under  the  date.^     If  there  be  no  date,  it  may  be  inferred  to 
have  been  accepted  on  the  date  of  the  bill.^ 

It  has  been  suggested  that  when  accepting  a  foreign  bill 
for  a  large  amount,  and  without  advice,  it  is  advisable,  and 
a  proper  precaution,  to  specify  the  amount  in  words  and  fig- 
ures (^.  ^.,  $2,000.  Accepted  for  two  thousand  dollars),  to 
avoid  the  risk  of  alteration.^ 


SECTION  III. 

FORM   AND   VARIETIES    OF  ACGEPT.VNCE. EXPRESS   AND   IMPLIED 

ACCEPTANCE. 

§  496.  According  to  the  law  merchant,  an  acceptance  may 
be  (1)  expressed  in  words,  or  (2)  implied  from  the  conduct 
of  the  drawee.  (3)  It  may  be  verbal  or  written.  (4)  It 
may  be  in  writing  on  the  bill  itself  or  on  a  separate  paper. 
(5)  It  may  be  before  the  bill  is  drawn  or  afterward.  And 
there  may  be  absolute,  conditional,  and  qualified  accept- 
ances. 

Acceptance  by  telegram  has  been  held  sufiicient ;  ^  and 
under  the  statutes  of  New  York,  which  make  an  uncondi- 
tional promise  to  accept  a  bill  before  it  is  drawn  equivalent 
to  actual  acceptance  in  favor  of  a  pai'ty,  who  upon  the  f^iith 
thereof  receives  it  for  valuable  consideration,  it  has  been  ad- 
judged that  a  telegram  written  and  sent  by  the  promisor 
operates  as  acceptance.'* 

By  statute,  in  many  of  the  States,  these  principles  of  the 
law  merchant  governing  acceptances  are  modified,  or  repealed 
in  one  respect  or  another,  as  will  be  seen  hereafter. 

§  497.  (1)  As  to  express  acceptance  it  is  usually  made  by 
writing  the  word  "accepted,"  across  the  face  of  the   bill, 

*  Glossup  V.  Jacob,  4  Camp.  227;  1  Stark.  69. 

^  Chitty  on  Bills  [*292],  380.  ="  Chitty  on  Bills  [+300],  338. 

*  Central  Sayings  Bank  v.  Richards,  109  Mass.  414  ;    Coffman  y.  Campbell 
(Sup.  Ct.  111.)  Cent.  L.  J.  July  12,  1878,  p.  26. 

'  Molson's  Bank  v.  Howard,  40  N.  Y.  Sup.  Ct.  15. 


FORM  AND   VARIETIES  OF  ACCEPTANCE.  401 

(wliicli  tlie  drawee  may  do  with  pen  or  pencil),  and  adding 
the  acceptor's  signature.  But  l)y  the  law  merchant  neither 
the  word  nor  the  signature  is  necessaiy — "  acceiDted  "  ^  with- 
out a  signature, ''seen,"  ^  "honored,"'  "presented,"*"!  will 
pay  the  bill,"  °  or  writing  the  day  and  month  when  present- 
ed ; "  or  a  written  direction  of  the  drawee  on  tlie  bill  to  some 
other  person  to  pay  it,'^  or  the  signature  of  the  drawee  alone,^ 
or  the  word,  "  excepted,"  it  being  obviously  intended  for  "  ac- 
cepted."" The  words  "I  take  notice  of  the  above"  were 
recently  held  in  Massachusetts  not  necessarily  to  import  ac- 
ceptance ;  and  even  if  they  did,  unexplained,  to  be  open  to 
explanation,  as  between  immediate  parties.^"  Where  the 
drawee  wrote  his  name  across  the  bill,  it  was  held  inadmissi- 
ble for  him  to  show  that  he  refused  to  write  "accepted,"  for 
the  name  alone  imported  it.^^  And  it  has  been  held  that 
where  the  statute  law  requires  that  acceptance  shall  be  in 
wanting  on  the  bill,  and  signed  by  the  party  to  be  charged 
thereby,  or  his  agent,  such  requisition  is  complied  with  by 
the  acceptor's  writing  his  name  across  the  fiice  of  the  bill.^^ 
But  merely  paying  and  crediting  a  part  of  the  amount  on  the 
'bill  would  not  amount  to  an  acceptance  in  writing ;  ^^  and 


'Philips  V.  Frost,  19  Me.  77;  Dufaur  v.  Oxenden,  1  Moody  &  R.  90  ;  Les- 
lie V.  Hastings,  1  Moody  &  M.  119. 

"  Barnct  v.  Smith,  10  Foster,  25G;  Spear  v.  Pratt,  2  Hill,  583. 
'  Anonymous,  Comb.  401. 

*  Story  on  Bills,  §  243 ;  1  Pars.  N.  &  B.  282. 

'  Ward  V.  Allen,  2  Mctc.  (Mass.)  53;  Leach  v.  Buchanan,  4  Esp.  226. 

*  1  Pars.  N.  &  B.  343;  Cunningham  on  Bills,  26. 

'  Moore  v.  Wilby,  EuUer  N.  P.  270  ;  Harper  v.  West,  1  Cr.  C.  C.  192. 

«  Spear  V.  Pratt,  2  Hill,  582 ;  Wheeler  v.  Webster,  1  E.  D.  Smith,  1  ;  Kyd  on 
Bills,  80. 

"  Miller  v.  Butler,  1  Cr.  0.  C.  170. 

'°  Cook  V.  Baldwin,  120  Mass.  317  (1876). 

-'  Kaufman  v.  Barrenger,  20  La.  Ann.  419. 

'-  Spear  v.  Pratt,  2  Hill,  583. 

"  Bassett  v.  Haines,  9  Cal.  2G1.  In  this  case  it  appeared  that  A  drew  an 
order  on  B  in  favor  of  C,  for  $206  50.  C  presented  it  to  B,  who  paid  $22  50 
thereon,  and  the  amount  was  receipted  on  the  back  in  the  handwriting  of  B, 
and  signed  by  C.  The  Court  said:  "The  only  question  in  the  case  is,  whether 
this  constitutes  an  acceptance  '  in  writing,  signed  by  the  acceptor,'  as  required  by 
Vol.  L— 26 


402  ACCEPTANCE  OF  BILLS  OF  EXCHANGE. 

even  where  a  parol  acceptance  is  sufficient  a  part  payment  by 
tlie  drawee  is  not  such  a  recognition  as  will,  as  matter  of  law, 
bind  liim  to  pay  the  remainder,  for  it  may  have  been  accom- 
panied with  positive  refusal  to  pay  more.^ 

§  498.  Although  usual  it  is  not  necessary  for  the  signa- 
ture when  written  to  be  across  the  face  of  the  bill.  It  may 
be  written  at  the  bottom  of  the  bill  immediately  below  the 
drawer's  name,  or  it  may  be  ^vritten  above  and  parallel  to  it. 
Thomson  says:  "The  position  of  the  drawee's  subscription 
seems  immaterial,  provided  it  be  there,  for  it  may  be  written 
above  as  well  as  below  that  of  the  drawer;  and  as  it  has 
been  held,  that  an  indorsement  may  be  written  on  the  face 
of  the  bill,  an  acceptance  may,  as  is  sometimes  the  case,  be 
indorsed.^ 

A  letter  from  the  drawee  to  the  drawer,  the  latter  l)eing 
dead,  but  the  former  not  knowing  it,  has  been  held  an  accept- 
ance, on  the  ground  that  it  was  so  intended.^  The  death  of 
the  drawer  is  no  revocation  of  a  bill  if  it  has  been  delivered 
to  the  payee,  and  the  drawee  may  accept  and  pay  it.'^  "  The 
death  of  the  drawer,"  says  Parsons,  "is  no  objection  what- 
ever to  an  ordinary  acceptance  by  the  drawee,  whether  with 
vor  without  knowledge,  for  the  death  is  no  revocation  of  the 


theisixth  section  of  the  act  relating  to  bills  of  exchange  and  promissory  notes." 
Wood's  Digest,  72. 

"  We  think  it  clear  that  this  was  no  acceptance,  either  at  common  law  or 
under  the  statute.  Haines  may  have  owed  the  drawer,  Willse,  the  sum  of 
twenty-two  dollars  and  fifty  cents,  and  no  more.  If  so,  the  jDaymcnt  of  that 
amount,  and  the  indorsement  of  the  same  upon  the  paper,  would  not  imply  that 
he  accepted  and  would  pay  the  whole.  Tlie  receipt  is  evidence  that  Haines 
owed  only  that  sum  and  paid  it.  In  all  the  instances  cited  by  the  counsel  of 
plaintiff,  the.  writing  on  the  bill  related  to  the  entire  amount.  But  the  receipt 
only  relates  to  the  amount  paid,  and  implies  no  acceptance  of  the  order  for  the 
balance.  Besides  this^  the  receipt  is  not  signed  by  the  acceptor,  within  the 
meaning  of  the  statute." 

'  Cook  V.  Baldwin,  120  Mass.  317  (1876). 

=  Thomson  on  Bills,  220.  '  Billing  v.  Dc  Yaux,  3  Man.  &  G.  5G5. 

*  Cutts  V.  Perkins,  12  Mass.  20G;  Thomson  on  Bills,  216;  Story  on  Bills,  §250; 
1  Parsons  N.  &  B.  287 ;  Chitty  on  Bills  [*287],  325 ;  Hammond  v.  Barclay,  2  Enst, 
227,  acceptance  was  Ijcfore  drawee  had  notice  of  the  death  of  the  drawer. 


FORM  AND  VARIETIES  OF  ACCEPTANCE.  403 

bill  if  it  has  passed  into  the  hands  of  a  holder  for  value."  ^ 
This  view  seems  to  us  entirely  correct,  and  has  the  sanction 
of  authority.  ^  Upon  the  delivery  of  the  bill  to  the  payee,  tlie 
liability  of  the  drawer  becomes  complete,  if  the  holder  is 
guilty  of  no  laches,  and  it  results  that  the  drawer  has  a  right 
to  discharge  that  liability.^ 

§  499.  hniiUed  acceptance. — (2)  So  accejitance  may  be 
implied  from  the  conduct  of  the  drawee.  Any  conduct  of 
the  drawee  (no  statute  intervening)  from  which  the  holder 
is  justified  in  drawing  the  conclusion  that  the  drawee  in- 
tended to  accept  the  bill,  and  intended  to  be  so  understood, 
will  be  regarded  as  an  acceptance.*  Thus,  keeping  a  bill  a 
considerable  length  of  time  without  returning  an  answer, 
may,  under  some  circumstances,  be  considered  as  an  accept- 
ance, especially  if  the  drawee  be  informed  that  delay  will  be 
so  considered,  and  there  be  an  inference  from  the  language  of 
the  drawee  that  he  intended  an  acceptance.^ 

The  cases  have  been  decided  upon  special  circumstances, 
and,  as  a  general  rule,  the  mere  detention  for  an  unreasonable 
time  is  not  considered  as  amounting  to  an  acceptance.^ 

Thus,  where  a  bill  has  been  sent  to  the  drawee  by  mail 
for  acceptance,  with  the  view  of  waiting  for  funds  or  secu- 
rities to  be  forwarded  by  the  drawer,  and  is  retained  by  the 
drawee,  it  is  not  an  implied  acceptance,  for  the  retention  is 
consistent  with  the  rights  of  all  parties.'^  And  where  the 
holder  leaves  a  bill  for  acceptance,  it  is  his  duty  to  call  for 
it  within  a  reasonable  time,  so  as  to  ascertain  whether  it  has 


'  1  Parsons  N.  &  B.  287,  and  note  I.  See  Chapter  on  Checks,  §  1618  a; 
Story  on  Bills,  §  250. 

^  Cutts  V.  Perkins,  12  Mass.  206. 

'  Cutts  V.  Perkins,  12  Mass.  210-211  (1815). 

^  1  Pars.  N.  &  B.  287 ;  Byles  on  Bills  (SharswoocVs  ed.)  [*185]  315  ;  Billing  v. 
De  Vaux,  3  M.  &  G.  565. 

'  Chitty  on  Bills  [*295],  334 ;  Byles  on  Bills  (Sharswood's  ed.)  [*185],  315  ; 
Bayley  on  Bills,  193  ;  Harvey  v.  Martin,  1  Camp.  425  ;  see  Jcune  v.  Ward,  2  Stark. 
336,  note  ;  1  B.  &  Aid.  G53;  Edwards  on  Bills,  418. 

°  Mason  v.  Barff,  2  B.  &  Aid.  2G ;  Koch  v.  Howell,  6  Watts  &  S.  350. 

'  Mason  v.  Barff,  supra. 


404  ACCEPTAisCE  OF   BILLS  OE   EXCHANGE. 

been  accei^ted  or  not ;  and  if  lie  does  not  call  for  it  within  a 
reasonable  time,  there  would  be  no  ground  to  insist  that  its 
retention  was  an  implied  acceptance/ 

§  500.  Whether  the  destruction  of  the  hill  by  the  drawee 
will  amount  to  an  acceptance  has  been  a  Cjuestion  upon  wliicb 
learned  judges  have  diflered  in  opinion.  In  an  English  case 
where  the  drawee  refused  acceptance,  l)Ut  retained  and  sub- 
sequently destroyed  the  bill,  Lord  Ellenborough  though  it 
amounted  to  acceptance ;  but  Bayley,  Abbott  and  Ilolroyd, 
JJ.,  thought  otherwise,  and  it  was  so  determined.^  But  the 
court  seemed  to  be  of  the  opinion  that  if  there  had  not  been 
a  previous  refusal  to  accept,  the  destruction  of  the  bill  would 
have  been  an  implied  acceptance.^ 

The  drawer  in  such  cases  has  liis  lemedy  of  trover  for  the 
destruction  of  the  bill;^  and  it  is  singular,  as  is  well  ob- 
served by  Chitty,  tliat  it  should  ever  have  been  supposed 
that  the  toitious  act  of  destroying  a  l)ill,  whicli  is  calculated 
to  defeat  the  remedy  on  the  bill,  should  have  been  deemed 
evidence  of  a  contract  on  the  part  of  the  drawee  to  pay  the 
bill  to  the  holder.^  In  New  York  ])y  Eevised  Statutes  (Sec. 
11,  2d  ed.  p.  757)  it  is  provided  that  "every  person  upon 
whom  a  bill  of  exchange  is  drawn,  and  to  whom  the  same  is 
delivered  for  acceptance,  who  shall  destroy  such  l)i]l,  or  re- 
fuse within  twenty-four  hours  after  such  delivery,  or  within 
such  other  period  as  the  holder  may  allow,  to  return  the  bill, 
accepted  or  non-accepted,  to  the  holder,  shall  be  deemed  to 
have  accepted  the  same."  This  statute,  it  has  been  held,  ap- 
plies only  to  cases  in  which  the  acts  of  the  drawee  are  of  a 
tortious  character,  and  imply  an  unauthorized  conversion  by 
him,  and  not  to  cases  in  which  the  bill  is  willingly  left  in  his 
hands  by  the  holder,  and  no  demand  therefor  is  made.^ 

'  Jeune  v.  Ward,  2  Stark.  326 ;  1  B.  &  Aid.  654,  Bayley,  J. 

'  Jeune  v.  Ward,  1  B.  &  Aid.  653;  2  Stark.  326;  see  Edwards  on  Bills,  417. 

'  Jeuue  V.  Ward,  svpi-a,  Holroyd,  J. 

*  Story  on  Bills,  §248;  1  Parsons  N.  &  B.  285  ;  Johnson  on  Bills,  31. 
'  Chitty  on  Bills,  §  [*29G],  335;  Edwards  on  Bills,  418. 

•  Matteson  v.  Moiilton,  18  N.  Y.  S.  C.  (11  Hun),  268.    See  also  Gates  v.  Erie, 
11  N,  y.  S.  0.  (4  Huiij,  90. 


FORM  AND  VARIETIES  OF  ACCEPTANCE.  405 

§  501.  It  has  been  held  tliat  if  the  drawee  of  a  bill, 
drawn  and  indorsed  forliis  accommodation,  procure  the  same 
to  be  discounted,  and  promise  to  pay  it  at  maturity,  he  con- 
stitutes himself  an  acceptor;^  and  that  a  promise  to  pay  a 
bill  at  maturity  amounts  to  an  acceptance.^  Also,  that  au- 
thority "  to  draw  on  us  or  either  of  us,"  and  "  we  hereby 
jointly  and  severally  hold  ourselves  accountable  for  the  ac- 
ceptance and  payment  of  such  drafts,"  binds  the  signers 
jointly  and  severally  to  the  payment  of  acceptances  by  each 
other.^ 

§  502.  If  the  drawee  has  expressly  or  impliedly  promised 
the  intended  drawer  to  accept  the  bill,  to  be  drawn  upon 
him  for  a  valuable  consideration,  and  should  afterward  re- 
fuse to  perform  sucL  contract,  the  drawer  may  recover  I'e- 
exchange  and  damages  consequent  upon  its  dishonor.*  And 
where  the  drawee  has  funds  of  the  drawer,  very  slight  cir- 
cumstances will  support  the  presumption  of  a  contract  to 
accept.^ 

A  promise  to  notify  a  party  when  he  may  draw  a  bill 
amounts  to  an  undertaking  to  accept  the  bill  wlien  drawn  in 
pursuance  thereof® 

It  has  been  said  that  the  w^ords  "  I  will  not  accej^t  this 
bill,"  written  across  the  face  of  it,  amounts  to  acceptance,  but 
it  is  impossible  to  suppose  that  any  such  doctrine  is  main- 
tainable unless  it  could  be  shown  that  the  word  "  not"  was 
unintentionally  inserted."^  If  it  were  inserted  to  deceive  the 
holder,  it  has  been  suggested  that  the  drawee  might  be 
bound.®  "  I  protest  the  within,"  written  on  the  back  of  a 
draft  by  the  drawee,  has  been  considered  sufficient  evidence 
of  due  presentment  and  refusal.^ 

»  Bank  of  Rutland  v.  WoodruflF,  34  Vt.  89. 

'  Spaulding  v.  Andrews,  12  Wright,  411. 

'  Michigan  State  Bank  v.  Pecks,  2  Williams,  200. 

•  Chitty  on  Bills  (13  Am.  cd.)  [*281],  319;  Smith  v.  Brown,  2  Marsh.  41  ;  6 
Taunt.  440. 

'  Laing  v.  Barclay,  1  B.  &  C.  398;  2  Dow.  &  Ry.  530. 

•  Smith  V.  Brown,  2  Marsh.  41 ;  G  Taunt.  340. 
'  1  Parsons  N.  &  B.  283;  Roscoe  on  Bills,  178. 

•  Roscoe  on  Bills,  178.  °  Pridgen  v.  Cox,  13  Tex.  257. 


40G  ACCEPT.VNCE  OF  BILLS  OF   EXCHANGE. 

§  503.  There  is  no  doubt  that  an  acceptance  may  be 
upon  a  separate  paper,  as  in  a  letter,  for  instance,  as  well  as 
upon  tlie  bill  itseltV  Thus  a  written  promise  to  accept  an 
existing  bill,  or  "  that  it  shall  meet  with  due  honor  ; "  or  that 
the  drawee  "  will  accept  or  certainly  pay  it '' — or  any  other 
equivalent  language  has  been  held  to  amount  to  acceptance.' 
But  if  the  language  be  equivocal — if  it  be  merely  stated 
"  your  l)ill  shall  have  attention  " — it  is  insufficient.^  Prom- 
ises to  accept  are  hereafter  considered. 


SECTIOI^  lY. 

VERBAL    AND    WEITTEX     ACCEPTANCES. 

§  504.  Accej^tauce  is  usually  effected  by  the  drawer's 
writins:  his  name  across  the  face  of  the  bill.  And  it  seems 
that  the  holder  may  always  insist  on  such  an  acceptance  in 
writino^,  and  in  default  thereof  treat  the  bill  as  dishonored.* 
But  there  is  no  doubt  that  a  verbal  as  well  as  a  written 
acceptance  is,  by  the  law  merchant  binding  on  the  drawee.*^ 
In  England,  by  statute  19  and  20  Victoria,  c.  97,  §  6,  it  is 
provided  that  "  no  acceptance  of  a  bill  of  exchange,  inland 
or  foreign,  shall  be  sufficient  to  bind  or  charge  any  person, 
unless  the  same  'be  in  writing  on  such  bill,  signed  by  the 
acceptor  or  some  person  duly  authorized  by  him."  And 
it  has  been  held  that  the  word  "  accepted  "  written  across 

'  Billing  V.  De  Vaux,  3  Man.  &  G.  565;  Hatcher  v.  Stalworth,  35  Miss.  376; 
Fairlie  v.  Herring,  3  Biug.  R.  625;  Piersou  v.  Dunlap,  Cowp.  571;  Wynne  v. 
Raikes,  5  East,  514;  Grant  v.  Hunt,  1  Man.  Grang.  &  S.  44;  McEvers  v.  Mason, 
10  Johns.  207;  Greele  v.  Parker,  5  Wend.  414. 

»  Id.  '  Roes  V.  Warwick,  2  B.  &  Aid.  113. 

*  Chitty  on  Bills  (13  Am.  ed.)  [*287j,  326;  Edwards  on  Bills,  417. 

■^Lmnleyv.  Palmer,  2  Strange,  1000;  Chitty,  Jr..  275  (1735);  Sproat  v. 
Matthews,  1  T.  R.  182  (1786);  Grant  v.  Shaw,  16  Mass.  34;  Phelps  v.  Northrup, 
56  111.  156  ;  Sturges  v.  Fourth  National  Bank,  75  111.  595;  Miller  v.  Neihaus,  51 
Ind.  40],  case  of  an  order.  Scudder  v.  Union  K  B'k,  91  U.  S.  (1  Otto),  406; 
Pierce  v.  Kittredge,  115  Mass.  374;  Chitty  on  Bills  (13  Am.  ed.)  [*289],  327; 
Story  on  Bills,  §  242;  Edwards  on  Rills,  417,  422;  1  Parsons  N.  &  B.  285;  Byles 
(Sharswood's  ed.)  [*184J,  313;  Bayley,  eh.  vi,  sec.  1. 


VERBAL  AND   WRITTEN  ACCEPTANCES.  407 

the  face  of  the  bill,  but  unsigned,  did  not  satisfy  the  stat- 
ute.^ In  the  absence  of  statutory  provision,  any  words 
used  l)y  tlie  drawee  to  the  drawer  or  holder,  which  by  rea- 
sonable intendment  signify  that  he  honors  the  bill,  will 
amount  to  sucb  acceptance ;  thougli  it  would  be  different  if 
the  words  w^ere  addressed  to  a  stranger  having  no  interest 
in  the  bill.  Tlius,  where  a  foreign  bill  drawn  on  defend- 
ant was  protested  for  non-acceptance  and  returned,  and 
afterward  the  drawee  told  the  plaintiff,  "  If  the  bill  comes 
back  I  will  pay  it,"  was  held  an  acceptance.^  So,  if  tlie 
drawee  say,  "  Leave  your  bill  w4tli  me,  and  I  wdll  accept 
it."^  80,  where  the  holder  met  in  the  street  the  drawee 
of  the  bill  which  had  been  sent  to  his  counting-house, 
and  i-eturned  unaccepted,  and  the  drawee  said,  "  If  you 
will  send  it  to  the  counting-house  again,  I  wall  give  di- 
rections for  its  being  accepted,"  Lord  Ellenborough  held 
that  if  the  bill  had  been  sent  accordingly,  it  would  ope- 
rate as  an  acceptance,  but  otherwise  not,  the  words  being 
conditional.'*  So  where  the  drawees  requested  that  funds 
should  be  placed  in  their  hands  to  meet  a  certain  bill, 
and  after  the  bill  w^as  left  at  their  house  and  was  not 
cepted,  one  of  them,  on  being  complained  to,  said  :  "  What ! 
not  accepted !  we  have  had  the  money ;  they  ought  to  be 
paid,  but  I  do  not  interfere  in  this  business ;  you  should  see 
Mr.  P.,"  Best,  C.  J.,  said :  We  are  all  of  opinion  that  there 
has  been  a  good  acceptance  of  the  bilL"  ^ 

§  505.  Where  the  drawee,  on  hearing  a  bill  read,  says  it 
is  coi-rect,  and  shall  be  paid,  it  is  an  acceptance.*'  So  wdiere 
a  bill  is  drawn  on  the  faith  of  a  consignment  of  goods,  and 
the  drawee  refused  to  accept  before  the  bill  of  lading  and 
invoices  came  to  hand,  but  after  their  arrival  called  on  the 
holder's  agent,  and  said  that  if  he  would  get  the  bill  back  he 


'  Hindhaugh  v.  Blakey,  1  C.  P.  Div.  136. 

'  Cox  V.  Coleman,  Chitty,  Jr.  on  Bills,  274  (1733). 

=  Chitty,  Jr.  12;  Bayley  on  Bills,  cli.  vi,  sec.  1. 

*  Anderson  v.  Hick,  3  Camp.  17s)  (1812). 

'  Fairlie  v.  Herring,  11  Moore,  320;  3  Bing.  525,  S.  C.  (1820). 

'  AVard  v.  Allen,  2  Mete.  53. 


408  ACCEPTAlfCE  OF  BILLS  OF  EXCHAKGE. 

would  accept  and  pay  it,  and  the  bill  was  accordingly  re- 
turned, it  was  held  as  an  acceptance.^  So  if  the  drawee  of  a 
bill  at  sight  promise  to  pay  it  on  a  subsequent  day  named,  it 
is  an  acceptance.^  The  w^ords,  "  will  pay  A.  Harper  draft 
$2,300  for  stock,"  by  telegram,  have  been  held  an  uncondi- 
tional acceptance.'' 

§  506.  The  words  used  must  evince  a  clear  intention  on 
the  part  of  the  drawee  to  bind  himself  to  the  payment  of 
the  bill  at  all  events,  in  order  to  amount  to  an  acceptance, 
and  equivocal  language  will  not  suffice.  Therefore,  where 
the  drawee  said,  on  the  day  after  presentment  for  accceptance, 
wdien  the  plaintiif's  clerk  called  for  the  bill,  "  there  is  your 
bill,  it  is  all  right,"  it  was  held  no  acceptance.*  So,  saying, 
when  a  bill  is  presented  for  payment,  that  "  it  will  be  paid," 
if  said  with  reference  to  immediate  payment,  will  not  amount 
to  an  acceptance,  if  the  holder  decline  immediate  payment 
on  the  terms  proposed,  because  he  makes  an  ulterior  de- 
mand.^ So,  saying,  "  The  bill  shall  have  attention,"  *  or, 
"  I  will  pay  it,  but  I  cannot  now.  I'll  give  you  a  bill  at 
three  months,"  ^  will  not  suffice.  So  it  has  been  held  that  if 
the  drawee  of  a  bill  say  he  cannot  accept  it  without  further 
direction  from  A.  B.,  and  A.  B.  afterward  desire  him  to  ac- 
cept and  draw  upon  C.  D.  for  the  amount,  the  mere  drawing 
a  bill  upon  C.  D.  will  not  amount  to  an  absolute  acceptance, 
nor  can  become  such  before  the  bill  upon  C.  D.  is  accepted.^ 
§  507.  In  order  to  amount  to  an  acceptance,  the  words 
used  must  be  addressed  to  the  drawer  or  holder,  or  their 
agent,  or  to  some  one  who  takes  the  bill  on  the  faith  and 
credit  imparted  by  them ;  and  if  the  drawee  say  to  a  mere 
stranger,  "  I  must  accept  and  pay  the  bill,"  or,  ''  I  shall  have 


•  Grant  v.  Shaw,  16  Mass.  341. 

''  Clarke  v.  Gordon,  3  Rich.  (S.  C.)  311.   But  see  Peck  v.  Cochniu,  7  Pick.  35. 
'  Coffman  v.  Campbell  (S.  C.  111.)  Cent.  L.  J.  July  12,  1878,  p.  26. 

•  Powell  V.  Jones,  1  Esp.  17  (1763),  per  Lord  Kenyon. 
"  Anderson  v.  Heath,  4  Maulc  &  Scl.  308  (1815). 

•  Bees  V.  Warwick,  2  Barn.  &  Aid.  113  (1818). 

'  Reynolds  v.  Peto,  11  Exch.  410,  s.  c.  33  Eng.  L.  &  Eq.  481. 
»  Smith  V.  Nissen,  1  T.  R.  269. 


ABSOLUTE,  CONDITIONAL  AND  QUALIFIED  ACCEl'TANCE.    -109 

to  accept  or  pay  it,"  it  is  no  acceptance.^  For,  as  acceptance 
is  a  contract,  it  must  be  assented  to  by  both  parties,  and  a 
mere  stranger  has  no  privity  with  the  drawee.  And  espe- 
cially must  a  verbal  acceptance  be  assented  to  by  the  holder, 
since  in  all  cases  he  has  a  right  to  insist  on  an  acceptance  in 
writing  on  the  bill  itself,  in  order  to  avoid  mistakes  and  pre- 
vent difficulties  which  may  arise  from  mere  parol  proof 
thereof.^ 


SECTION  Y. 

ABSOLUTE,    CONDITIONAL    AND    QUALIFIED    ACCEPTANCE. 

§  508.  It  is  the  right  of  the  holder  of  the  bill  to  require 
an  absolute  and  unconditional  acceptance — that  is,  an  accept- 
ance in  conformity  with  the  tenor  of  the  bill — and  may  cause 
it  to  be  protested  unless  it  be  so  accepted.^  The  holder  may, 
however,  at  his  risk,  take  a  conditional  or  qualified  accept- 
ance, and  in  such  cases  the  acceptor  will,  if  the  condition  be 
complied    with,   or    the    qualification    admitted,  be    bound 

'  Martin  v.  Bacon,  2  South  Car.  132;  Bayley  on  Bills,  ch.  vi,  sec.  i,  109;  Ed- 
wards on  Bills,  416;  1  Parsons  N.  &  B.  28G. 

"  Story  on  Bills,  §§  242,  247;  Edwards  on  Bills,  417. 

'  In  Boehm  v.  Garcias,  1  Camp.  425,  the  bill  was  drawn  on  Lisbon,  -'payable 
in  effective  and  not  in  val  reals."  The  drawee  offered  to  accept  it  payable  in 
val  denaros,  another  sort  of  currency.  Lord  EUenborough,  in  suit  brought  by 
the  holder  against  the  drawee,  said:  "  The  plaintiff  had  a  right  to  refuse  this  ac- 
ceptance; the  drawee  of  aj)ill  has  no  right  to  vary  the  acceptance  from  the 
terms  of  the  bill,  unless  they  be  unambiguously  and  unequivocally  the  same. 
Therefore,  without  considering  whether  a  payment  in  denaros  might  have  satis- 
fied the  term  effective,  an  acceptance  in  denaros  was  not  a  sufiicient  acceptance 
of  a  bill  drawn  payable  in  effective.  The  drawee  ought  to  have  accepted  gener- 
ally, and  an  action  being  brought  against  them  on  the  general  acceptance,  the 
question  would  probably  have  arisen  as  to  the  meaning  of  the  term."  Parker  v. 
Gordon,  7  East,  385;  Gammon  v.  SchmoU,  5  Taunt.  344;  Thomson  on  Bills,  219; 
Beawes,  No.  265;  Story  on  Bills,  §  272;  Chitty  (13  Am.  ed.)  [*287-8],  326.  In 
Louisiana,  it  has  been  held  that  a  dated  acceptance  to  pay  on  a  specified  day, 
which  is,  in  fact,  the  last  day  of  grace,  is  according  to  the  tenor  of  the  bill. 
Kenner  v.  Creditors,  19  Martin,  5i0.  See  as  to  conditional  acceptance  by  letter. 
Shaver  v.  Western  Union  Tel.  Co.  57  N.  Y.  459. 


410  ACCEPTANCE   OF  BILLS   OF   EXCHANGE. 

thereby ;  and  the  holder  will  likewise  be  bound  by 
it/  The  burden  of  proof  is  on  the  plaintift'  to  show  per- 
formance of  the  condition ;  ^  and  although  absolute  then  it 
should  1)0  set  out  as  conditional,  with  an  averment  of  per- 
formance.^ 

§  509.  Acceptances  "  to  pay  as  remitted  for  ;  *'  '^  "  to  pay 
when  in  cash  for  the  cargo  of  the  ship  Thetis  ; "  ^  "  to  pay 
when  goods  consigned  to  me  are  sold;""  "to  pay  when  a 
cargo  of  equal  value  is  consigned  to  me ;  "  '^  "  payable  when 
house  is  ready  for  occupancy,"  ^  are  examples  of  conditional 
acceptances.  So,  where  on  presentment  of  bills  for  accept- 
ance the  drawee  said  he  would  have  accepted  them  if  he  had 
had  certain  funds  which  he  had  not  been  able  to  obtain  from 
France,  but  that  when  he  did  obtain  them  he  would  pay  the 
bill,  it  was  held  a  conditional  acceptance.^  And  it  has  been 
held  that  the  words  "  accepted  payable  on  giving  up  a  bill  of 
lading  "  constituted  a  conditional  acceptance,  but  not  a  further 
condition  to  the  acceptor's  liability  that  the  bill  of  lading 
should  be  given  up  at  the  day  of  maturity  of  the  bill.^'^  If 
drawee,  on  presentment,  projooses  to  pay  in  fifteen  days,  it  is 
an  acceptance  to  pay  at  that  time,  if  communicated  to  the 
holder."  If  a  drawee  accept  a  bill  in  regular  form,  but  upon 
an  agreement  with  the  drawer,  that  he  should  not  negotiate 
it  before  complying  with  certain  conditions,  and  the  drawer 
proceed  to  negotiate  it  without  performance  of  those  condi- 
tions, the  acceptor  would  be  bound  to  a  bona  fide  holder 

'  Smith  V.  Abbott,  2  Str.  1153;  Julian  v.  Shorbrook,  3  Wills,  9;  Mitchell  v. 
Barring,  10  B.  &  C.  4;  Ford  v.  Angolrodt,  37  Mo.  50;  Wintersmith  v.  Post,  4 
Zab.  420;  Crowcll  v.  Plant.  53  Mo.  145. 

""  Read  v.  Wilkinson,  2  Wash.  C.  C.  514;  Gammon  v.  Sclimoll,  5  Taunt.  344; 
Mason  v.  Hunt,  1  Doug.  207;  Xagle  v.  Horner,  8  Cal.  358;  Liggett  v.  Weed,  7 
Kan.  273. 

'  Langston  v.  Corry,  4  Camp.  170.  '  Banbury  v.  Lissett,  2  Stra.  1211. 

"  Julian  V.  Shorbrook,  2  Wills,  9.  "  Smitli  v.  Abbott,  2  Stra.  1152. 

'  Mason  v.  Hunt,  2  Doug.  297.  "  Cook  v.  Wolfeudalc.  105  Mass.  401. 

"  Byles  on  Bills  [«187].  317;  Mendizabal,  v.  Machado,  G  C.  &  P.  218;  25  E.G. 
L.  R.  ;  3  M.  &  Scott,  841. 

"  Bylcs  on  Bills  [*187],  317;  Smith  v.  Vortuc,  30  L.  J.  C.  P.  5G  ;  9  C.  B.  N. 
S.  214  (99  E.  C.  L.R). 

"  Wylie  V.  Bryce,  70  N.  C.  425. 


ABSOLUTE,  CONDITIONAL  AND  QUALIFIED  ACCEPTANCE.   411 

without  notice.^  Where  the  drawer  declines  to  accept  uncon- 
ditionally, but  receives  and  keeps  the  bill  on  a  promise  to 
"  try  and  save  the  amount  for  the  liolder,"  it  does  not  amount 
to  an  obligatory  acceptance.^ 

§  510.  On  the  offer  of  a  conditional  or  varying  accept- 
ance, if  the  holder  resolve  to  reject  it  altogether,  he  may  pro- 
test generally,  or  give  general  notice  of  non-acceptance ;  but 
if  he  is  willing  to  accept  the  offer,  he  should  then  give  notice 
of  its  exact  terms  to  all  the  parties,  and  state  his  readiness  to 
accept  the  offer  if  they  will  respectively  consent.^  A  general 
or  unqnalified  protest  or  notice  of  non-acceptance  would,  in 
such  a  case,  evince  that  the  holder  did  not  acquiesce  in  the 
offer,  and  preclude  him  from  afterward  availing  himself  of 
it ;  '*  but  not  if  he  was  not  aware  of  the  acceptance  when  he 
caused  the  bill  to  be  noted  or  protested  for  non-acceptance.^ 

§  511.  The  rule  above  stated  is  in  respect  to  the  indorsers 
of  a  bill  of  absolute  and  invariable  application.*'  But  in  re- 
spect to  the  drawer,  it  is  subject  to  qualification.  The  drawer 
warrants  that  the  drawee  is  in  funds,  and  that  he  will  accept 
and  pay  the  bill.  And  he  is  bound  to  know  whether  or  not 
the  drawee  is  in  funds.  Therefore,  when  he  draws  without 
having  the  right  to  do  so,  he  is  not  entitled  to  notice  of  dis- 
honor. And  upon  the  same  principle  it  is  thought  that  he 
cannot  be  injured,  and  will  not  be  discharged  by  the  holder's 
taking  a  qualified  acceptance  payable  at  a  future  day."^  True, 
such  an  acceptance  is  a  departure  from  the  tenor  of  the  bill; 
but  the  drawer,  having  improperly  drawn  the  bill,  cannot 
complain  of  the  holder  for  taking  those  steps  which  seem  es- 
sential to  prevent  its  entire  dishonor,  and  to  secure  its  pay- 
ment.^ 

Bayley  says  that  "  a  neglect  to  give  notice  where  there  is 


'  Merritt  v.  Duncan,  7  Heiakell  (Teun.)  156. 

^  McEowen  v.  Scott,  49  Vt.  376. 

=  Cliitty's  language  [*301],  340.  *  Sproat  v.  Matliews,  1  T.  R.  183. 

'  Fairlie  v.  Herring,  3  Bing.  G25;  11  Moore,  530. 

•  Edwards  on  Bills,  428,  430. 

'  Walker  v.  Bank  of  tlie  State,  13  Barb.  636;  Edwards  on  Bi  Is,  439. 

*  Edwards  on  Bills,  429. 


412  ACCEPTANCE  OF  BILLS  OF  EXCHANGE. 

a  conditional  acceptance,  is  done  away  with  by  tlie  comple- 
tion of  those  conditions  before  the  bill  becomes  payable ;  and 
a  neglect,  where  tliere  is  an  acceptance  as  to  part,  and  a  re- 
fusal as  to  the  residue  only,  discharges  the  persons  entitled  to 
notice  as  to  the  residue  only."  ^  But  he  cites  no  authority 
for  this  doctrine.  It  seems  obviously  illogical,  and  has  been 
justly  criticised  and  dissented  from.^ 

§  512.  Where  a  bill  was  drawn  by  a  contractor  on  the 
postmaster  general,  and  having  been  "  accepted  on  condition 
that  the  drawer's  contracts  be  complied  with,"  was  discounted 
by  the  defendants,  it  was  held  that  such  forfeitures  as  had 
occurred  previous  to  such  accej^tance  were  not  within  the 
condition.^  ''  I  will  see  the  within  paid  eventually,"  written 
on  the  back  of  a  draft,  was  held  a  promise  to  pay  in  a  reason- 
able time.* 

§  513.  Acceptances  to  jpay  ^^  ivhen  in  funds.'''' — An  accept- 
ance to  pay  "  when  in  funds,"  renders  the  drawee  liable  only 
when  he  has  funds;  ^  though  it  has  been  held  that  this  im- 
plied when  the  drawee  has  funds  which  the  drawer  has  a 
present  right  to  demand  and  receive,  and  that  it  did  not 
apply  to  wages  for  daily  labor  earned  after  acceptance,  and 
needed  for  the  daily  subsistence  of  the  laborer.^  "  When  in 
funds "  means  "  when  in  cash,"  and  available  securities  will 
not  answer  this  condition  until  actually  converted  into 
money.''^  If  the  funds  are  not  received  in  the  acceptor's  life- 
time, but  are  collected  by  the  administrator,  the  latter  is 
liable  as  representative  of  the  deceased ;  ^  but  the  condition  of 
the  word  "  administrator  "  to  an  acceptance  does  not  make 
it  a  conditional  one,  nor  qualify  his  liability.^ 

Where  the  acceptance  is  to  pay  out  of  the  first  money  re- 

>  Bayley  on  Bills,  ch.  7,  §  2.  '  Story  on  Bills,  §  273,  note  1. 

»  United  States  v.  Bank  of  the  Metropolis,  15  Pet.  377. 

*  Brannin  v.  Henderson,  12  B.  Monroe,  62. 

*  Marshall  v.  Clarj^  44  Ga:  513.  "  Wintermute  v.  Post,  4  Zabr.  420. 
'  Campbell  v.  Pettcngill,  7  Greenl.  126. 

«  Swansey  v.  Breck,  10  Ala.  533;  Gallery  v.  Prindle,  14  Harb.  IS''.;  Owen  v. 
Iglanor,  4  Cold.  15. 

»  Tassey  v.  Church,  4  Watts  &  S.  346. 


ABSOLUTE,  CONDITIONAL  AND  QUALIFIED  ACCEPTANCE.   413 

ceived,  the  acceptor  is  bound  to  pay  from  time  to  time,  ou 
reasonable  request,  such  funds  as  he  receives  from  the 
drawer ;  and  a  judgment  for  a  certain  sum  which  he  re- 
ceived is  no  bar  to  another  action  for  a  sum  subsequently 
received.^  An  acceptance  in  the  words  "accepted  for  the  full 
amount,  provided  there  is  this  amount  in  my  liands,"  is  an 
absolute  undertaking  to  pay  all  the  money  of  the  drawer  in 
the  drawee's  hands,  not  exceeding  the  amount  of  the  draft.^ 
An  acceptance  to  pay  "if  on  settlement  there  is  anything 
over"  becomes  on  settlement  an  acceptance  for  what  balance 
may  be  due  if  the  condition  be  assented  to  by  the  holder.'^ 

If  the  holder  receive  an  acceptance  to  be  paid  "  when  in 
funds,"  he  cannot  resort  to  the  drawer  until  the  acceptor  re- 
fuses to  pay  after  he  is  in  funds ;  *  and  the  conditional  ac- 
ceptor will  not  be  liable  if  the  funds  are  intercepted,  or  com- 
pliance with  the  condition  is  prevented,  by  operation  of  law.^ 

Where  the  drawee,  upon  presentment  of  a  bill  or  order, 
says,  "  I  must  defer  payment  until  in  receipt  of  funds,"  the 
language  implies  that  he  accepts  to  pay  when  in  funds,  and 
the  implication  is  the  stronger  when  he  receives  and  detains 
the  instrument.^ 

§  514.  In  a  suit  to  recover  on  such  an  acceptance,  the 
burden  of  proof  is  ou  the  plaintiff  to  show  that  the  accejDtor 
is  in  funds ;  ^  and  where  a  factor  so  accepted  an  order  of  a 
planter,  it  was  held  that  he  was  only  bound  to  pay  out  of 
the  first  funds  coming  to  his  hands,  after  deducting  advances.^ 
Evidence  is  admissible  to  explain  a  conditional  acceptance 
when  its  full  meaning  does  not  appear.  Thus,  an  acceptance 
payable  "  when  the  lumbei*  is  run  to  market,"  is  conditional, 
and  the  circumstances  requii-e  explanation.     What  lumber? 

*  Perry  v.  Harrington,  3  Mete.  368. 

*  Ray  V.  Faulkner,  73  HI.  469. 

'  Stevens  v.  Androscoggin  Water  Power  Co.  62  Me.  498. 

4  Andrews  v.  Baggs,  Minor,  173;  Campbell  v.  Pettengill,  7  Greenl.  126;  Knox 
V.  Reeside,  1  Miles,  294;  Gallery  v.  Prindle,  14  Barb.  18G. 

°  Browne  v.  Coit,  1  McCord,  408.  "  Pope  v.  Hutli,  14  Cal.  407. 

'  Owen  V.  Lavine,  14  Ark.  389;  Andrews  v.  Baggs,  Minor,  173;  Knox  v. 
Reeside,  1  Miles,  294;  Atkinson  v.  Manks,  1  Cow.  691. 

°  Hunter  v.  Ingraham,  1  Strob.  271;  Owen  v.  Iglanor,  4  Cold.  15. 


414  ACCEPTANCE  OF  BILLS  OF  EXCHANGE. 

What  market?     By  whom,  and  when  to  be  run  to  market? 
All  these  are  proper  inquiries  to  be  made.^ 

§  515.  As  to  qualified  acceptances. — As  an  acceptance 
may  vary  from  the  tenor  of  the  order  l>y  introducing  a  con- 
dition, so  it  may  vary  from  it  as  to  the  sum,  time,  place  or 
mode  of  payment.^  Such  an  acceptance  is  generally  called  a 
qualified  acceptance,  and  the  same  principles  govern  it  as 
govern  a  conditional  acceptance. 

By  receiving  such  qualified  acceptance  the  holder  dis- 
charges all  antecedent  parties,  unless  he  obtains  their  consent.^ 
Thus,  if  the  bill  be  addressed  to  the  drawees  at  their  place  of 
residence,  and  it  is  accepted,  payable  at  a  different  town,  it 
is  a  material  variation  if  the  holder  receives  it,  and  does  not 
protest  for  non-acceptance ;  *  but  a  bill  addressed  generally 
to  the  drawee,  in  a  city,  may  be  accepted,  payable  at  a  par- 
ticular bank  in  the  city.^ 

§  516.  A  bill  drawn  payable  at  a  certain  time  may  be 
accejoted  on  condition  of  being  renewed  to  a  certain  other 
time,  and  it  will  be  properly  declared  on  as  payable  at  the 
time  named  in  the  acceptance.®  If  accepted  as  to  part  of 
the  amount  drawn  for,  it  is  a  good  acceptance  as  to  such 
j)art ;  "^  and  if  accepted  payable  partly  in  money  and  partly 
in  bills,  it  is  a  good  acceptance  as  to  the  part  payable  in 
money.^  The  holder  may  take  a  partial  acceptance,  but  he 
will  discharge  the  drawer  and  indorsers  unless  he  protests 
as  to  the  residue.^ 

§  5lY.  If  any  conditions  are  annexed  to  a  written  accept- 

'  Lamon  v.  French,  25  Wis.  37. 

=■  See  Bylcs  on  Bills  [^''•ISaj,  316;  Chitty  on  Bills  [*203],  342. 
'  Byles  on  Bills  [*186],  316;  Cliitty  on  Bills  [*300],  339;  Story,  §  204;  Sebag 
V.  Abithol,  4  M.  &  Sel.  462. 

*  Niagara  Bank  v.  Fairraan  Co.  31  Barb.  403. 

'  Troy  City  Bank  v.  Lauman,  19  N.  Y.  477;  Meyers  v.  Standart,  11  Ohio,  N. 
S.  29;  Niagara  Bank  v.  Fairman  Co.  31  Barb.  403. 

«  Russell  V.  Phillips,  14  Q.  B.  891;  Clarke  v.  Gordon,  3  Rich.  311. 

7  WeggerslofFe  v.  Kerne,  1   Stra.  214 ;  Thomson  on  Bills  (Wilson's  ed.)  225. 

«  Petit  V.  Benson,  Coml).  452;  1  Pars.  N.  &  B.  312. 

•  Marius,  68,  86 ;  Thomson  on  Bills,  226. 


ABSOLUTE,  CONDITIONAL  AND  QUALIFIED  ACCEPTANCE.    415 

ance,  they  should  appear  on  its  face.  It  has  been  laid  down 
that  acceptance  may  be  rendered  conditional  by  another  con- 
temporaneous writing,^  but  sucb  condition  could  have  no  ef- 
fect against  a  bona  fide  holder  ignorant  of  it.^  The  terms  of 
an  acceptance  in  writing  cannot  be  varied  by  any  contem- 
poraneous parol  agreement,  as  that  is  against  the  first  prin- 
ciples of  the  law  of  evidence.^ 

Sometimes  the  words  which  make  the  acceptance  condi- 
tional are  in  the  bill  or  order  itself,  as  where  the  order  ran, 
"  Please  pay,  cfec,  out  of  tbe  amount  to  be  advanced  to  me, 
when  the  houses  I  am  now  erecting  on  your  land  are  so  far 
completed  as  to  have  the  plastering  done,  according  to  our 
contract,"  and  in  such  case  if  tlie  work  were  never  done,  the 
condition  upon  wdiicli  the  defendant  would  be  bound  w^ould 
not  be  complied  with.*  And  it  matters  not  that  the  contract 
was  canceled  by  agreement  witli  the  acceptor,  provided 
there  was  no  fraud.  The  acceptance  of  an  order  payable  "  If 
in  funds,"  is  regarded  as  an  admission  that  the  acceptor  has 
funds  to  meet  it,  and  he  cannot  afterward  allege  w^ant  of 
consideration  against  the  holder.^ 

§  518.  Where  a  verbal  acceptance  is  competent,  a  condi- 
tion annexed  to  a  verbal  acceptance  may  be  shown,  because 
it  does  not  vary  or  contradict  the  contract,  but  shows  what 
the  contract  was.^  But  the  acceptor  having  once  accepted 
absolutely,  cannot  by  subsequent  declarations  annex  a  con- 
dition to  his  liability.' 

§  519.  Acceptances  payaUe  at  a  particiilar  place. — Before 
the  statute  1  <fe  2  Geo.  IV,  c.  78,  was  enacted  it  was  a  point 
much  disputed  whether  a  bill  or  note  drawn  or  made  paya- 

'  Bowerbank  v.  Monteiro,  4  Taunt.  884. 

'  U.  S.  V.  Bank  of  Metropolis,  15  Pet.  377;  Montague  v.  Perkins,  23  E.  L.  & 
Eq.  516;  Story,  §  240;  Edwards,  424;  Thomson,  223. 

'  Adams  v.  Wordley,  1  M.  «fc  W.  347;  Besant  y.  Cross,  10  C.  B.  896  (70  E. 
C.  L.  R.)  ;  Hoare  v.  Graham,  3  Camp.  57;  Haverin  v.  Dounell,  7  Smed.  &  M. 
244  ;  Goodwin  v.  McCoy,  13  Ala.  271. 

^  Ncwhall  V.  Clark,  3  Cush.  376.     See  Crowell  v.  Plant,  53  Mo.  145. 

'  Kemble  v.  Lull,  3  McLean,  272  ;  Edwards  on  Bills,  420. 

°  Edwards  on  Bills,  426.  '  Wells  v.  Brigham,  G  Cush.  6. 


41G  ACCEPTANCE  OF  BILLS  OF  EXCHANGE. 

ble  at  a  particular  place — or  a  bill  accepted  payable  at  a 
particular  place — should  be  necessarily  presented   at   such 
place  in  order  to  charge  the  acceptor,  maker  or  other  par- 
ties.    Finally  it  \Yas  decided  in  the  House  of  Lords  that  an 
acceptance  payable  at  a  particular  place  was  a  qualified  ac- 
ceptance, rendering  it  necessary,  in  an  action  against  the  ac- 
ceptor, to  aver  and  prove  presentment  at  such  place.^     This 
led  to  the  passage  of  the  statute  1  &  2  Geo.  IV,  above  re- 
ferred to,  called  Sergeant  Onslow's  act,  which  provided  that 
an  acceptance  payable  at  a  particular  place  should  be  deemed 
a  general  acceptance,  unless  expressed  to  be  payable  there 
"  only,  and  not  otherwise  or  elsewhere."     Since  that  statute,  a 
bill  may,  in  England,  be  accepted  in  three  different  forms 
when  it  is  drawn  generally  on  a  party — that  is  :  "  First,  it 
may  be  accepted  simply  without  more.      Secondly,  it  may 
be  accepted  payable  at  a  particular  banker's,  which  will  be 
the  same  in  effect  as  against  the  acceptor;  or  thirdly,  it  may 
be  accepted  payable  at  a  particular  banker's  "  only,  and  not 
otherwise  or  elsewhere."    In  this  latter  case,  it  will  be  deemed 
a  qualified  acceptance ;  and  presentment  at  the  banker's  will 
be  a  condition  precedent  to  the  right  of  the  holder  to  main- 
tain an  action  against  the  acceptor  thereon.^ 

'  Rowe  V.  Young,  2  Brod.  &.  Bing.  1C5;  2  Bligh,  391,  s.  c.  overruling  the 
opinion  of  eight  of  the  twelve  judges  who  were  consulted. 

"-  Ilalstead  v.  Skelton,  5  Ad.  &  El.  86. 

In  1  Parsons  N.  &  B.  309,  310,  311,  it  is  said:  "If  a  bill  were  accepted 
'  payable  only  at  such  a  place,'  it  would  be  so  entirely  conditional  under  the 
English  statutes,  that  if  not  demanded  there,  the  acceptor  would  not  be  liable 
at  all.  We  think  this  should  be  the  rule  in  the  United  States,  on  the  ground 
that  such  words  are  equivalent  to  '  accepted,  provided  that,'  or  '  on  condition 
that; '  but  it  is  not  certain  that  a  bill  accepted  with  the  word  '  only,'  or  possibly 
with  express  words  of  condition,  might  not  be  held  by  some  courts  as  binding 
the  acceptor  to  the  amount  of  the  bill,  but  discharging  him  from  interest  and 
costs,  if  he  had  funds  at  the  proper  place  at  the  maturity  of  the  bill,  by  which 
it  would  then  and  there  have  been  paid.  The  principle  upon  which  any  such 
decision  must  be  founded  is,  that  the  having  the  funds  there  for  that  purpose 
operates  as  a  tender  of  them.  The  cases  which  we  have  been  considering,  are, 
as  our  notes  show,  in  a  curious  state  of  conflict,  confusion  and  uncertainty.  A 
great  number  of  fine  subtile  distinctions  have  been  made  on  a  comparatively  nar- 
row point,  and  it  seems  as  if  ingenuity  and  acuteness  had  been  exerted  to  make 
refinements  in  an  important  commercial  question,  instead  of  an  endeavor  to  carry 


ABSOLUTE,  CONDITIONAL  AND  QUALIFIED  ACCEPTANCE.    417 

In  an  action  airainst  the  drawer,  or  an  iudorser,  if  the  bill 
be  accepted  and  payable  at  a  particular  place  named  by  the 
acceptor,  it  is  still  necessary  to  prove  presentment  there.^ 
And  so  if  the  bill  be  drawn  payable  at  a  particular  place, 
presentment  must  be  made  there  in  order  to  charge  the 
drawer  or  indorser."^  The  statute  1  <fe  2  Geo.  IV,  does  not 
extend  to  promissory  notes,  and,  therefore,  if  a  note  be  made 
expressly  payable  at  a  particular  place,  it  is  necessary,  in 
England,  to  present  it  there  for  payment  in  order  to  charge 
the  maker. ^ 

§  520.  In  the  United  States  a  different  view  from  that 
expressed  by  the  House  of  Lords  has  prevailed ;  and  accord- 
ing to  the  ruling  of  the  Supreme  Court,  and  of  the  great 
current  of  decisions  of  the  State  courts  of  last  resort,  the 
effect  and  construction  of  an  acceptance  would  accord  with 
the  act  of  1  <fe  2  Geo.  IV — that  is,  the  acceptance  will  be  re- 
garded as  general  in  all  cases,  save  when  the  bill  is  drawn, 
or  the  acceptance  expresses  that  it  is  payable  at  a  particular 
banker's  "  only,  and  not  otherwise  or  elsewhere."  *  This 
subject  will  be  more  fully  discussed  when  we  come  to  con- 
sider the  principles  governing  "  presentment  for  payment." 


out  the  real  and  honest  intentions  of  the  contracting  parties,  and  to  produce 
uniformity  in  the  law  precisely  there  where  uniformity  is  eminently  desirable." 

'  Gibb  V.  Mather,  8  Bing.  214  (21  E.  C.  L.  R.) ;  1  M.  &  S.  3S7;  2  C.  &  J.  254, 
S.  C. ;  Saul  v.  Jones,  28  L.  J.  Q.  B.  i37 ;  1  E.  &  E.  59  (102  E.  C.  L.  R.)  S.  C. 
Tindal,  C.  J.,  saying:  "In  cases  between  the  indorsee  and  the  drawee,  upon 
a  special  acceptance  by  the  drawee,  no  doubt  appears  to  have  existed,  but 
that  a  presentment  at  the  place  specially  designated  in  the  acceptance  was 
necessary  in  order  to  make  the  drawer  liable  upon  the  dishonor  of  the  bill  by 
the  acceptor."  "  It  appears  to  us  that  tlie  statute  neither  intended  to  alter,  nor 
has  it  in  any  manner  altered,  the  lialnlity  of  drawers  of  bills  of  exchange;  but 
that  it  is  confined  in  its  operation  to  the  case  of  acceptors  alone.'' 

==  Boydell  v.  Harkness,  3  C.  B.  168  (54  E.  C.  L.  R.) 

'  Sanderson  v.  Bowes,  14  East,  500;  Byles  on  Bills  (Sharswood's  ed.)  [*208]. 
844-5. 

*  Wallace  v.   McConnell,   13  Peters,  136.     Numerous  cases  are  cited  in  the 
chapter  on  Presentment  for  Payment.     Forms  of  declarations,  and  an  excellent 
treatise  on  this  subject,  may  be  found  in  4th  Rob.  Prac.  (new  ed.),  450^54. 
Vol.  I.— 27 


418  ACCEPTANCE  OF   BILLS  OF   EXCHANGE. 

SECTION  VI. 

ACCEPTANCE    FOR    HONOR,    OR    6UPRA    TROTKBT. 

§  521.  There  is  a  peculiar  kind  of  acceptance  called  ac- 
ceptance for  honor,  or  supra  protest.  This  most  frequently 
happens  Avhen  the  original  drawee  (and  the  drawee  au  besoin, 
if  any)  refuses  to  accept  the  bill,  in  which  case  a  stranger  may 
accept  the  bill  for  the  honor  of  some  one  of  the  parties 
thei'eto,  which  acceptance  will  inure  to  the  benefit  of  all  the 
parties  subsequent  to  him  for  whose  honor  it  was  accepted.^ 

§  522.  As  to  the  circumstances  under  which  there  may  he 
such  an  acceptance, — it  is  only  allow^able  when  acceptance  by 
the  drawee  has  been  refused,  and  when  the  bill  has  been  pro- 
tested, and  hence  it  is  called  acceptance  supra  protest? 

The  reason  assigned  for  this  is  that  the  drawers  and  in- 
dorsers  have  a  i-ight  to  say  that  the  bill  was  not  primarily 
drawn  on  the  acceptor  for  honor ;  and  the  only  proper  proof 
of  the  refusal  of  the  original  drawee  is  by  a  protest,  that  be- 
ing the  known  instrument,  by  the  custom  of  merchants,  to 
establish  the  facts.^ 

§  523.  As  to  the  method  of  acceptance  for  honor ^  it  is  in 
this  wise :  the  acceptor  for  honor,  or  supra  protest^  appears 
before  a  notary  jmblic,  witnesses  and  declares  that  he  accepts 
such  protested  bill  in  honor  of  the  drawer  or  indorser,  as  the 
case  may  be,  and  that  he  will  pay  it  at  the  appointed  time.^ 
And  then  he  subscribes  his  name  to  the  words,  "  Accepted 
supra  protest  for  the  lionor  of  A.  B.,"  or,  as  is  more  usual, 
"AbceptsS.  r."^ 

Sometimes  the  form  used  is,  "  Accepted,  under  protest,  for 
honor  of  Messrs, ,  and  will  be  paid  for  their  account,  if 

'  Bayley  on  Bills,  177;  Story,  §§255-6;  ea;  ^ar^e  Wackerbatli,  5  Ves.  574; 
Konig  V.  Bayard,  1  Pet.  250;  llussey  v.  Jacob,  1  Ld.  Raym.  88;  May  v.  Kelly, 
27  Ala.  497;  Iloare  v.  Cazcnovu,  16  East,  391. 

^  Ibid. 

'  Story  on  Bills,  §  236.  *  Gazzam  v.  Armstrong,  3  Dana,  5?4. 

"  Thomson  on  Bills,  323 ;  Byles  (Sharswood's  ed.)  [*265J,  402 ;  Chitty  on  Bills 
[«346J,  387. 


ACCEPTANCE  FOR  HONOR,    OR  SUPRA  PROTEST.  419 

regularly  protested  and  refused  when  due."  ^  And  the  ac- 
ceptor supra  protest  must  be  particular  to  state  for  whose 
honor  he  accepts.^ 

It  is  the  duty  of  the  acceptor  supra  protest^  as  soon  as  he 
has  made  the  acceptance,  to  notify  the  fact  to  the  party  for 
whose  honor  it  is  done;'^  and  the  party  paying  a  bill  under 
protest  for  honor  must  give  reasonable  notice  to  the  person 
for  whose  honor  he  pays,  otherwise  he  will  not  be  bound  to 
refund.^ 

§  524.  As  to  wlw  may  he  acceptor  for  honor. — A  stranger 
may  undoubtedly  accept  for  honor;  and  by  the  word 
stranger  in  this  connection  is  meant  any  third  person  not  a 
party  to  the  bill.  It  seems  that  acceptance  for  honor  may 
also  be  made  by  tbe  drawee,  wlio,  if  he  does  not  choose  to 
accept  the  bill  drawn  generally  on  account  of  the  person  in 
whose  favor,  or  on  whose  account,  he  is  advised  it  is  drawn, 
he  may  accept  it  for  the  honor  of  the  drawer,  or  of  the  in- 
dorsers,  or  of  all  or  any  of  them.^ 

But  if  tlie  drawee  were  bound  in  good  faith  to  accept  the 
bill,  he  cannot  change  his  relations  to  the  parties,  and  accept 
it  supra  protest  for  the  honor  of  an  indorser;  he  must  either 
accept  or  refuse.^ 

An  acceptor  supra  protest  for  the  honor  of  an  indorser 
may,  however,  recover  against  such  indorser,  though  he  ac- 
cepted at  the  instance  of  the  drawee,  and  as  his  agent,  pro- 
vided the  indorser  were  not  thereby  damnified.  The  in- 
dorser might  avail  himself  of  any  defense  which  he  could 
have  made,  had  the  drawee  accepted  for  his  honor,  and  then 
sued  upon  the  acceptance."  It  is  immaterial,  indeed,  as  to 
the  defenses  which  a  drawer  or  indorser  may  make  against 
an  acceptor  for  honor,  whether  such  acceptor  acted  at  the  in- 
stance of  the  drawer,  or  as  the  agent  of  the  drawee.^ 

'  Mitchell  V.  Bnring,  10  B.  &  C.  4 ;  4  Car.  &  P.  T.o. 

•■'  Story  on  Bills,  §  25G.  '  Story  on  Bills,  §  259;  Edwards  on  Bills,  441. 

'  Wood  V.  Pugh,  7  Ohio,  Part  2,  156.  '  Story  on  Bills,  §  259. 

•  Schimiuelponnich  v.  Buyard,  1  Pet.  264;  Chitty  on  Bills  [*345],  386. 
■'  Konig  V.  Bayard,  1  Pet.  250. 

*  Gazzam  v.  Armstrong,  3  Dana,  554;  "Wood  v.  Pugh,  7  Ohio,  156. 


420  ACCEPTANCE  OF  BILLS  OF  EXCHANGE. 

§  525.  While  there  cannot  be  successive  acceptors  of  a 
bill,  generally  speaking,  there  may  be  several  acceptors  supra 
protest  for  the  honor  of  different  parties  ^ — that  is,  one  may 
accept  for  the  lionor  of  the  drawer,  another  for  the  honor  of 
the  first  indorser,  and  another  for  the  honor  of  the  second 
indorser,  and  so  on.^ 

And  the  acceptor  supra  protest  may  accept  for  the  honor 
of  any  one,  or  all,  of  the  parties  to  the  bill ;  and  his  accept- 
ance should  designate  for  whose  honor  it  was  made,  in  which, 
case  it  could  be  at  once  perceived  for  whose  benefit  it  inured.* 
If  the  acceptance  do  not  specify  for  whose  honor  it  was  made, 
it  will  be  construed  to  be  for  the  lionor  of  the  drawer;*  and 
if  for  the  lionor  of  the  bill,  or  of  all  the  parties,  it  should  be 
so  expressed.^ 

§  526.  As  to  the  riglits  of  an  acceptor  for  honor. — By  his- 
acceptance  for  honor,  the  acceptor  has  recourse  against  the 
party  for  whose  honor  he  accepts,  and  all  parties  whom  the 
latter  would  have  recourse  against,  and  none  otliers.^  But 
the  acceptor  for  the  honor  of  tbe  drawer  cannot  recover 
against  him  without  proof  of  a  presentment  for  acceptance 
or  payment,  and  refusal  and  notice  to  the  drawer."^ 

If  he  accepts  for  the  honor  of  the  drawer  only,  he  will  in 
general,  have  no  recourse  against  the  indorsers ;  and  if  for 
the  honor  of  an  indorser,  he  will  have  no  recourse  against  a 
subsequent  indorser  ^ — the  exception  arising  in  cases  where 


■  Chitty  on  Bills,  375;  Story  on  Bills,  §  2G0;  1  Parsons  N.  &  B.  31o;  Byles 
on  Bills  (Sharswood's  cd.)  [*25r)],  403 ;  Beawcs,  33. 

*  Chitty  on  Bills,  37G;  Story  on  Bills,  §  2G0;  Byles  on  Bills  (Sharswood's  ed.) 
[*255],  403. 

'  Ilussey  V.  Jacob,   1  Ld.    Raymond,    8S;  Lewin  v.  Brunette,  1   Lutw.  896; 
1  Parsons  N.  &  B.  313;  Story  on  IJills,  §  250. 
'  Chitty  [*34C],  387;  1  Parsons  N.  &  B.  313. 
'  Gazzam  v.  Armstrong,  3  Dana,  552. 

•  Byles  (Sharswood's  Ed.),  [*259],  400;  Goodall  v.  Polhill,  1  C.  B.  233. 
'  Baring  v.  Clark,  19  Pick.  220;  Schofield  v.  Bayard,  3  Wend.  488. 

"  Gazzam  v.  Armstrong,  3  Dana,  554,  Marshall,  J.,  saying:  "  We  are  decidedly 
of  opinion  that  he  (tiie  acceptor  for  honor)  acquired  no  demand,  or  right  of 
action,  against  any  party  subsequent  to  the  one  for  whom  he  made  the  payment, 
and  that,  even  as  against  the  preceding  parties,  he  was  only  substituted  to  the 
rights  of  that  party  in  the  same  condition  as  if  he  paid  th^  bill  himself. 

In  Mertens  v.  Winnington,  1  Esp.  112,  counsel  contended  that  where  a  bill  is 


ACCEPTANCE   FOR  HONOR,   OR   SUPRA  PROTEST.  421 

the  person  for  whose  honor  he  accepts  the  bill  might  have 
recourse  ao-ainst  either,  as  when  he  is  an  accommodation 
drawer  or  indorser.^ 

§  527.  As  to  the  liahility  of  the  acceptor  for  lionor. — ^The 
acceptance  for  honor  or  supra  protest  is  not  an  absolute  en- 
gagement like  an  ordinary  accepjtance  for  value.  It  is  a  con- 
ditional engagement,  and  to  render  it  absolute,  the  perform- 
ance of  several  acts  as  conditions  precedent  are  essential.^ 
Such  an  acceptance,  says  Lord  Tenterden,  C.  J. :  "  Is  to  be 
considered  not  as  absolutely  such,  but  in  the  nature  of  a 
conditional  acceptance.  It  is  equivalent  to  saying  to  the 
holder  of  the  bill,  '  keep  this  bill,  don't  return  it,  and  when 
the  time  arrives  at  which  it  ought  to  be  paid,  if  it  be  not 
paid  by  the  party  on  whom  it  was  originally  drawn,  come  to 
me  and  you  shall  have  your  money.' "  ^  The  nature  of  such 
an  acceptor's  undertaking  is  more  analogous  to  that  of  an  in- 
taken  up  for  honor  of  a  party,  only  such  party  was  liable.  But  Lord  Kenyon 
was  of  opinion  "  that  where  a  bill  is  so  taken  up,  the  party  who  does  so  is  to  be 
considered  as  an  indorsee  paying  full  value  for  the  bill,  and  as  such  entitled  to 
all  remedies  to  which  an  indorsee  would  be  entitled,  that  is  to  sue  all  the  parties 
to  the  bill."  But  this  proposition  is  too  broad ;  for  there  are  cases  in  which  the 
payor  supra  protest,  stands  on  a  very  different  footing  from  an  indorsee.  Thus, 
if  he  paid  for  honor  of  the  acceptor,  he  could  not  sue  the  drawer,  as  the  acceptor 
could  not  sue  him. 

'  Story  on  Bills,  §  356.  '  Chitty  on  Bills  [*347],  388. 

=  Williams  v.  Germaine,  7  B.  &  C.  4r)7 ;  1  M.  &  R.  394.  In  Hoare  v.  Caze- 
nove,  16  East,  391  (1812),  Lord  EUeuborough,  said:  "  It  is  an  undertaking  to  pay 
if  the  original  drawee,  upon  a  presentment  to  him  for  payment,  should  persist  in 
dishonoring  the  bill,  and  such  dishonor  by  him  be  notified  by  protest  to  the  per- 
son who  has  accepted  for  honor.  *  *  *  'piie  use  and  convenience,  and  indeed 
the  necessity  of  a  i:)rotest  upon  foreign  bills  of  exchange,  in  order  to  prove  in 
many  cases  the  regularity  of  proceedings  thereupon,  is  too  obvious  to  warrant  us 
in  dispensing  with  such  an  instrument  in  any  case  where  the  custom  of  mer- 
chants, as  reported  in  the  authorities  of  law,  appears  to  have  acquired  it.  And 
indeed  the  reason  of  the  thing,  as  well  as  the  strict  law  of  the  case,  seems  to  ren- 
der a  second  resort  to  the  diMwec  proper,  when  the  unaccepted  bill  still  remains 
with  the  holder;  for  effects  often  reach  the  drawee  who  has  refused  acceptance 
in  the  iirst  instance,  out  of  which  the  bill  may  and  would  be  satisfied,  if  presented 
to  him  again  when  the  period  of  payment  had  arrived.  And  the  drawer  is  en- 
titled to  the  chance  of  benefit  to  arise  from  such  second  demand,  or  at  any  rate 
to  the  benefit  of  that  evidence  which  the  protest  affords,  that  the  demand  has 
been  made  duly  without  effect,  as  far  as  such  evidence  may  be  available  to  him 
for  purposes  of  ulterior  resort." 


4*22  ACCEPTANCE  OF  BILLS  OF  EXCHANGE. 

dorser ;  ^  than  that  of  an  ordinary  acceptor,  and  to  render 
him  absolutely  liable  it  is  necessary  : 

First.  To  present  the  bill  at  maturity  to  the  original 
drawee,  notwithstanding  his  prior  refusal,  because  between 
the  time  of  such  refusal  and  the  time  of  maturity,  effects 
may  have  reached  the  drawee,  out  of  which  he  might,  if  the 
bill  were  again  presented,  pay  it;  and  the  drawer  and  other 
parties  are  entitled  to  the  chance  of  any  benefit  which  might 
arise  from  such  second  demand.  And  if  it  were  not  made 
(except  in  the  case  of  a  bill  made  payable  at  a  place  not 
being  the  residence  of  the  drawee),  the  drawer  and  indorsers 
would  be  discharged ;  and  as  the  acceptor  supra  protest  would 
thereby  lose  recourse  against  them,  he  is  also  discharged.^ 

Second.  Upon  refusal  by  the  original  drawee  to  pay  the 
bill  when  it  is  presented  at  maturity,  it  must  be  again  pro- 
tested for  non-payment,  and  such  protest  and  presentment 
must  be  alleged  in  the  declaration  against  the  acceptor  supra 
protest.^  And  third^  it  is  then  necessary  to  present  the  bill 
in  due  time  to  the  acceptor  supra  'protest^ 

If  on  such  presentment  the  acceptor  supra  protest  re- 
fuses to  pay  there  must  be  another  formal  protest,  stating 
the  presentment  for  payment  to  the  drawee,  the  protest  for 
his  non-payment,  the  presentment  of  the  bill  and  accept- 
ance to  the  acceptor  supra  protest^  and  demand  of  payment 
of  him,  and  the  protest  for  his  non-payment;  and  notice 
thereof  must  be  forthwith  forwarded  to  the  drawer  and  in- 
dorsers.^ 

§  528.  There  appears  to  be  a  conflict  of  opinion  as  to  the 
extent  of  the  admission  of  the  acceptor  supra  protest.  Ac- 
cording to  a  recent  eminent  author,  the  acceptor  supra  protest 
does  not  admit  the  genuineness  of  the  signature  of  any  party 
for  whose  honor  the  acceptance  is  given,  not  even  the  draw- 
er's, and  therefore  he  could  recover  back  money  paid  to  the 

'  1  Parsons  N.  &  B.  315. 

«  Chitty  [*348],  389-00;  Story  on  Bills,  §  261 ;  Barry  v.  Clark,  19  Pick.  220. 

»  Chitty  [*350],  392;  Story  on  Bills,  §  2G1. 

^  lb.;  Chitty  [*351],  392.  "  Chitty  [*352],  393;  1  Parsons  N.  c&  B.  320. 


ACCEPTANCE  FOR   HONOR,    OR  SUPRA  PROTEST.  423 

holder  if  the  bill  turned  out  to  be  a  forgery.^  The  language 
of  the  case  cited  in  support  of  this  docti-ine  would  seem  to 
sustain  it ;  but  confined  to  the  point  decided,  it  determines 
no  more  than  that  acceptance  for  the  honor  of  an  indorser 
does  not  admit  his  signature.'^ 

The  reasoning  of  the  judge  which  leads  to  this  conclusion, 
however,  would  go  to  the  full  extent  of  the  rule  laid  down 
by  Professor  Parsons.  But  it  is  at  least  subject  to  this  modi- 
fication, that  one  who  accepts  for  the  honor  of  the  drawer  is 
estopped  from  denying  that  the  bill  is  a  valid  bill ;  and,  con- 
sequently, it  would  not  be  competent  for  him  to  set  up  as  a 
defense  to  an  action  by  an  indorsee  that  the  payee  is  a  ficti- 
tious person,  and  that  he  was  ignorant  of  the  fact  at  the  time 
he  accepted  the  bill.^ 

'  1  Parsons  N.  &  B.  323. 

''  Wilkinson  v,  Johnson,  3  B.  &  C.  428.  Abbott,  C.  J.  (Lord  Tenterden), 
said  :  "A  bill  is  carried  for  payment  to  the  person  whose  name  appears  as  ac- 
ceptor, or  as  agent  of  an  acceptor,  entirely  as  a  matter  of  course.  The  person 
presenting  very  often  knows  nothing  of  the  acceptor,  and  merely  carries  or  send* 
the  bill  according  to  the  direction  that  he  finds  upon  it;  so  that  the  act  of  pre- 
sentment informs  the  acceptor  or  his  agent  of  nothing  more  than  tiiat  his  name 
appears  to  be  on  the  bill  as  the  person  to  pay  it ;  and  it  behooves  him  to  see  that 
his  name  is  properly  on  the  bill.  But  it  is  by  no  means  a  matter  of  course  to 
call  upon  a  person  to  pay  a  bill  for  the  honor  of  an  indorser;  and  such  a  call, 
therefore,  imports,  on  the  part  of  tiie  person  making  it,  that  the  name  of  a  cor- 
respondent, for  whose  honor  the  payment  is  asked,  is  actually  on  the  bill;  but 
still  his  attention  may  reasonably  be  lessened  by  the  assertion  that  the  c;dl  itself 
makes  to  him  in  fact,  though  no  assertion  may  be  made  in  words.  And  the  fault, 
if  he  pays  on  a  forged  signature,  is  not  wholly  and  entirely  his  own ;  but  begins 
at  least  with  the  person  who  thus  calls  upon  him.  And  though,  where  all  the 
negligence  is  on  one  side,  it  may  perhaps  be  unfit  to  inquire  into  the  quontum  ; 
yet  where  there  is  any  fault  in  the  other  party,  and  that  other  party  cannot  be 
said  to  be  wholly  innocent,  he  ought  not,  in  our  opinion,  to  profit  by  the  mistake 
into  which  he  may,  by  his  own  prior  mistake,  have  led  the  other;  at  least,  if  the 
mistake  is  discovered  before  any  alteration  in  the  situation  of  any  of  the  other 
parties,  that  is,  while  the  remedies  of  all  the  parties  entitled  to  remedy  are  left' 
entire,  and  no  one  is  dischargied  by  lachis.'' 

^  Phillips  v.  Thurn,  18  Com.  B.  N.  S.  694  (18(55),  Erie,  C.  J.,  said  :  "  I  take 
it  to  be  clear  that  if  the  defendant  had  not  intervened,  and  the  action  had  been 
brought  by  the  holder  of  the  bill  against  the  drawer,  the  drawer  would  have 
been  by  law  compelled  to  admit  that  the  bill  was  a  valid  bill  payable  to  bearer. 
*  *  *  *  It  seems  to  me  that  there  is  good  reason  for  saying  that  that  which 
the  drawer  would  be  estopped  from  denying,  the  acceptor  for  honor  should  also 


424  ACCEPTANCE   OF   BILLS  OF  EXCHANGE. 

Why,  indeed,  the  acceptor .,9?/;?7'a  ^^ro^c^s^f  should  not  be 
bound  by  the  same  rules  which  apply  toau  ordinary  acceptor 
in  the  usual  course  of  business  we  cannot  perceive.  It  is  his 
own  voluntary  act,  and  unless  he  has  been  imposed  upon  by 
the  holder  of  the  bill  to  such  an  extent  as  to  warrant  a  de- 
fense on  the  distinct  ground  of  fraud,  lie  should,  Ave  tliink,  be 
held  up  to  the  strict  performance  of  his  engagement,  and 
estopped  from  denying  any  fact — such  as  the  validity  of  the 
signatures  of  parties — wdiich  it  presupposes.^  Certainly 
wdien  the  bill  has  passed  into  the  hands  of  a  bona  fide  holder 
for  value  after  the  acceptance  supra  protest^  he  could  not 
then  be  permitted  to  open  the  question  of  forgery .- 

§  529.  The  holder  is  in  no  case  bound  to  take  an  accept- 
ance for  honor  ;^  but  if  he  receives  it,  and  it  is  for  the  honor 
of  a  j^articular  party,  he  cannot  sue  such  party  until  the  ma- 
turity of  the  bill,  and  its  dishonor  by  the  acceptor  srqyra 
protest}  And  if  the  acceptance  is  for  the  honor  of  all  the 
parties  to  the  bill,  he  cannot  sue  any  of  them  until  it  has 
matured  and  been  dishonored.^ 

But  there  seems  to  be  no  reason  wdiy  the  holder  may  not 
sue  prior  parties,  when  the  acceptance  is  for  honor  of  a  par- 
ticular party,  after  'giving  them  due  notice.^ 

be  estopped  from  denying.  I  tliink  that  he  is  equally  hound  to  admit  that  the 
bill  is  a  valid  bill." 

'  In  Byles  on  Bills  (Sharswood'sed.)  [*35S],  406,  it  is  said  :  "  The  acceptor  s'ipra 
jiroted  admits  the  genuineness  of  the  signatui  e,  and  is  bound  by  any  estoppel  bind- 
ing on  the  party  for  whose  honor  he  accepts.  Tims,  where  a  l)ill  was  drawn  in 
favor  of  a  non-existing  person  or  order,  but  the  name  of  the  drawer,  and  the 
name  of  the  payee  and  lirst  indorser  were  both  forged,  and  the  defendant  ac- 
cepted for  the  honor  of  the  drawer,  it  was  held  that  the  defendant  was  estopped 
from  disputing  that  the  drawer's  signature  was  genuine,  and  tliat  the  bill  was 
drawn  in  favor  of  a  non-existing  person,  was  negotiable,  and  had  become  payable 
to  bearer."  See  also  Story  on  Bills,  §  262  ;  Reddeld  and  Bigelow's  Leading  Cases, 
88-03.  • 

=  Story  on  Bills,  §  262;  Salt  Springs  Bank  v.  Syracuse  Sav.  Inst.  62  Barb.  101. 

=  Chitty  on  Bills  f*345],  387;  Mitford  v.  Walcott,  12  Mod.  410;  Ld.  Raym. 
57o;  Gregory  v.  Walcup,  1  Comyns,  76;  Pillans  v.  Van  Mierop,  3  Burr.  1663; 
Byles  on  Bills  (Sharswood's  ed.)  L*256],  403 ;  Edwards  on  Bills,  443. 

'  Williams  v.  Germaine,  7  B.  &  C.  4G8;  1  Man.  &  R.  394. 

'  Story  on  Bills,  §  25S;  Chitty,  p.  375.  '  Story  on  Bills,  §  258. 


ACCEPTANCE   FOR  HONOR,    OR   SUPRA    PROTICST.  425 

§  530.  Protest  for  better  security. — There  is  another 
species  of  acceptance  for  honor  which  occurs  after  accept- 
ance and  before  the  maturity  of  the  ])ill,  when  the  ac- 
ceptor absconds  or  becomes  a  bankrupt  or  insolvent/  In 
this  case  the  holder  is  not  l)Ound  to  protest  the  bill, 
and  his  neglect  to  do  so  will  not  affect  his  remedy 
against  any  prior  party .'^  But  he  may  make  protest  if  he 
choose  to  do  so,  and  it  is  then  called  protest  for  better  secu- 
rity.^ Mr.  Chitty  says,  on  this  subject :  "The  custom  of  mer- 
chants is  stated  to  be,  that  if  the  drawee  of  a  bill  of  ex- 
change abscond  before  the  day  when  the  bill  is  due,  the 
holder  may  protest  it,  in  order  to  have  better  security  for 
the  payment,  and  should  give  notice  to  the  drawer  and  in- 
dorsers  of  the  absconding  of  the  drawee ;  and  if  the  acceptor 
of  a  foreign  bill  become  bankrupt  before  it  is  due,  it  seems 
that  the  holder  may  also,  in  such  case,  protest  for  better 
security;  but  the  acceptor  is  not,  on  account  of  the  bank- 
ruptcy of  the  drawer,  compellable  to  give  this  security. 
The  neglect  to  make  this  protest  will  not  affect  the  holder's 
remedy  against  the  drawer  and  indorsers ;  and  its  principal 
use  appears  to  be  that,  by  giving  notice  to  the  drawers  and 
indorsers  of  the  situation  of  the  acceptor,  by  which  it  is 
become  improbable  that  payment  will  be  made,  they  are 
enabled  by  other  means  to  provide  for  the  payment  of  the 
bill  when  due,  and  thereby  prevent  the  loss  of  re-exchange, 
<fec.,  occasioned  by  the  return  of  the  bill.  It  may  be  recol- 
lected that,  though  the  drawer  or  indorsers  refuse^  to  give 
better  security,  the  holder  must,  nevertheless,  wait  till  the 
bill  be  due  before  he  can  sue  either  of  those  parties."  * 

§  531.  An  acceptor  for  honor  of  the  drawer  thereby  re- 
leases the  accommodation  acceptor  of  the  bill,  because  an 
acceptor  for  honor  can  acquire  only  the  rights  of  the  party 
for  Avhose  honor  he  accepts,  and  the  drawer  could  not  sue 
the  accommodation  acceptor.''     If  the  bill  be  payable  at  a 

'  Chitty  on  Bills  [*344].  385.  '  Et  parte  Wackerbath,  5  Ves.  574. 

'  Chitty  on  Bills  [*344].  385.  '  Ibid. 

'  McDowell  V.  Cook,  6  Smedcs  &  M.  420;  Gazzaui  v.  Arnistroug,  3  Daua,  554. 


42G  ACCEPTANCE  OF  BILLS  OF  EXCHANGE. 

certain  time  after  sight,  and  is  accepted  for  honor,  tlie  time 
runs  from  such  acceptance,  and  not  from  the  presentment  to 
the  drawee.^ 

SECTION  VII. 

THE    EFFECT    OF    ACCEPTANCE WHAT    H'   ADMITS. 

§  532.  The  effect  of  the  acceptance  of  a  bill  is  to  consti- 
tute the  acceptor  the  principal  debtor.^  The  bill  becomes 
by  the  acceptance  very  similar  to  a  promissory  note — the 
acceptor  being  the  pronjisor,  and  the  drawer  standing  in  the 
relation  of  an  indorser. 

Bat  in  respect  to  the  acceptor's  position  with  regard  to 
the  drawer,  and  the  amount  for  which  he  renders  himself 
liable  by  accepting  the  bill,  it  is  well  to  observe  that  the  ac- 
ceptance does  not  entitle  the  acceptor  to  charge  it  in  account 
against  the  drawer  from  the  date  of  acceptance,  unless  he 
pays  the  whole  amount  at  the  time,  or  discharges  the  drawer 
from  all  responsil)ility.'^ 

Like  the  maker  of  a  note,  the  acceptor  is  bound  by  all 
the  terms  of  the  instrument,  and  if  it  contain  a  stipulation 
for  payment  of  attorney's  fees,  he  is  bound  by  it.* 

If  the  acceptance  be  for  the  drawer's  accommodation,  the 
acceptor  does  not  thereby  become  entitled  to  sue  the  drawer 
upon  the  bill ;  but  when  he  has  paid  the  bill,  and  not  before, 
he  may  recover  back  the  amount  from  the  drawer  in  an  action 
for  money  had  and  received.'"^  If  the  acceptor  put  the  bill 
in  circulation,  he  is  estopped  from  showing  it  was  then  paid." 

§  533.  What  acceptance  admits. — It  follows  from  the 
fact  that  the  acceptor  assumes  to  pay  the  bill,  and  becomes 
the  principal  debtor  for  the  amount  specified,  that  acceptance 
is  an  admission  of  everything  essential  to  the  existence  of 
such  liability.     Therefore,  acceptance  is,  in  the  first  place,  an 


'  Williams  v.  Germaine,  7  B.  &  C.  468 ;  1  Man.  &  R.  394,  403. 

'  Thomson  on  Bills,  229.  '  Bracton  v.  Willing,  4  Call,  288. 

*  Smith  V.  Muncie  National  Bank,  29  Incl.  158. 
'-  Planters'  Bank  v.  Douglas,  2  Head,  G99. 

•  Hinton  v.  Bank  of  Columbus,  9  Porter  (Ala.),  463. 


THE   EFFECT   OF   ACCEPTANCE.  427 

admission  of  tlie  signature  of  the  di-awer,  tlie  drawee  being 
supposed  to  know  his  correspondent's  handwriting,  and,  by 
accepting,  to  acknowledge  it ;  and  in  a  suit  against  tlie  ac- 
ceptor he  would  not  be  permitted  to  plead  or  show  that  the 
handwriting  was  not  the  drawer's,  and  would  be  bound  by 
his  acceptance  even  though  the  drawer's  name  were  forged.^ 

§  534.  In  the  second  place,  acceptance  admits  that  the 
acceptor  had  funds  of  the  drawer  in  his  hands,  for  the 
drawing  of  the  bill  implies  this,  and  acceptance  in  the  usual 
course  of  business  only  follows  when  it  is  the  fact.  There- 
fore, the  acceptor  cannot  deny  that  he  was  in  funds  when  suit 
is  brought  by  a  holder  of  the  bill ;  -  though  as  between  him- 
self and  the  drawer  it  is  only  prima  facie  evidence  that  the 
drawer  had  funds  in  his  hands,  and  he  may  rebut  this  pre- 
sumption by  showing  that  the  acceptance  was  for  the  draw- 
er's accommodation,  or  otherwise  under  circumstances  which 
place  him  under  no  obligation  to  pay  the  bill  to  him.^  But, 
notwithstanding  the  presumption  that  the  acceptor  has  funds 
of  the  drawer,  yet,  where  bills  have  been  drawn  upon  letters 
of  credit  to  enable  a  party  to  purchase  and  ship  merchandise, 
this  presumption  is  rebutted,  and  the  drawer  becomes  the 
primaiy  debtor,  and  is  liable  to  the  acceptor  for  his  advances. 
But  if  the  acceptor  has  notice  that  one  of  two  joint  drawers 
of  such  a  bill  has  merely  loaned  his  name  to  give  currency 

'  Wilkinson  v.  Lutwidge,  1  Strange,  648  (1726).  Lord  C.  J.  Raymond  thought 
acceptance  acknowledged  handwriting  of  the  drawer,  but  was  not  conclusive 
evidence.  In  Jenys  v.  Fawler,  2  Strange,  946  (1732),  it  was  held  that  proof  of 
forgery  of  drawer's  handwriting  was  inadmissible.  Hoffman  &  Co.  v.  Bank  of 
Milwaukee,  12  Wall.  193;  Hortsman  v.  Ilenshaw,  11  How.  177;  Bank  of  U.  S. 
V.  Bank  of  Georgia,  10  Wheat.  333;  White  v.  Continental  Nat.  Bank.  64  N.  Y. 
316;  Goddard  v.  Merchants'  Bank,  4  Comst.  147;  Canal  Bank  v.  Bank  of  Albany, 
1  Hill,  287;  Bank  of  Commerce  v.  Union  Bank,  3  Comst.  235;  Levy  v.  Bank  of 
U.  S.  1  Binn.  27;  Peoria  R.  R.  Co.  v.  Neill,  16  111.  260;  Ellis  v.  Ohio  Life,  &c. 
Co.  4  Ohio  St.  628;  Whitney  v.  IJunnell,  8  La.  Ann.  429;  Leach  v.  Buchanan,  4 
Esp.  226;  Price  v.  Neal,  3  Burr.  1354;  Smith  v.  Chester,  1  Term  R.  654:  Wilkin- 
son V.  Johnson,  3  Bam.  &  Cres.  428;  Sanderson  v.  Coleman,  4  Man.  &  G.  209. 

*  Hortsman  v.  Henshaw,  11  How.  177;  Raborg  v.  Peyton,  2  Wheat.  385; 
Kemble  v.  Lull.  3  IMcLean,  272;  Jordan  v.  Tirkington,  4  Dov.  357. 

'  See  Chapter  on  Consideration,  §$  174-6  ;  Turner  v.  Bro\vder,5  Bush  (Ky.),216- 


428  ACCEPTANCE  OF   BILLS  OF  EXCHANGE. 

to  tlie  bill,  such  drawer  is  no  more  liable  to  the  acceptor  than 
if  he  had  merely  indorsed  the  bill.^ 

§  535.  In  the  third  place,  the  acceptor  admits  the  ca- 
pacity of  the  drawer  to  draw  the  bill,  for  otherwise  it  would 
not  be  valid ;  ^  and  therefore  he  cannot  set  up  a  plea,  that 
the  drawer  of  a  bill,  which  he  had  accepted,  was  a  body  cor- 
porate having  no  legal  authority  to  draw  the  bill,^  or  was  a 
bankrupt,'^  infant,'^  married  woman,*^  or  fictitious  person.' 
When  the  bill  is  drawn  in  the  name  of  a  firm,  acceptance  ad- 
mits that  there  is  such  a  firm,^  and  if  it  be  drawn  by  a  person 
as  executor,  it  admits  his  rio-ht  to  sue  in  that  character.^ 

§  536.  In  the  fourth  place,  the  acceptor  admits  the  ca- 
pacity of  the  payee  to  indorse  the  bill  when  it  is  drawn  pay- 
able to  the  payee's  order,  for  by  the  very  act  of  acceptance 
lie  agrees  to  pay  to  his  order ;  ^^  and,  therefore,  he  cannot 
show  that  at  the  time  of  acceptance  the  payee  was  an 
infant,^^  an  insane  person,^^  a  married  womau,^^  a  bankrupt,"  or 

■  Turner  v.  Browder,  5  Biish  (Ky.),  216  ;  ante,  §  176. 

'  Story  on  Bills,  §  113;  Byles  (Sharswood's  ed.)  [*193],  325;  Thomson  ob 
Bills,  2:30,  231.  '  Halifax  v.  Lyle,  3  Welsby,  Hurl.  &  G.  (Exch.)  446. 

''  Braithwaito  v.  Gardiner,  8  Q.  B.  473;  Lord  Denman,  C.  J.,  quoting  Lord 
Abingor's  opinion  in  Pitt  v.  Chappelew,  8  Mees.  &  W.  610, said:  '  'Lord  Abinger 
was  a  high  authority  on  subjects  of  this  kind.  It  is  clear  what  his  opinion  was 
on  the  point  of  estoppel  in  Pitt  v.  Chappelew,  and  I  think  it  rests  on  sound 
principles.  Tn  this  case,  all  parties  knowing  the  bankrupt's  situation,  the  de- 
fendant accepts  a  l)ill  drawn  by  him.  He  thereby  admits  that  the  bankrupt  had 
power  to  draw  U|)on  him;  and,  therefore,  on  a  short  and  simple  ground,  always 
the  best,  I  am  of  opinion  that  the  plaintiff  has  a  right  to  maintain  this  action." 

'•  Taylor  v.  Croker,  4  Esp.  187;  Jones  v.  Darch,  4  Price,  300. 

°  Smith  V.  Marsack,  6  C.  B.  486  ;  Cowton  v.  Wickersham,  54  Penn.  St.  303. 

'  Cooper  V.  Meyer,  10  Barn.  &  C.  468;  5  Man.  &  R.  387. 

«  Bass  V.  Clive,  4  Maule  &  S.  13.  "  Aspiuall  v.  Wake,  10  Bing.  51. 

'"  See  ante,  §§  93,  243. 

"  Jones  V.  Darch,  4  Price,  300  (1817).  The  payee  was  an  infant,  and  the  ac- 
ceptor knew  it  when  he  accepted;  Taylor  v.  Croker,  4  Esp.  187  (1803).  The 
drawers,  who  were  infants,  had  drawn  the  bill  payable  to  their  own  order. 
Lord  Ellenborough  held  that  the  acceptance  admitted  their  power  to  indorse, 
and  the  acceptor  could  not  show  they  were  infants.  Byles  (Sharswood's  ed.) 
[*19;],  325.  '-  Smith  v.  Marsack,  0  C.  B.  486;  see  ante,  §§  93,  242. 

"  Smith  V.  Mar.-?ack,  6  C.  B.  483.  But  in  Massachusetts  it  has  been  held  that 
evidence  of  the  insanity  of  the  payee  at  the  time  the  note  was  executed  was  ad- 
missible; Poaslee  V.  Robins,  3  Mete.  164;  see  ante,  §  93. 

"  Drayton  v.  Dale,  2  Barn.  &  C.  393  (1833),  which  was  the  case  of    a  uoto 


THE  EFFECT  OF  ACCEPTANCE.  429 

a  corporation  without  legal  existence.^  It  is  a  general  prin- 
ciple, applicable  to  all  negotiable  securities,  that  a  person 
shall  not  dispute  the  power  of  another  to  indorse  such  an 
instrument,  when  he  asserts  by  the  instrument  which  he 
issues  to  the  world  that  tlie  other  has  such  power.*  Indeed, 
there  could  be  no  reason  why  the  acceptor  should  be  inter- 
ested to  show  that  the  payee  was  incompetent  to  make  the 
order;  for  he  has  been  guaranteed  in  that  regard  by  the 
drawer,  and  may  charge  the  amount  in  account  against  him 
whether  the  payee  were  competent  or  not. 

§  537.  In  the  Jifth  place,  if  the  bill  be  drawn  by  one  pro- 
fessing to  act  as  agent  of  the  drawer,  the  acceptance  admits 
his  handwriting  and  authority  as  agent  to  draw.'^ 

§  538.  W/mt  accejptance  does  not  admit. — But  beyond 
these  admissions  the  acceptance  does  not  go.  In  the  first 
place,  it  does  not  admit  the  genuineness  of  the  signature  of 
the  payee  when  it  purports  to  bear  his  indorsement,  or  that 
of  any  other  indorser,  for  with  their  handwriting  he  is  not 
presumed  to  be  familiar;  and,  therefore,  if  the  signature  of 
the  payee  or  other  indorser  be  forged,  the  acceptor  will  not 
be  bound  to  pay  the  bill  to  any  one  who  is  compelled  to 
trace  title  through  such  indorsements.^  And  if  he  has  gone 
so  far  as  to  pay  the  bill  to  any  one  holding  it  under  such 
forged  indorsement,  he  may,  as  a  general  rule,  recover  back 
the  amount.^  The  rule  would  not  apply,  however,  where  the 
drawer  had  issued  the  bill  with  the  forged  indorsement  upon 

made  payable  to  the  order  of  a  bankrupt.  Bayley,  J.,  in  Drayton  v.  Dale,  supra. 
Approved  in  Smith  v.  Marsack,  6  C.  B.  486;  see  ante,  §  243. 

'  See  ante,  Chapter  III,  §  93.         '  See  Chapter  XLIf,  on  Forgery,  Sec.  III. 

'  Robinson  v.  Yarrow,  7  Taunt.  455. 

'Holt  V.Ross,  54  N.  Y.  474;  Edwards  on  Bills,  432.  lu  White  v.  Conti- 
nental Nat'l  Bank,  64  N.  Y.  320,  Allen,  J.,  says:  "  The  plaintiffs  as  drawees  of 
the  bill,  were  only  held  to  acknowledge  the  signature  of  their  correspond- 
ents; by  accepting  and  paying  the  bill  they  only  vouched  for  the  genuineness  of 
such  signatures,  and  were  not  held  to  a  knowledge  of  the  want  of  genuineness 
of  any  other  part  of  the  instrument,  or  of  any  other  names  appearing  thereon,  or 
of  the  title  of  the  holder." 

'  lb. ;  Canal  Bank  v.  Bank  of  Albany,  1  Hill  (N.  Y.)  387;  Dick  v.  Leverich, 
11  La.  573;  Williams  v.  Drexel,  14  Md.  566. 


430  ACCEPTANCE   OF   BILLS  OF   EXCHANGE. 

it,  for  then  tlie  acce2">tor  could  charge  the  amount  in  account 
against  him,  and  as  the  forged  indorsement  could  in  such  case 
subject  him  to  no  loss,  he  would  not  l)e  entitled  to  recover 
back  the  amount.^  The  acceptance  does  not  admit  the  signa- 
ture of  the  indorser,  even  when  the  bill  is  payable  to  the 
drawer's  order,  and  purports  to  be  indorsed  by  him,  in  the 
same  handwriting  as  the  drawer's.^  But  if  tlie  drawer  is  a 
fictitious  person,  and  the  bill  is  payable  to  the  drawer's  order, 
the  acceptor's  undertaking  is  that  he  will  pay  to  the  signa- 
ture of  the  same  person  that  signed  for  the  drawer ;  and  in 
suck  case  the  holder  may  show,  as  against  the  acceptor,  that 
the  si2:nature  of  the  fictitious  drawer  and  of  the  first  indorser 
are  in  the  same  handwriting.^ 

§  539.  In  the  second  place,  acceptance  does  not  admit 
agency  to  indorser,  which  must  be  proved  by  the  holder  in 
order  to  recover  againt  the  acceptor,  even  though  the  ac- 
ceptor acknowledges  agency  to  draw  the  bill,  and  the  in- 
dorsement was  upon  it  at  the  time  of  acceptance.  Thus, 
wliere  a  bill  was  drawn  over  tke  signature,  "  A.  Henry  p. 
proc.  C,  Staeben  <fe  Co.,"  and  was  expressed  to  be  payable  "  to 
our  order,"  and  was  indorsed  in  like  manner  as  drawn :  "  A. 
Henry  p.  proc.  C.  Staeben  &  Co.,"  and  was  accepted  by  the 
defendant,  and  sued  on  by  the  plaintiff,  it  was  held  that,  in 
order  to  recover,  he  must  prove  the  procuration  to  indorse. 
And  Park,  J.,  said:  "The  mere  acceptance  proves  the  draw- 
ing, but  it  never  proves  the  indorsement ;  it  is  not  at  all  nec- 
essary that  a  power  given  to  draw  bills  by  procuration  should 
enable  the  agent  to  indorse  by  procuration ;  the  first  is  a 
power  to  get  funds  into  the  agent's  hands,  the  other  to  pay 
them  out."  "* 

'  See  Chapter  XLII,  on  Forgery,  Sec.  Ill;  Hortsman  v.  Henshaw,  11  How. 
177:  Mcachcr  v.  Fort,  3  Hill  (S.  C.)  227;  Coggill  v.  American  Exchange  Bank,  1 
Comst.  113. 

'  Ilobin.son  v.  Yarrow,  7  Taunt.  455;  Canal  Bank  v.  Bank  of  Albany,  1  Hill, 
287;  Becniaa  v.  Duck,  11  M.  &  W.  257;  Williams  V.  Drexel,  14  Mil.  560;  see 
Chapter  XLH,  on  Forgery,  Sec.  III. 

•■'  Cooper  V.  Meyer,  10  Barn.  &  C.  468;  Beeman  v.  Duck,  11  M.  &  W.  251. 

*  Robinson  v.  Yarrow,  7  Taunt.  455  (1817). 


EXTINGUISHMENT  OF  ACCErTOR'S  OBLIGATION.  431 

§  540.  Ill  the  third  place,  the  acceptance  does  not  admit 
the  genuineness  of  the  terms  contained  in  the  body  of  the  in- 
strument at  the  time  of  the  acceptance ;  and,  therefore,  if  at 
that  time  they  tad  been  altered  so  as  to  purport  to  bind  the 
drawer  for  a  larger  sum,  or  in  a  different  manner  than  that  in 
the  original  bill,  he  will  not  be  bound  by  his  acceptance  to  pay 
the  amount,  unless  the  drawer  had  by  his  own  carelessness 
afforded  opportunity  for  the  alteration,  and  the  acceptor 
could  therefore  charge  him  in  account  with  the  whole 
amount.^  But  where  the  drawer  alters  it  himself,  or  acqui- 
esces in  an  alteration,  before  acceptance,  it  binds  him,  and 
therefore  the  acceptor.^ 

If  the  drawer  were  not  responsible  for  affording  the  op- 
portunity for  the  alteration  to  be  made,  the  acceptor  could  not 
only  defend  against  a  recovery  upon  the  bill,  but  might  him- 
self recover  back  the  amount  paid  upon  it,  or,  at  least,  to  the 
extent  of  the  amount  for  which  he  would  still  remain  liable 
to  the  drawer.^  If,  however,  the  acce2)tor  were  himself  re- 
sponsible for  issuing  tlie  bill  in  such  a  form  as  to  admit  of  its 
being  easily  forged  or  altered — as  where  an  acceptor  wrote 
his  acceptance  in  blank,  on  an  agreement  with  the  drawer 
that  he  should  not  draw  for  over  $1,000,  and  the  latter  in- 
serted a  larger  sum  and  passed  the  bill  to  the  plaintiff' — he 
would  be  bound  for  the  whole  amount,  and  could  not  recover 
it  back  if  paid.* 

SECTION  VIII. 

EXTESTGUISHMENT   OF    ACCEPTOR'S    OBLIGATION. 

§  541.  The  obligation  of  the  acceptor  may  be  discharged, 
extinguished,  or  waived:  (1)  by  operation  of  law ;   (2)  by 


.  '  Young  V.  Grote,  4  Bing.  253;  White  v.  Cont,  Nat.  Bank,  64  N.  Y.  320;  Ma- 
rine Nat.  Batik  v.  National  City  Bank,  59  N.  Y.  68  ;  see  Chapter  XLIX,  on  Checks, 
and  Chapter  XLII,  on  Forgery;  also  Chapter  XLIII,  on  Alteration,  Sec.  VI. 

^  Langton  v.  Lazarus,  5  Mees.  &  W.  028-9:  Ward  r.  Allen,  2  Mctc.  (Mass.)  57. 

"Bank  of  Commerce  v.  Union  Bank,  3  Comst.  230;  see  Chapter  XLIX,  on 
Checks,  Sec.  XIII,  and  XLIf,  on  Forgery,  Sec.  III. 

*  Van  Duzer  v.  Howe,  21  N.  Y.  53L 


432  ACCEPTANCE   OF   BILLS  OF  EXCHANGE. 

payment;  (3)  by  release;  and  (4)  by  express  or  implied 
waiver  or  agreement  of  the  parties. 

In  the  first  place,  as  to  discliarge  by  operation  of  law^ 
this  occurs  when  the  acceptor  is  discharged  by  force. and 
effect  of  the  laws  of  the  place  where  the  acceptance  was 
made — as  for  example,  by  going  into  bankruptcy,  or  plead- 
ing successfully  the  statute  of  limitations.^ 

In  the  second  place,  the  acceptor  may  be  discharged  by 
payment  of  the  bill  according  to  its  tenor.  This  branch  of 
the  subject  is  elsewhere  fully  considere'd,^  as  is  also  the  dis- 
charge by  release,^ 

§  542.  In  the  fourth  place,  as  to  when  an  acceptor  may 
be  discharged  by  the  express  or  implied  waiver  or  agreement 
of  the  parties,  it  is  a  general  principle  of  law  that  an  execu- 
tory contract,  whether  sealed  or  unsealed,  may  be  discharged 
before  breach  by  mere  verbal  agreement,  or  by  a  waiver  of 
the  rights  accruing  under  it.*  But  after  breach  it  can  only 
be  discharged  by  payment,  release  (under  seal),  or  by  taking 
some  collateral  thing  in  satisfaction,  or  by  merger  by  oi)era- 
tion  of  law,  as  by  a  judgment,  or  taking  a  higher  security.^ 
But  cases  of  bills  of  exchange  are  said  to  form  an  exception 
to  this  rule,  and  the  liability  of  the  acceptor,  or  other  party, 
remote  or  immediate,  though  complete,  may  be  discharged 
by  an  express  renunciation  of  his  claim  on  the  part  of  the 
holder  without  consideration.*^ 


'  1  Parsons  N.  &  B.  328.        *  See  Chapter  XXXVIII,  on  Payment,  Vol.  3. 

'  See  Chapter  XL,  on  Discharges,  &c.,  Sec.  II,  Vol.  2. 

'  Story  on  Bills,  §  2G6;  1  Parsons  N.  &  B.  324  et  ^eq.  ;  Chitty  on  Bills  [*310], 
349.  See  especially  Bylos  on  Bills  1*192],  324;  Sharswood's  note  1 ;  also  Foster 
V.  Dawber,  G  Exch.  85U,  Parke  B.  ;  Dobson  v.  Espie,  26  L.  J.  N.  S.  240  (1857). 

"  Story  on  Bills,  §  200. 

"  Byles  on  Bills  (Sharswood's  ed  ),  [*190-1],  322.  It  is  therein  said:  "  It  is 
a  general  rule  of  law  that  a  simple  contract  may,  before  breach,  be  waived  or  dis- 
charged, without  a  deed  and  without  a  consideration;  but  after  breach  there  can 
be  no  discharge,  except  by  deed,  or  upon  sullicient  cousideration.  To  this  rule 
it  has  been  repeatedly  held  that  contracts  on  bills  of  exchange  form  an  excep- 
tion, and  that  the  liability  of  the  acceptor,  or  other  party  remote  or  immediate, 
though  complete,  may  be  discharged  by  an  express  renunciation  of  his  claim  on 
the  part  of  the  holder  without  consideration.     The  exception  seems  at  first  to 


EXTi:SGUISnMENT  OF  ACCEPTOU'^  OBLIGATION.  433 

§  543.  In  the  case  of  acceptances  for  accommodation,  the 
principles  upon  whicli  this  doctrine  rests  are  not  difficult  to 
discover.  The  acceptor  is,  indeed,  according  to  the  form  and 
nature  of  his  contract,  primarily  liable  to  the  holder.  But 
tlie  debt  ^vhich  he  has  bound  himself  to  Y>av,  is  in  every  re- 
spect the  debt  of  another  person  to  the  payee,  or  the  holder ; 
and  the  payee  or  holder,  while  having  the  right  to  sue  the 
acceptor  as  his  principal  debtor,  has  such  relations  to  the 
party  for  whose  accommodation  the  bill  has  been  accepted, 
that  it  is  not  unnatural  for  him  to  be  in  negotiation  with 
such  party  respecting  its  settlement.  And  when  he  re- 
linquishes his  claim  against  the  acceptor,  it  is  nothing  more 
than  a  waiver  of  his  right  to  hold  him  as  primarily  bound 
for  another's  debt,  for  which  he  may  be  regarded  in  some 
sort,  though  not  to  all  intents  and  purposes,  as  a  surety. 
Thus  where  the  holder  knowing  that  the  acceptance  was  for 
accommodation,  and  himself  possessed  goods  of  the  drawer 
from  the  2'>i'oceeds  of  which  he  expected  payment,  told  the 
acceptor  and  his  creditors  that  he  should  look  to  the  drawer, 
and  not  come  upon  the  acceptor ;  and,  in  consequence,  the 
acceptor  assigned  his  property  for  the  benefit  of  his  creditors, 
it  was  held,  that  if  by  the  facts  an  unconditional  renuncia- 
tion was  established,  it  was  a  discharge  of  the  acceptor, 
although  the  goods  in  the  possession  of  the  holder  proved 
to  be  of  little  value,  and  the  drawer  was  insolvent ;    but  if 


violate  a  fundamental  rule,  Imt  the  reason  may  be  that  the  distinction  between 
a  release  under  seal,  and  a  release  not  under  seal,  is  quite  unknown  in  foreign 
countries.  An  express  and  complete  renunciation  by  the  holder  of  his  claim 
on  any  party  to  the  bill  is  therefore,  according  to  the  law  merchant,  equivalent 
to  a  release  under  seal.  And  as  it  would  be  highly  inconvenient  to  introduce 
nice  distinctions,  and  nice  questions  of  international  law,  all  the  contracts  on  a 
foreign  bill,  thougii  negotiated  or  made  in  England,  and  all  the  contracts  on  an 
inland  bill,  depending,  as  they  do,  on  tlie  same  law  merchant,  may  be  so  re- 
leased. And  such  a  relaxation  of  the  general  rule  on  the  case  of  bills  of  ex- 
change is  not  unreasonable  on  another  ground.  The  money  due  at  the  maturity 
of  a  bill  of  exchange  is  in  practice  expected  to  be  paid  immediately,  and  in  many 
cases  with  rcmetiies  over  in  favor  of  the  delator.  Parties  liable  who  are  expressly 
told  that  recourse  will  not,  in  any  event,  be  had  to  them,  are  almost  sure,  in 
consequence,  to  alter  their  conduct  and  position.'^ 
Vol.  I.— 28 


434  ACCEPTANCE  OF  BILLS  OF   EXCHANGE. 

the  words  import(Hl  only  tLat  the  renunciation  was  condi- 
tional, and  that  the  bolder  only  looked  to  the  drawer  in  the 
first  instance,  the  acceptor  was  not  discharged.^  So  where 
the  holder  arrested  tlie  acceptor,  and  finding  that  he  had 
accepted  for  accommodation  of  Dallas,  tlie  drawer,  his  attorney, 
took  security  from  Dallas,  and  wrote  to  the  acceptor  that 
"  he  had  settled  with  Dallas,  and  he  (the  acceptor)  need  not 
trouble  himself  any  further,"  it  was  held  that  the  acceptor 
was  discharged.^  But  where  an  accommodation  acceptor 
applied  to  the  holder  to  give  up  the  bill,  which  he  refused  to 
do,  but  said  the  acceptor  should  not  be  troubled  about  it,  it 
was  held,  under  the  circumstances,  that  the  acceptor  was  not 
discharged.* 

§  544.  The  text  writers  generally  concur  in  the  doctrine 
that  even  where  the  acceptance  is  for  value  and  in  the  usual 
-course  of  business  an  express  renunciation  by  the  holder  of 
the  right  to  proceed  against  the  acceptor,  o|)erates  as  a  waiver 
of  such  right,  and  discharges  the  acceptor.^  And  there  is  au- 
thority to  support  the  doctrine.  Where  one  Walpole,  hold- 
ing a  bill  accepted  by  Pulteney,  agreed  to  consider  his  accept- 
ance at  an  end,  and  wrote  in  his  bill  book  the  memorandum, 
"  Mr.  Pulteney's  acceptance  at  an  end,"  and  kept  the  bill  from 
1772  to  1775  without  calling  on  Pulteney,  it  was  held  that 
the  latter  was  discharged."'  In  the  cases  where  the  renuncia- 
tion is  express,  it  will  discharge  the  acceptor  although  with- 
out consideration,  for  the  reason  that  it  would  operate  as  a 
fraud  upon  him  to  hold  otherwise.  And  the  doctrine  arises 
out  of  the  peculiar  relations  of  the  parties.^  The  acceptor 
enters  into  his  engagement  with  funds  of  the  drawer  in  his 

'  Whatley  V- Tricker,  1  Camp.  35  (1807);  Chitty,  Jr.,  740;  Chitty  on  Bills 
[*311],  350;  Story  on  Bills,  §  266;  1  Parsons  N.  &  B.  334. 

''  Black  V.  Peele,  cited  in  Dingwall  v.  Dunster,  1  Douglas,  247;  Chitty,  Jr., 
403;  Bayley  on  bills,  188. 

'  Adams  y.  Gregg,  2  Stark.  531  (1819);  Chitty,  Jr.,  1076. 

*  Bayley  on  Bills,  187,  188;  Story  on  Bills,  §  267;  1  Parsons  N.  &  B.  325. 

'  Walpole  V.  Piilten(y,  cited  in  Dingwall  v.  Dunster,  1  Douglas,  248 ;  Chitty 
.Jr.,  401;  Story  on  Bills,  §  267. 

*  Byles  on  Bills  [*191],  323;  see  remarks  of  that  author  quoted  in  note  6,  §542. 


EXTINGUISHMENT  OF  ACCEPTOR'S   OBLIGATION.  435 

Lands,  or  under  some  business  arransferaent  accordinir  to  his 
course  of  dealing,  and  if  the  hohler  expressly  renounces  claim 
against  him,  his  lic\nds  are  then  untied,  and  he  is  left  free  to 
account  to  the  drawer  for  the  funds  in  his  hands,  or  at  least 
is  no  longer  bound  to  appropriate  them  to  the  payment  of 
the  bill,  or  to  carry  out  the  arrangements  contemplated  for 
its  payment.  To  permit  the  holder,  after  thus  exonerating 
the  acceptor,  to  recur  to  him  for  payment,  would  work  in 
many  cases  the  harshest  injustice,  and  he  is  estopped  from 
doincT  so.^ 

§  545.  It  is  absolutely  requisite  according  to  some  au- 
thorities that  the  renunciation  of  claim  against  the  acceptor 
should  be  express.^  In  a  case  where  the  accommodation  accept- 
or wrote  to  the  holder  that  he  had  been  informed  that  the 
drawer  had  taken  up  the  bill,  and  given  another  to  his  (the 
holder's)  satisfaction,  and  the  holder  took  no  notice  of  it,  but 
received  interest  from  the  drawer  for  several  years,  and  during* 
that  time  did  not  call  on  the  acceptor,  it  was  held  that  the 
latter  was  not  discharged.  Ashurst,  J.,  said  :  "  An  acceptor 
makes  himself  a  debtor,  and  his  case  is  different  from  that  of 
the  other  parties  to  the  bill.  Nothing  but  an  express  dis- 
charge will  do."  Willes,  J. :  "I  do  not  think  silence  can  dis- 
charge the  acceptor.  No  case  of  tacit  discharge  has  been  pro- 
duced." BuUer,  J. :  "  Nothing  but  an  express  agreement  can 
discharge  an  acceptor."  ^  But  if  an  agreement  may  discharge 
the  acceptor  we  do  not  see  why  it  may  not  be  implied  as 
well   as   expressed.      It  is  the  fact  and  not  the  form  that 

'  See  Story  on  Bills,  §  267;  very  nearly  concording  with  the  text  is  the  obser- 
vation of  Professor  Parsons,  in  1  Parsons  N.  &  B.  32G-7,  note  x,  where  it  is  said: 
"  The  true  ground  it  is  conceived  is,  that  a  waiver  works  by  way  of  estoppel 
rather  than  by  way  of  contract.  We  should  prefer  to  state  the  rule  thus:  an  ex- 
press renunciation,  founded  upon  a  consideration,  or  honestly  and  fairly  acted 
upon  by  the  holder,  so  as  to  put  him  in  a  worse  situation  than  if  the  renunciation 
had  not  been  made;  or  any  act  upon  the  part  of  tlio  liolder,  giving  the  acceptor 
reasonable  ground  to  iiifer  that  the  former  had  renounced  all  claim  upon  him, 
and  acted  upon,  amounts  to  discharge." 

'Dingwall  v.  Dunster,  1  Doug.  247;  13  East,  430  (17S0);  Byles  on  Bills 
(Sharswood's  ed.)  [*191],  323;  Edwards  on  Bills,  435. 

*  Dingwall  v.  Dunster,  supra. 


436  ACCEPTANCE  OF  BILLS  OF   EXCHANGE. 

should  l)e  looked  to.  And  all  tliat  is  necessary  to  discharge 
the  acceptor  is  that  the  renunciation  of  claim  against  him 
should  be  clearly  made  out  whether  by  words  or  acts.  What 
is  meant  by  the  declaration  that  the  renunciation  must  be 
express  is  doubtless  nothing  more  than  that  it  must  be 
unmistakable,  distinct  and  direct,  and  is  not  to  be  inferred 
from  the  mere  circumstance  of  delay.  To  say  that  "  the  cir- 
cumstances must  amount  to  an  express  renunciation"  defines 
the  correct  doctrine — that  it  must  be  equally  as  clear.-' 

§  540.  It  is  qnite  clear  that,  as  the  acceptor  is  the  princi- 
pal debtor,  mere  delay  to  proceed  against  him  will  not  dis- 
charge him.'^  It  was  so  held  where,  in  a  suit  by  an  indorsee 
against  the  acceptor,  no  demand  was  proved  till  three  months 
after  the  bill  had  fallen  due,  and  the  drawer  had  in  the  mean- 
time become  insolvent.^  Nor  will  receiving  interest  from 
the  drawer  or  indorser;^  nor  giving  time  to  them   when 

^  See  Farquhar  v.  Southey,  2  Car.  &  P.  497;  Wintermute  v.  Post,  4  N. 
J.  420.  la  Parker  v.  Leigh,  2  Stark.  328  (1817),  indorsee  sued  acceptor. 
It  appeared  that  when  he  threatened  suit,  the  acceptor  called  to  ascertain  the 
amount,  and  (he  ])laintitf  showed  an  account  containing  several  claims,  among 
which  was  the  bill  sued  on.  The  plaintiff  said  that  as  to  the  sum  on  the  bill  for 
£300,  he  should  look  to  the  drawer  for  it;  that  the  sum  of  £160  was  due  upon  it, 
and  that  he  held  the  warrant  of  attorney  of  an  Irish  baronet  for  the  amount. 
The  defendant  supposing  that  he  was  settling  the  whole  of  the  plaintiff's  claim 
paid  the  amount,  which  he  said  he  sliould  not  otherwise  have  done.  The  court 
did  not  regard  the  renunciation  as  unconditional ;  but  that  the  holder  only  in- 
tended to  look  to  the  drawer  tirst.  This  is,  we  think,  the  gist  of  the  decision. 
Lord  EUenborough  said:  "If  he  does  not  expressly  renounce  all  claim  upon  the 
security,  it  still  remains  valid  in  point  of  law.  If  the  party  were  to  forego  a  bill 
in  equity  on  that  account,  it  would  be  a  good  consideration  for  a  renunciation 
of  part  of  his  claim;  but  the  ground  of  renunciation  must  be  distinctly 
proved.  The  plaiutifi' probably  might  suppose  tiiat  Williams  (the  drawer)  would 
pay  the  bill,  and  that  he  should  not  have  occasion  to  call  upon  the  defendant.  I 
am  of  opinion  that  in  point  of  law  the  circumstances  do  not  amount  to  an 
express  renunciation,  and  nothing  short  of  that  will  be  sufficient  to  discharge  the 
defendant  from  his  acceptance  of  the  bill."     Bayley  on  Bills,  189. 

^  Ante,  §  545. 

'Anderson  v.  Cleveland,  13  East,  430  (1779).  Lord  Mansfield  said:  "The 
acceptor  of  a  bill  or  maker  of  a  note  always  remains  liable.  The  acceptance  is 
proof  of  having  assets  in  his  hands,  and  he  ought  never  to  part  with  them,  un- 
less he  is  sure  that  the  bill  has  been  paid  by  the  drawer." 

*  Farquhar  v.  Southey,  2  Car.  &  P.  497  ;  Moody  &  M.  14  ;  Dingwall  v.  Dun- 
ster,  1  Doug.  247. 


EXTINGUISHMENT   OF   ACCEPTOR'S   OBLIGATION.  4.'37 

the  acceptance  is  for  valiie.^  And  when  the  acceptance  is 
for  accommodation,  the  case  will  not  be  altered,  as  we 
think,^  though  some  cases  take  a  different  view.''  This  brancli 
of  the  subject  is  amply  discussed  in  the  chapter  on  Principal 
and  Surety."^ 

§  547.  Failure  of  consideration  for  acceptance. — If  the 
consideration  inducing  an  acceptance  afterward  fail,  it  will, 
nevertheless,  be  binding  to  the  payee  or  other  holder,  if  such 
failure  were  not  occasioned  by  his  fault;  ^  and  if  by  the  ac- 
ceptance the  time  of  payment  were  extended,  or  the  terms  of 
the  bill  otherwise  varied,  the  acceptor  cannot  object  to  the 
alteration ;  ^  nor  will  his  obligation  be  varied  by  the  fact  that 
the  bill  was  accepted  after  the  time  of  payment  had  passedJ 

§  548,  An  acceptor,  being  the  primary  debtor  as  to 
the  holder,  will  not  be  discharged  by  taking  security  from 
the  other  parties,  or  giving  them  time  to  pay  the  bill.^ 
But  taking  a  co-extensive  security  from  the  acceptor  himself 
by  specialty  will  discharge  him,^  unless  it  recognizes  the  bill 
as  still  existing,  in  which  case  it  will  not."  If  the  holder  re- 
ceive from  the  acceptor  another  bill  indorsed  by  the  acceptor, 
as  satisfaction  or  security  for  the  first  bill,  he  discharges  him 
both  as  acceptor  and  indorser,  by  neglect  to  give  him  notice 
of  dishonor  of  the  last  bill ; "  but  not  if  the  last  bill  was  given 
as  collateral  security  and  not  indorsed  by  him.^^ 

§  549.  A  cancellation  by  the  holder  or  by  a  third  party  is 
evidence  of  a  waiver,  and  whether  the  cancellation  in  the  lat- 
ter case  was  by  the  holder's  consent  or  not,  is  for  the  jury  to 

'  Story  on  Bills,  §  268  ;  foat,  §  547. 

'  1  Parsons  N.  &  B.  325.     See  Cliaptor  XLI,  on  Discharge  uf  Suret}-,  Vol.  0. 

"  Ibid. 

'  See  Chapter  XLI,  Vol.  2. 

*  Corbin  v.  Soutligate,  3  Ilcn.  &  M.  319. 

*  U.  S.  V.  Bank  of  Mctropoli?;,  15  Pet.  395;  2  Rob.  Prac.  (N.  cd.)  151. 
'  Mitford  V.  Wallcot,  1  Salk.  129. 

*  Story  on  Bills,  §  208,  and  numerous  cases  cited ;  see  ante,  §  546. 
»  Ansell  V.  Baker,  15  Q.  B.  20  (69  E.  C.  L.  R.) 

'"  Twopenny  v.  Young,  3  V,.  &  C.  208. 

"  Bridges  v.  Berrj-,  3  Taunt.  130. 

"  Bishop  V.  Rowe,  3  Maule  &  Sel.  362. 


438  ACCErTANCE  OF  BILLS  OF  EXCHANGE. 

determine.^  If  the  canceliation  is  l)y  mistake,  it  does  not 
operate  as  a  discbarge ;  ^  but  if  the  holder,  knowing  the  mis- 
take, causes  the  bill  to  be  noted  for  non-acceptance,  he  is 
estopped  from  saying  it  was  accepted.^ 

>  Sweeting  v.  Halse,  9  B.  &  C.  365  (17  E.  C.  L.  R.) ;  4  Man.  &  R.  287. 

"Wilkinson  v.  Johnson,  3  B.  *&  C.  428;  Raper  v.  Birkbeck,  15  East,  17; 
Novclli  V.  Rossi,  2  B.  &  Ad.  757. 

'  Sproat  V.  Mattliews,  1  T.  R.  182;  Beutuick  v.  Dorricn,  6  East,  199;  1  Par- 
sons N.  &  B.  338. 


CHAPTEll    XIX. 

PROMISES    TO    ACCEPT    BILLS    OF   EXCHANGE. — HOW  AFFECTED  BY 
THE   STATUTE    OF   FRAUDS. 


SECTION    I. 

WRirrEN    AND   VERBAL    PROMISES    TO    ACCEPT    EXISTING    AND    NOX-EXIST- 

ING   BILLS. 

§  550.  First.  A  written  j[)romi8e  to  the  drawer  to  acbe]^t 
an  existing  hill  wliicli  is  conununicated  to  a  third  party ^  and 
induces  liiiu  to  take  the  bill  upon  the  credit  thereby  excited, 
is  undoubtedly,  by  the  decisions  in  England  and  in  the 
United  States,  the  same  as  an  actual  acceptance.  "  The  de- 
fendant," said  Lord  EUenborough,  in  such  a  case,  "has 
thereby  enabled  another  with  truth  to  assert,  and  furnished 
him  with  the  means  of  proving  that  assertion,  by  the  pro- 
duction of  the  defendant's  letter,  that  lie  had  undertaken  to 
accept  the  bills,  which  in  ordinary  mercantile  understanding 
amounts  to  an  acceptance,  and  by  that  credit  was  attached  to 
the  bills.  "'  *  *  It  may  be  for  the  convenience  of  mercantile 
affairs  that  a  bill  may  be  accepted  by  a  collateral  writing, 
without  the  bill  itself  coming  to  the  actual  touch  of  the  ac- 
ceptor, which  would  sometimes  create  great  delay.  This  ac- 
ceptance being  by  writing  comes  within  all  the  cases  cited."  ^ 
And  to  this  extent  go  all  the  decisions.^ 


'  Clarke  v.  Cock,  4  East,  57  (1803). 

^  McEvcrs  V.  Mason,  10  Johns.  213;  Goodrich  v.  Gordon,  15  Johns.  6;  Wilson 
T.  Clements,  3  Mass.  10;  Grecle  v.  Parker,  5  Wend.  5U;  Grant  v.  Shaw,  16  Mass. 
341  ;-Edson  v.  Fuller,  2  Foster,  183;  1  Parsons  N.  &  B.  298;  Cassel  v.  Dows,  1 
Blatchf.  C.  C.  335;  Cook  v.  Miltenberger,  23  La.  Ann.  377;  Steman  v.  Harrison. 
42  Penn.  St.  57 ;  Vance  v.  Ward,  2  Dana,  95;  Carrollton  Bank  v.  Tayleur,  IG  La. 
O.  S.  490;  Russell  v.  Wiggin,  2  Story  C.  C.  214;  Storer  v.  Logan,  9  Mass.  58. 


440  PROMISES  TO  ACCEPT  BILLS  OF  EXCHANGE. 

§  551.  Second.  A  written  'promise  to  the  draiver  to  ac- 
cept a  non-existing  hill^  which  is  communicated  to  a  third 
party^  and  induces  him  to  take  tlie  bill,  it  is  also  agreed  by 
the  English  and  United  States  decisions  to  be  the  same  as 
an  actual  acce])tance.  The  United  States  Supreme  Court  de- 
clares that  "  upon  a  review  of  the  cases  which  are  reported, 
a  letter  written  within  a  reasonable  time  before  or  after  the 
date  of  a  bill  of  exchange,  describing  it  in  terms  not  to  be 
mistaken,  and  promising  to  accept  it,  is,  if  shown  to  the  j^er- 
son  who  afterward  takes  the  1)ill  on  the  credit  of  the  letter, 
a  virtual  acceptance."  ^  And  where  the  letter  was  written  on 
the  17th  of  April,  and  the  bills  were  drawn  on  the  1st  of  May 
following,  and  taken  on  the  ftiith  of  the  promise  to  accept  con- 
tained in  it.  Lord  Mansfield  said  :  ^  "If  one  man,  to  give  credit 
to  another,  makes  an  absolute  promise  to  accept  his  bill,  the 
drawer  or  any  other  person  may  show  such  promise  on  the 
exchange  to  get  credit;"  and  held  that  the  letter  writer 
would  be  bound  as  an  acceptor.  To  this  extent  the  author- 
ities generally  concur.^  And  a  telegram,  it  has  been  held, 
would  stand  on  the  same  footing  as  a  letter.'*  In  a  recent 
New  York  case  where  the  defendant  authorized  in  writing 
one  Loveland  as  his  agent  to  draw  upon  him,  and  money  was 
advanced  upon  a  bill  drawn  by  the  agent  in  pursuance  of 
such  authority,  it  was  said  :  "  The  language  of  the  instrument 

'  Coolidge  V.  Payson,  2  Wheat.  66 ;  Boyce  v.  Edwards,  4  Pet.  Ill ;  Schimmel- 
pennich  v.  Bayard,  1  Pet.  264. 

'  Mason  v.  Hunt,  1  Doug.  297  (1780). 

'  Kennedy  v.  Geddes,  8  Porter  (Ala.)  268 ;  Kendrick  v.  Campbell,  1  Bailey, 
552;  Goodrich  v.  Gordon,  15  Johns.  11 ;  Greele  v.  Parker,  5  Wend.  414;  Storer 
V.  Logan,  9  Mass.  58 ;  Wilson  v.  Clements,  3  Mass.  10 ;  Gates  v.  Parker,  43  Me. 
544  ;  Stcman  v.  Harrison,  42  Penn.  St.  57;  Vance  v.  Ward,  2  Dana,  95;  Russell 
V.  Wiggin,  2  Story  C.  C.  214  ;  Wildes  v.  Savage,  1  Story  C.  C.  22.  But  it  is  also 
held,  in  this  case,  that  if  the  bill  be  payable  after  sight,  and  not  after  date,  a 
l^romise  to  accept  a  non-existing  bill  does  not  amount  to  an  acceptance. 

*  Central  Savings  Bank  v.  Richards,  109  Mass.  414,  Morton,  J.:  "The  tele- 
gram sent  to  tlie  St,  Louis  Zinc  Company  was  an  authority  for  it  to  draw  the  bill 
of  exchange  in  suit,  and  necessarily  implied,  a  promise  to  accept  it.  This  tele- 
gram was  shown  to  the  plaintiffs,  who  thereupon  discounted  the  bill.  They  took 
the  bill  upon  the  faith  of  the  defendants'  promise,  and  are  entitled  to  hold  them 
as  acceptors." 


WRITTEN  AND  VERBAL  PROMISES.  441 

amounts  to  an  unconditional  written  promise  to  accept  the 
draft,  plaintiff  having  discounted  it  upon  the  foith  of  the  au- 
thority for  a  valuable  consideration.^ 

§  552.  Third.  As  to  a  loritten  promise  to  ilie  drawer  to  ac- 
cept an  existing  hill^  ivhich  tvas  not  communicated  to  the  holder, 
and  therefore  did  not  enter  into  the  inducement  to  take  it, 
the  decisions  are  in  a  condition  of  inextricable  confusion.  In 
a  number  of  them  the  inquiry  whether  or  not  the  holder  was 
induced  by  the  promise  to  take  tke  bill,  is  held  the  criterion 
of  its  effect,  whether  such  promise  be  written  or  verbal.  In 
others,  it  is  considered  immaterial.  In  an  early  case,  where 
the  bill  was  drawn  April  3d,  and  the  letter,  declaring  that 
"  it  should  be  duly  honored  and  placed  to  the  drawer's  debit," 
within  ten  days  after,  but  not  communicated  to  the  bolder,  it 
was  lield  an  acceptance,  available  to  him.^  Subsequently, 
where  the  plaintiffs,  who  were  indoi'sees  of  the  payee,  sued 
the  drawee  of  a  bill,  who  had  written  a  letter  to  the  drawer, 
after  the  bill  had  been  protested  for  non-acceptance  while  in 
the  plaintiffs'  hands,  stating  that  they  "  would  accept  or  cer- 
tainly pa}'  all  the  bills  which  have  hitherto  appeared,"  Lord 
Ellenborough  adhered  to  this  precedent,  declaring  that  he 
only  conformed  an  established  rule  of  law  "  on  a  subject 
which,  least  of  all  others,  endured  uncertainty  and  change."  ' 
But  this  view  may  be  regarded  as  overruled,  for  the  great 
preponderance  of  authority  is  to  the  effect  that,  unless  the 
Iiolder  took  the  bill  on  the  face  of  the  promise,  it  is  not  an 
acceptance.*  And  in  Massachusetts,  it  has  been  held  that  a 
promise  to  accept  a  bill  contained  in  a  letter  to  the  drawer, 
written  after  the  holder  took  the  bill,  would  not  enable  him 
to  sue  the  drawee  as  acceptor,  even  though  the  bill  was  ex- 

»  Merchants'  Bank  v.  Griswold,  16  K  Y.  S.  C.  (9  Hun),  505. 

=  Powell  V.  Monnier,  1  Atk.  611  (1737). 

MVynne  v.  Raikcs,  5  East,  511;  3  Smith,  98,  S.  C.  (1804);  sec  Fuirlce  v. 
Herring,  3  Bing.  525  (1836). 

*  Picrson  v.  Dunlop,  3  Cov.p.  571  (1777);  Kennedy  v.  Geddes,  8  Porter  (Ala.) 
268;  Lagriie  v.  ^Yoodruff,  38  Ga.  649;  McEvers  v.  Mason,  10  Johns.  3i>7;  Lewis 
V.  Kramer,  3  Md.  389;  Storer  v.  Logan,  9  Mass.  58;  Wilson  v.  Clements,  3 
Mass.  10. 


442  PROMISES  TO   ACCEPT   BILLS   OF   EXCHANGE. 

pressed  to  be  drawn  "  against  twelve  bales  of  cotton,"  and  had 
been  discounted  on  tlie  credit  thereof.^  There  are,  however, 
cases  in  the  United  States  which  hold  the  contrary  view  as 
applied  to  existing  bills,  and  maintain  that  they  need  not 
have  been  taken  on  faith  of  the  promise  to  make  it  operate 
as  an  acceptance.^ 

§  553.  Fourth.  As  to  a  ivritten  promise  to  the  draioer  to 
accept  a  non-existing  hill^  luJiich  was  not  communicated  to  the 
holder  before  he  received  it,  the  decisions  are,  alike,  jarring 
and  perplexing.     More  than  a  century  ago  it  was  held  that  a 
written  promise,  contained  in  a  letter,  to  bonor  a  bill  to  be 
drawn,  operated  as  an  acceptance  of  it,  although  the  credit 
on  which  the  bill  was  drawn  was  given  before  the  promise  to 
accept  was  made ;  and  the  doctrine  there  recognized  is  that 
a  naked  promise  to  accept  operates  as  an  acceptance,  whether 
the   holder  take  the  bill  on  the  faith  of  it  or  not.      Lord 
Mansfield  said:  "'I  will  give  the  bill  due  honor,'  is  the  same 
as  accepting  it.     If  a  man  agrees  that  he  will  do  the  formal 
part,  the  law  looks  upon  it  (in  the  case  of  an  acceptance  of  a 
bill)  as  if  actually  done.     This  is  an  engagement  '  to  accept 
the  bill,  if  there  w\as  a  necessity  to  acce2:)t  it,  and  to  pay  it 
when  due,'  and  they  could  not  afterward  retract.     It  would 
be  very  destructive  to  trade,  and  to  trust  in  commercial  deal- 
ing if  they  could."     Mr.  Justice  Wilmot  said:  ^^ Fides  ser- 
vanda est ;  an  acceptance  for  the  honor  of  the  drawer  shall 
bind  the  acceptor,  and  so  shall .  a  verbal  acceptance.     And 
Avbether  this  be  an  actual  acceptance,  or  an  agreement  to  ac- 
cept, it  ought  equally  to  bind."     Mr.  Justice  Yates  said  :  "  A 
promise  to  accept  is  the  same  as  an  actual  acceptance ;  and  a 
small  matter  amounts  to  an  acceptance."     Mr.  Justice  Aston 
declared    that   "  a    promise    to    accept  ^vas    an  im2:>lied  ac- 
ceptance." ^ 


'  Bank  of  St.  Louis  v.  Rice,  98  Mass.  288;  s.  c.  107  Mass.  41. 
^  Mason  v.  Dousay.  3.5  III.  424;  Jones  v.  Bank  of  Iowa,  34  111.  313  ;    Read  v. 
Marsh,  T)  B.  Monr.  8. 

=  Pillan  V.  Van  Mierop,  3  Burr.  1G33  (17G5);  see  ante,  §  552. 

In  Read  v.  Marsh,  5  B.  Mon.  10  (1844),  Breck,  J.,  said  :  "  It  seems  to  be  now 


WRITTEN   AND  VERBAL   PROMISES.  443 

§  554.  But  Lord  Mansfield  soon  qualified  the  opinion 
quoted,  by  observing  in  a  subsequent  case  (where,  however, 
the  promise  was  made  to  the  liolder  of  an  existing  bill),  that : 
"  It  has  been  truly  said,  as  a  general  rule  that  the  mere  answer 
of  a  merchant  to  the  drawer  of  a  bill,  saying,  '  he  will  duly 
honor  it,'  is  no  acceptance  unless  accompanied  with  circum- 
stances which  may  induce  a  third  person  to  take  tin;  bill  by 
indorsement.  But  if  there  are  any  such  circumstances,  it 
may  amount  to  an  acceptance,  though  the  answer  be  con- 
tained in  a  letter  to  the  drawer."  ^  And  this  view  generally 
obtains,  that  the  promise  to  the  drawer  must  induce  the 
holder  to  take  the  bill,  thereafter  drawn,  in  order  to  amount 
to  acceptance  of  it.^ 

§  555,  Fifth.  As  to  a  verbal  promise  to  accept  an  existing 
hill,  xoliicli  is  communicated  to  the  holder,  and  induces  him  to 
take  it,  it  was  conceded  by  Le  Blanc,  J.,  in  the  case  cited  be- 
low,^ that  it  would  amount  to  an  acceptance  (upon  the  au- 
thority of  Pierson  v.  Dunlop,  ante,  §  554);  but  the  bill  in 
question  having  been  drawn  subsequent  to  the  j^romise,  this 
particular  question  did  not  arise. 

§  556.  Sixth.  As  to  a  verbal  promise  to  accept  a  non-exist- 
ing bill,  which  is  communicated  to  the  holder  and  induces  him 
to  take  it ;  this  particular  point  was  decided  by  the  Court  of 
Exchequer,  which  held  that,  notwithstanding  the  bill  had 
been  discounted  on  the  credit  of  the  promise,  by  the  holder, 
it  did  not  amount  to  an  acceptance  of  it.'*  And  the  same 
view  has  been  taken  in  the  United  States.^ 

§  557.  Seventh.  As  to  a  verbal  promise  to  accept  an  exist- 
ing bill,not  communicated  to  the  holder  before  he  takes  it. — We 

well  settled  that  a  letter,  promising  to  accept  or  protect  a  bill,  whether  written 
before  or  after  it  is  drawn,  may  operate  as  an  acceptance,  and  that  it  may  so 
operate,  although  the  holder  has  not  been  induced  by  such  letter  or  promise  to 
take  the  bill." 

'  Pierson  v.  Dunlop,  2  Cow.  571  (1777). 

"  Lewis  V.  Kramer,  3  ?tld.  289 ;  Storer  v.  Logan,  9  Mass.  58 ;  antf^  §  552. 

»  Johnson  v.  Collings,  1  East,  1'8  (1800). 

*  Bank  of  Ireland  v.  Archer,  11  M.  «&  W.  (1843),  ParUe,  B. 

*  Kennedy  v.  Geddes,  8  Porter  (Ala.),  2G8 ;  see  2  Rob.  Prac.  (N.  cd.)  156. 


444  PROMISES  TO  ACCEPT  BILLS  OF   EXCHANGE. 

know  of  no  case  In  wlilcli  this  identical  question  lias  been  de- 
cided. Its  determination  must  be  reached  according  to  the 
principles  stated  under  other  heads. 

§  558.  Eighth.  As  to  a  verhal  promise  to  accept  a  non-ex- 
isting  hill^  not  commimicated  to  the  holder^  this  was  held  no 
acceptance  in  an  English  case  ;  but  Le  Blanc,  J.,  thought,  if 
he  had  taken  the  bill  on  the  faith  of  the  promise,  it  would 
be  different.  Grose,  J.,  declared  that :  "  No  authority  has 
been  cited  to  show  that  by  the  law  merchant  a  mere  promise 
to  accept  a  bill  to  be  drawn  in  future,  amounts  to  an  actual 
acceptance  of  the  bill  when  drawn."  Lord  Kenyon,  C.  J., 
said  that  the  fact  that  this  was  a  non-existing  bill  varied  the 
case  from  those  previously  decided,  and  that  "  he  knew  not 
by  what  law  such  a  promise  was  binding  as  an  acceptance."  ^ 
And  this  view  is  generally  concurred  in.'^ 

§  559.  From  this  review  of  the  adjudicated  cases  it  will 
be  seen  how  vacillating  and  conflicting  they  have  been.  In 
some  tlie  criterion  is  declared  to  be,  whether  or  not  the 
holder  took  the  bill  on  the  faith  of  the  promise.  In  others, 
this  is  deemed  immaterial.  In  some,  a  distinction  is  taken 
between  existing  and  non-existing  bills ;  and  in  some  be- 
tween written  and  verbal  promises.  And  it  is  often  la- 
mented that  anything  has  been  deemed  to  be  an  acceptance 
of  a  bill  but  an  express  acceptance  in  writing.^  Certainly 
this  would  have  greatly  simplified  the  law ;  but  this  is  not 
the  law.  And,  amid  jarring  opinions  we  are  left  to  pursue 
the  course  which  reason  commends.  As  verbal  acceptance 
is  as  effectual  as  written  acceptance,  it  would  seem  to  follow 
as  a  necessary  sequence,  that  a  parol  promise  to  accept 
should  be  as  effectual  as  a  written  promise — provided  no 
statutory  enactment  discriminated  between  them.  In  either 
case,  however,  it  is  a  sound  view  of  the  law,  as  it  seems  to 


'  Johnson  v.  Collings,  1  East,  98  (1800);  see  2  Rob.  Prac.  (N.  ed.)  153. 

'  Bank  of  Michigan  v.  Ely,  17  Wend.  508;  Wilson  v.  Clements,  3  I^Iass.  10. 

»  Johnson  v.  Collings,  1  East,  98  (1800),  Lord  Kenyon,  C.  J, ;  Boyce  v.  Ed- 
wards, 4  Pet.  122;  Espy  v.  Bank  of  Cincinnati,  18  Wall.  620;  3  Rob.  Prac.  (N. 
ed.),  153. 


WRITTEN  AND   VERBAL   TUOMISES.  445 

US,  to  require  either  tluit  the  promise  shouhl  be  made  to  the 
liokler  of  tlie  bill  then  iu  possession  of  it,  in  wliicli  case  he  is 
brought  in  privity  with  the  drawee;^  or  tliat  the  promise, 
when  made  to  the  drawer,  should  have  been  communicated 
to  the  holder,  and  entered  into  the  inducement  to  his  taking 
it.  It  is  true,  that  if  there  had  been  an  actual  acceptance  of 
the  bill  by  parol,  or  otherwise,  before  the  holder  took  it,  it 
would  be  available  to  him,  althougli  he  was  unconscious  of 
it  until  afterward.  It  would  be  the  same  as  a  faintly  writ- 
ten acceptance  on  the  bill,  subsequently  discovered — for  it 
was  engrafted  on  the  bill  in  law  at  the  tinie.  But  a  promise 
to  accept  is  different.  When  made  to  the  drawer  it  may  be 
construed  as  authority  to  him  to  tell  the  holder  that  the 
drawee  will  accept  it.  If  the  drawer  exercises  that  authority 
the  holder  is  brought  in  privity  with  the  drawee,  and  the 
promise  to  accept  may  be  regarded,  in  such  a  case,  as  an 
acceptance  by  anticipation.  But  if  not  communicated  to  the 
holder  the  drawer  only  is  wronged  by  the  breach  of  prom- 
ise— the  proposition  from  the  drawee  to  the  draw^er,  the 
authority  from  the  drawee  is  unexercised — no  new  credit  or 
obligation  respecting  the  bill  is  created ;  and  the  drawer,  in 
case  of  subsequent  dishonor,  must  be  left  to  sue  the  drawee 
for  breach  of  promise  to  accept. 

§  560.  In  order  that  the  promise  to  accept  a  non-existing 
bill  shall  amount  to  acceptance,  there  are  two  indispensable 
requisites:  First,  that  it  should  be  w^ritten  within  a  reason- 
able time  before  the  l)ill  is  drawn,  for  otherwise  the  drawer 
will  be  presumed  to  have  declined  to  act  on  the  authority 
granted  him  to  draw,  and  the  drawee  will  not  be  construed 
to  have  intended  an  indefinite  liability."  And  second,  the 
promise  must  so  describe  the  bill  that  there  can  be  no  doubt 
of  its  application  to  it.  High  authorities  go  further,  and 
declare  that  the  promise  nuist  put  its  finger,  so  to  speak, 
upon  the  specific  bill ;  and  that  otherwise,  if  the  promise  be 

'  Miln  V.  Prest,  4  Camp.  393<1816). 

"  Coolidge  V.  Payson,  2  Wheat.  66  ;  Grccle  v.  Parker,  5  Wcml.  414  ;  Casscl  v. 
Dovv's,  1  Blatch.  C.  C.  '6Zo. 


44G  TROMTSES  TO  ACCEPT   BILLS   OF   EXCHANGE. 

broken,  the  promisor  may  be  sued  by  the  drawer  for  breach 
of  promise  to  accept ;  but  cannot  be  sued  by  any  one  as  ac- 
ceptor.^ Thus  where  a  letter  of  credit  addressed  to  Mr.  A. 
stated :  "  Mr.  B.  C,  of  D.,  is  authorized  to  draw  on  us  for 
the  amount  of  any  lots  of  cotton  whicli  he  may  buy  and  ship 
to  us,  as  soon  after  as  opportunity  will  offer;  such  drafts  ^vill 
be  duly  honored  by,  yours,  &c.,  E.  F. ;"  it  was  held  that  it 
did  not  operate  as  an  acceptance  of  certain  bills  drawn  by 
A.  on  E.  F.  The  reasons  assigned  were,  firs£,  that  it  was 
written  two  years  before  the  bill  was  drawn,  and,  further, 
"  what  is  conclusive  against  its  being  considered  an  accept- 
ance," said  Thompson,  J.,  "  is,  that  it  has  no  reference  what- 
ever to  these  particular  bills,  but  is  a  general  authority  to 
draw  at  any  time,  and  to  any  amount,  upon  lots  of  cotton 
shipped  to  them.^ 

§  5G1.  But,  wliile  it  should  clearly  appear  that  the  bill 
corresponds  to  the  authority,  or  promise,  we  cannot  perceive 
that  there  sliould  be  any  nicety  of  description  either  as  to 
number,  amount,  date,  or  otherwise.  The  burden  of  proof 
is  upon  the  holder  to  establish  that  by  comparing  the  face 
of  the  bill  with  the  promise ;  or  the  bill  in  connection  with 
the  transaction  in  wliich  it  is  dra^vn  ^vith  the  promise — that 
it  comes  fairly  and  reasonably  within  its  terms.  This  done, 
there  can  be  no  reason  why  the  pi-omisor  may  not  be  sued  as 
an  acceptor,  as  well  as  for  breach  of  promise  to  accept.  In 
either  case  the  correspondence  of  the  bill  with'  the  promise 
must  be  proved,  and  a  cause  of  action  existing  there  does 
not  seem  to  be  any  sufficient  reason  for  determining  tliat  the 
character  of  the  proof  must  shape  its  form,  and  also  de- 
termine whether  it  shall  be  brought  by  the  holder  of  the 
bill  who  has  taken  it  on  the  faith  of  the  promise,  or  1)y  the 
drawer,  whose  just  expectations  have  been  disappointed. 
The  doctrine  that  the  drawer  may  sue  for  breach  of  promise 

'  Coolidge  V.  Payson,  2  Wheat.  66;  Boyce  v.  Edwards,  4  Pet.  Ill;  Schim- 
melpennich  V.  Bayard,  1  Pet.  264;  Casscl  v.  Dows,  1  Blatch.  335;  CarroUton 
Bank  v.  Tayleur,  16  La.  O.  S.  490. 

'  Boyce  v.  Edwards,  4  Pot.  H. 


.WRITTEN   AND  VERBAL  PR03I1SES.  447 

to  accept  when  the  l)ill  is  not  accurately  described  in  the 
promise,  but  that  sucli  promise  does  not  operate  as  an  accept- 
ance, has  been  well  said  to  rest  on  a  distinction  without  a 
difterence.^  And  in  New  York  the  views  here  expressed 
have  been  adopted  in  numerous  cases.  Where  the  letter  of 
credit  addressed  to  the  drawers  ran,  "  I  hereby  authorize  you 
to  draw  on  me,  at  ninety  days,  from  time  to  time,  for  such 
amounts  as  you  may  require,  provided  that  the  whole  amount 
running  and  unpaid  shall  not  exceed  three  thousand  dollars, 
<fec.,"  Bronson,  J.,^  after  quoting  the  cases  cited  in  the  sub- 
joined note,^  said :  "  These  cases  show  that  the  written 
promise  to  accept  need  not  contain  a  particular  description 
or  identification  of  the  bill  to  be  drawn.  It  is  enough  that  it 
be  drawn  in  pursuance  of  the  authority.  The  plaintiff  re- 
ceived and  discounted  the  bill  upon  the  faith  of  the  letter, 
and  it  was  drawn  in  pursuance  of  the  authority ;  the  judge 
was  right  in  charging  the  jury  that  there  was  a  sufficient  ac- 
ceptance." In  a  recent  Illinois  case  this  view  was  admirably 
stated  and  illustrated.* 

'  Bissell  V.  Lewis,  4  Mich.  450;  Nelson  v.  First  Nat  Bank,  48  III.  39. 

^  Ulster  County  Bank  v.  McFurland,  5  Hill,  444  (1843);  3  Denio,  553  (1846). 

.'  Tarkcr  v.  Gieele,  2  Wend.  545;  Greele  v.  Parker,  5  Wend.  414;  Bank  of 
Michigan  v.  Ely,  17  Wend.  508. 

*  In  Nelson  v.  First  National  Bank,  48  111.  39,  it  appeared  that  a  party  had 
taken  a  check  upon  the  faith  of  a  promise  by  the  bank  to  pay  the  drawer's  check. 
The  Court  said:  "It  is  objected  in  the  present  case  by  counsel  for  appellee,  that 
the  promise  to  pay  by  tlic  bank  did  not  sufficiently  identify  the  checks  to  which 
the  promise  was  to  be  applied,  and  the  case  of  Boyce  v.  Edwards,  4  Pet.  122,  is 
cited  as  an  authority  in  point.  The  authority  of  that  case  is  certainly  to  the  ef- 
fect that  the  promise  of  the  bank  cannot  be  treated  as  a  technical  acceptance,  for 
want  of  identification  of  the  checks.  We  may  be  permitted  to  say,  however, 
that  the  difference  between  a  promise  to  accept  a  particular  bill  or  check  to  be 
therealter  drawn,  and  a  promise  to  accept  all  checks  which  a  person  might  draw 
for  a  specific  purpose,  is  so  extremely  technical  and  refined  that  wc  sliould  be  in- 
clined, where  the  plaintiff  had  received  the  check  or  bdl  upon  the  t'aitli  of  the 
promise,  and  had  sued  on  the  promise  as  an  acceptance,  to  bold  with  the  Su- 
preme Court  of  Michigan,  Bissell  v.  Lewis,  4  Mich.  450,  that  it  was  a  distinc- 
tion without  a  difi"erence.  It  seems  to  us,  a  fair  construction  of  the  language  of 
Chief  Justice  ^larshall  would  require,  not  that  the  promise  should  describe  the 
bill  to  be  drawn  and  accepted,  by  its  date  and  amount,  and  the  name  of  the 
drawee,  :is  that  would  be  generally  imi)ossiblc;  but  merely  in  such  a  mode  that 
there  could  be  no  possible  doubt  as  to  the  application  of  the  promise  to  the  bill 


448  PROMISES  TO  ACCEPT  BILLS  OF   EXCHANGE. 

§  562.  The  rule  that  tlie  promise  to  accept,  designating 
tlie  specific  l)ill,  amounts  to  an  acceptance,  seems  ai:>plicable 
only  to  the  cases  of  bills  payable  on  demand,  or  at  a  fixed 
time  after  date,  and  not  to  bills  payable  at  or  after  sight ; 
for,  in  order  to  constitute  an  acceptance  in  the  latter  cases,  a 
presentment  is  indis2:>ensable,  since  the  time  that  the  bill  is  to 
run  cannot  be  otherwise  ascertained.^  And  a  mere  promise  to 
accept  without  more,  it  is  thought,  applies  only  to  bills  pay- 
able at  the  drawee's  or  payee's  place  of  business.^ 

An  ofi'er  to  accept  a  draft  which  is  still  in  the  drawer's 


to  be  drawn.  A  description  of  sufficient  certainty  could  thus  be  made  to  apply 
to  a  series  of  bills,  as  well  as  Xp  one  bill.  In  the  present  case,  for  example,  there 
can  be  no  difficulty  in  applying  the  promise  of  the  bank  to  the  check  under  con- 
sideration. Indeed,  in  this  very  case  of  Boyce  v.  Edwards,  tlie  court,  while 
giving  so  technical  a  construction  to  the  language  of  Chief  Justice  Marshall,  say 
the  reason  of  tlie  rule  is,  'that  the  party  who  takes  the  bill  upon  the  credit  of 
such  authority  may  not  be  mistaken  in  its  application.'  If  that  be  the  reason  of 
the  rule,  it  wonld  seem  that  any  description  should  be  held  sufficiently  certain 
which  would  leave  no  doubt  that  a  particular  bill  or  series  of  Ijills  was  intended 
by  the  promise,  and  had  been  negotiated  upon  its  faith." 

"The  question,  however,  wdiether  the  promise  in  this  case  can  be  considered 
a  technical  acceptance,  we  do  not  propose  to  decide,  and  it  is,  indeed,  of  no 
practical  importance,  for  in  this  same  case  of  Boyce  v.  Edwards,  on  which  counsel 
for  appellant  rely  as  showing  the  promise  not  to  be  an  actual  acceptance,  it  is 
held  that,  though  a  recovery  cannot  be  had  upon  the  bill  as  an  accepted  bill, 
it  may  be  had  in  an  action  founded  upon  a  breach  of  the  promise  to  accept.  In 
an  action  of  the  latter  character  the  court  say,  '  tlie  evidence  may  be  of  a  more 
general  character,  and  the  authority  to  draw  may  be  collected  from  circumstances, 
and  extended  to  all  bills  coming  fairly  within  the  scope  of  the  promise.'  The 
court  further  say,  '  as  respects  the  rights  and  the  remedy  of  the  immediate  parties 
to  the  promise  to  accept,  and  all  others  who  may  take  bills  upon  the  credit  of 
such  promise,  they  are  equally  secure  and  equally  attainable  by  an  action  for  the 
breach  of  tlie  promise  to  accept,  as  they  could  be  by  an  action  on  the  bill  itself.' 
That  a  recovery  may  be  had  in  an  action  of  the  character  above  indicated, 
is  also  held  in  Cassel  v.  Dows,  1  Blatch.  335;  Russell  v.  Wiggins,  2  Story,  213; 
Lonsdale  v.  Lafayette  Bank,  18  Ohio,  136;  Bissell  v.  Lewis,  4  Mich.  450.  See 
also  Storer  v.  Logan,  9  Mas3.  55;  Carnegie  v.  Morrison,  2  Mete.  4CG;  Goodrich 
v.  Gordon,  15  Johns.  G;  Schimmclpennich  v.  Bayard,  1  Pet.  2G4." 

"That  the  promise  of  the  bank  in  tliis  case  so  far  identified  the  checks  to 
which  it  was  to  be  applied  as  to  enable  the  appellant  to  maintain  an  action  for 
its  breach,  is  settled  by  the  foregoing  authorities  and  by  others  which  might  be 
cited." 

'  See  Story  on  Bills  (Bennett's  ed.),  §  249;  Edwards  on  Bills,  414;  Wildes  v. 
Savage,  1  Story  C.  C.  R.  28. 

"  Michigan  State  Bank  v.  Leavenworth,  28  Vt.  209. 


WRITTEN  AND   VERBAL  niOMlSES.  449 

hands  may  be  withdrawn  at  any  time  before  it  has  been  act- 
ually presented  for  ac'cei)tance/ 

§  503.  In  respect  to  the  person  loho  may  avail  himself 
of  an  acceptance^  it  is  obvious  that  if  it  be  written  upon 
the  bill,  every  holder  acquires  it  as  constituting  in  chief  the 
instrument  itself.  And  there  seems  to  be  no  difierence  in 
the  law  when  the  acceptance  is  contained  in  a  separate 
writing,  or  has  been  by  parol  merely,  and  whether  the  holder 
has  been  informed  of  its  existence  or  not.  Thus,  where  a 
letter  was  written  by  the  drawees  of  a  bill  in  England  to 
the  drawer  in  America,  stating  that  "they  would  certainly 
accept  or  pay  the  l)ill,"  it  was  held  an  acceptance  in  law,  al- 
though the  bill  was  refused  payment,  and  the  letter  was  not 
received  by  the  drawer  until  after  the  bill  became  due.^ 
And  so,  wdiere  there  had  been  a  parol  acceptance  of  a  bill, 
it  was  held  that  the  acceptor  was  bound  to  the  indorsee,  al- 
though the  latter  had  caused  the  bill  to  be  protested  in  igno- 
rance of  such  acceptance. 

"  It  has  been  deterniined  in  a  groat  variety  of  cases,"  said 
Best,  C.  J.,  "  that  if  a  bill  comes  into  a  man's  hands  with  a 
parol  acceptance,  though  the  party  who  receives  the  bill 
does  not  know  of  that  parol  acceptance,  he  has  a  right  to 
avail  himself  of  it  afterward.  It  is  impossible  for  any  man 
to  doubt,  on  principles  of  common  sense,  that  such  ought  to 
be  the  law ;  for  if  I  take  a  bill,  I  take  it  with  every  advan- 
tage the  holder  had  before  it  came  into  my  hands.  *  "'  If 
the  plaintiffs  were  ignorant  of  this  (the  parol  acceptance),  it 
is  quite  impossible  that  that  which  they  have  done  in  igno- 
rance can  prejudice  any  right  which  was  before  vested  in 
them."'^ 

§  564.  The  measure  of  damages  for  non-performance  of 
an  agreement  to  accept  a  draft  for  tlie  drawer's  accommoda- 
tion, which  is  still  in  his  hands,  is  the  inconvenience  and  loss 
thereby  occasioned  to  him,  and  not  the  amount  of  the  draft.* 

'  Ilsley  V.  Jones,  12  Gray,  360.  "  Wynne  v.  Raikes,  5  East,  514  (1804). 

'  Fairlec  v.  Ilcrrinn:.  3  Bing.  625;  11  Moore,  520,  S.  C.  (1826). 
*  Ilsley  V.  Jones,  12  Gray,  260. 
Vol.  I.— 29 


450  PROMISES  TO  ACCEPT  BILLS   OF  EXCHAI^GE: 

In  case  a  debt  is  lost  by  tlie  negligence  of  an  agent  to  pre- 
sent the  bill  for  acce|)tance  or  payment,  the  measure  of  dam- 
ages is  prima  facie  the  amount  of  the  bill ;  but  evidence  is 
admissible  to  reduce  the  amount  to  a  nominal  sum.^ 

§  565.  If,  by  promise  and  liability  to  accept,  a  drawee 
induces  a  drawer  to  draw  upon  him,  and  then  refuses  to 
honor  the  bill,  he  will  be  liable  for  all  damages  incurred,  in- 
cluding protest.  In  a  case  before  the  U.  S.  Supreme  Court 
it  appeared  that  the  defendant  had  ordered  the  plaintiff  to 
purchase  salt  for  him,  and  draw  on  him  for  the  amount,  and 
he  having  so  purchased  and  drawn,  it  was  held  tliat  the  de- 
fendant was  bound  to  accept  the  bills,  and  having  failed  to 
do  so,  that  the  plaintiff  was  entitled  to  recover  the  amount 
of  the  bills,  with  damages  and  costs  of  protest,  upon  a  count 
for  money  paid  and  exj^ended,  and  that  the  bills  themselves 
were  good  evidence  on  that  count.^ 

It  seems  that  if  a  person  should  write  a  factor  that  he 
had  consigned  him  certain  goods,  and  would  draw  a  bill  on 
the  credit  thereof  for  a  certain  amount,  the  factor,  if  he  ac- 
cepted the  consignment,  would  T>e  bound  to  accept  the  bill  ; 
and  that  the  payee  of  such  a  bill  could  sue  the  factor  as  upon 
a  breach  of  promise  to  accept.^ 


SECTION  IL 

now   PAROL   ACCEPTANCE  IS   AFFECTED   BY   THE    STATUTE   OF   FRAUDS. 

§  566.  In  those  States  where  there  is  no  statute  prescrib- 
ing what  shall  constitute  an  acceptance,  the  question  of  the 
validity  of  a  verbal  acceptance  may  become  referable  to  the 
statute  of  frauds,  which  declares  that  all  promises  to  pay  the 
debt  of  another  shall  be  void  unless  in  writing.  An  eminent 
legal  writer  says  on  this  subject  that :  "  The  parol  acceptance 
being  no  more  than  a  parol  promise,  it  seems  to  the  author 
that  whether  or  not  the  acceptance  can  be  charged  on  such 

'  Allen  V.  Suyclai7i,  20  Wend.  321  ;  Van  Wort  v.  Woolley,  5  Dow.  &  Ry. 
'  Riggs  V.  Lindsay,  7  Cranch,  500,  '  1  Parsons  N.  &  B.  291. 


now   AFFECTED   BY   STATUTE   OF   FRAUDS.  451 

promise  may  depend  on  wlietlier  tlie  promise  is  to  pay  a  deht 
of  his  own,  or  to  answer  for  tlie  de1)t  of  another.  For,  in  the 
latter  case,  no  action  can  be  lawfully  bi'ouglit  unless  the  prom- 
ise, or  some  meraoranduni  or  note  thereof,  be  in  writing  and 
signed  by  the  party  to  be  charged  thereby  or  his  agent. 
Such  is  the  provision  of  the  Code  of  Virginia."  ^  This  view 
has  been  taken  in  Maine,  wliere  it  was  held  that  a  parol  prom- 
ise to  accept  an  order  from  a  debtor  in  favor  of  his  creditor, 
between  whom  and  the  maker  of  the  promise  there  was  no 
privity,  was  invalid  under  the  statute  of  frauds,  as  a  promise 
to  pay  the  debt  of  another.^  And  there  are  other  authorities 
to  the  same  effect — that  acceptance  must  be  in  writing  if  it 
be  to  pay  the  debt  of  another,  otherwise  it  will  be  void.'^ 

§  567.  It  may  w^ell  be  doubted,  however,  whether  or  not 
the  statute  of  frauds  applies  to  that  class  of  engagements 
which  are  regulated  by  the  peculiar  doctrines  of  the  law 
merchant,  and  the  weight  of  reason  and  of  authority  incline 
us  to  the  opinion  that  it  does  not.  A  recent  discriminating 
\vriter  on  "Verbal  Ao-reements"  lavs  it  down  as  a  cardinal 
principle,  that  "  contracts  the  construction,  validity  and  evi- 
dence of  which  depend  upon  so  much  of  the  law  merchant  as 
the  common  law  recognizes,  or  the  provisions  of  some  other 
statute,  are  exceptions  to  the  operation  of  this  clause  of  the 
statute  of  frauds  ; "  ^  and  the  numerous  cases  which  have  held 
a  verbal  acceptance  or  promise  to  accept  as  binding  are  gen. 
erally  based  upon  the  open  assertion  or  tacit  acknowledg- 
ment of  this  theory.  A  standard  author  considers  a  bill  of 
exchange  as  a  preferable  form  of  security,  on  the  ground  that 
the  statute  of  frauds  does  not  apply  to  it ;  '^  and  such  is  the 

'  Conway  Robinson,  in  his  Practice,  Vol.  2,  new  ed.  p.  153. 

*  Plumnier  v.  Lyman,  49  Me.  229. 

'  Walscficld  V.  Greenheod,  29  Cal.  600,  Sawyer,  J.,  dissenting;  Jlanley  v. 
Geagan,  105  Mass.  445. 

*  Throop  on  Verbal  Agreements,  p.  159,  §  85. 

'  Cliitty  on  Bills,  page  4,  in  wliich  it  is  said:  "  This  security  is  in  sonic  re- 
spects pivlcrable  to  many  others  of  a  more  formal  nature  ;  tor  eacii  of  the  parties 
to  a  bill,  by  merely  writing  his  name  upon  it  as  drawer,  acceptor,  or  indorser 
impliedly  guarantees  the  due  payment  of  it  at  maturity,  and  the  consideration, 


452  PROMISES   TO   ACCEPT   BILLS   OF   EXCHANGE. 

general   understanding,  as    we   believe,  of  the   commercial 
"vvorld.^ 

§  568.  It  is  not  necessary,  Lowever,  as  it  seems,  to  main- 
tain that  the  statute  of  frauds  is  wholly  inaj^plicable  to  the 
cases  arising  under  the  law  merchant  (although  such  is,  as 
we  think,  the  true  doctrine),  in  order  to  sustain  the  A'alidity 
of  verbal  acceptances  and  promises  to  accept.  They  may  be 
enforced  in  some  cases  upon  well  established  principles  of 
estoppel.  The  theory  of  a  bill  of  exchange  is  that  the  drawer 
puts  the  payee  in  his  place,  and  gives  him  the  right  to  receive 
funds  in  the  drawee's  hands  belonging  to  him.  When  the 
drawee  accepts  or  promises  to  accept,  he  says,  in  effect,  to 
the  payee,  "  It  is  true,  I  have  funds  of  the  drawer,  and  will 
pay  them  to  you  as  he  directs."  Now,  if  he  really  has  funds, 
he  does  not  undertake  to  pay  "  the  debt  of  another  "  than  him- 
self, but  simply  to  pay  his  own  debt  "  to  another  "  than  his 


in  respect  ofAvliich  he  l)ecame  a  party  to  it,  can  rarely  be  inquired  into;  where- 
as, in  the  case  of  an  ordinary  guaranty,  tlie  statute  against  frauds  requires  the 
consideration  to  be  expressed,  and  other  matters  of  form  Avliich  frequently  ren- 
der an  implied  guaranty  wholly  imperative."  In  Nelson  v.  First  National  Bank 
of  Chicago,  48  III.  41,  where  a  parol  promise  to  pay  checks  of  the  drawer  was 
held  binding,  the  Court  said,  per  Lawrence,  J. :  "  If  a  parol  promise  to  accept  an 
existing  though  non-present  check  is  binding,  we  are  wholly  unable  to  discover 
wliy  it  should  not  be  equally  so  as  to  a  non-existing  bill,  under  the  authority  of 
the  American  cases,  in  none  of  which  is  any  distinction  made  between  parol  and 
written  promises  of  this  character,  except  where  a  written  promise  is  expressly 
required  by  statute."     See  ante,  pp.  416,  417. 

'  Butler  V.  Prentiss,  6  Mass.  430,  Parsons,  C.  J.,  says:  "Neither  a  bill  of  ex- 
change on  its  face  nor  the  indorsements  are  within  the  statute  of  frauds."  In 
Pillans  V.  "Van  Mierop,  3  Burr.  1674,  the  defendants,  in  expectation  of  having 
funds  of  the  payee  in  their  hands,  agreed  to  honor  the  plaintiff's  draft  to  be 
thereafter  drawn  to  reimburse  them  for  money  lent  him.  After  the  loan,  but  be- 
fore the  draft  was  drawn,  the  payee  failed,  and  the  defendants  notified  the  plaint- 
iff that  the  draft  would  not  be  accepted ;  but  it  was  drawn  nevertheless  and  dis- 
honored. The  agreement  being  by  written  correspondence,  no  question  arose  as 
to  the  statute  of  frauds;  but  Lord  Mansfield  said  he  had  no  idea  that  "promises 
for  the  debt  of  another"  were  aj^plicable  to  the  present  case;  that  this  was  a 
mercantile  transaction,  and  credit  was  given  upon  a  supposition  "that  the  person 
who  was  to  draw  upon  the  undertakers  \^ithin  a  certain  time  had  goods  in  his 
hands,  or  would  have  them.  Here  the  plaintiffs  trusted  to  this  undertaking, 
therefore  it  is  quite  upon  another  foundation  than  that  of  a  naked  promise  from 
one  to  pay  the  debt  of  another."     See  Spalding  v.  Andrews.  48  Penn.  St.  411. 


now   AFFECTED   BY   STATUTE   OF   FRAUDS.  453 

original  creditor,  as  is  conceded ;  ^  and  wlien  an  acceptance 
or  promise  to  accept  is  communicated  to  the  bolder,  and  he 
takes  the  l)il]  on  the  faith  thereof,  he  has  a  right  to  presume 
the  condition  of  things  which  the  acceptor  or  promisor  to  ac- 
cept impliedly  asserts,  and  such  acceptor  or  promisor  should 
be  esto])ped  from  denying  it.  A  promise  by  A.  to  pay  his 
debt  to  B.,  by  paying  B.'s  debt  to  C,  has  been  well  said,  in 
Wisconsin,  by  Dixon,  C.  J.,  not  to  come  under  the  statute  of 
frauds,  because  simply  a  promise  to  pay  his  own  debt  "in 
that  particular  way."  "^ 

§  569,  There  are  cases  which  hold  that  a  verbal  accept- 
ance without  funds,  or  promise  to  accept,  would  not  be  valid, 
no  consideration  being  given  to  the  inquiry  whether  or  not 
the  holder  knew  the  fact  that  the  acceptance  or  promise  was 
for  accommodation.^  When  the  holder  knows  such  promise 
or  acceptance  to  be  for  accommodation,  it  stands  on  the 
same  footing  as  a  promise  to  indorse,  which  must  be  in 
writing  in  order  to  be  valid,  being  ])lainly  an  engagement  to 
answer  for  the  debt  of  another;^  but  the  inferences  to  be 
drawn  without  such  knowledge  are  altogether  different,  and 
it  would  create  rather  than  prevent  fraud,  to  permit  the 
drawee  to  repudiate  his  acknowledgment  of  funds  after  a  third 
party  has  contracted  upon  the  faith  of  it. 

§  570.  Where  there  is  a  new  and  indei")endent  considera- 
tion moving  at  the  time  from  the  party  to  whom  the  promise 
is  made,  the  statute  of  frauds  does  not  apply.^  Thus,  the 
United  States  Supreme  Court  held,  that  if  a  person  verbally 

'  Shields  v.  MidcUeton,  2  Crancb,  C.  C.  205;  Van  Reimsdyck  v.  Kane,  1  Gall. 
C.  C.  633 ;  Pike  v.  Irwin,  1  Sand.  (N.  Y.)  14 :  Strohecker  v.  Cohen,  1  Spears  (S. 
C),  349;  Brown,  Statute  of  Frauds,  §§  172-174.  Agreement  to  pay  one's  own 
debt  "  to  another''  is  not  agreement  to  pay  debt  of  another.  Spadine  v.  Reed,  7 
Bush  (Ky.),  455;  Besshears  v.  Rowc,  46  .Mo.  501;  see  also  Spalding  v,  Andrews, 
48  Penn.  St.  411. 

"  Putney  v.  Farnhara,  27  Wis.  187;  see  §  570,  note  1. 

3  Pike  V.  Irwin,  1  Sand.  (N.  Y.)  14;  Quin  v.  Hanford,  1  Hill  (N.  Y.).  82; 
Brown  on  Statute  of  Frauds,  174;  see  Townsley  v.  Sumrall,  2  Pet.  170. 

*  Carville  v.  Crane,  5  Hill  (N.  Y.),  583;  Taylor  v.  Drake,  4  Strobb.  (.So.  Car.) 
431. 

'  See  Brown  on  Statute  of  Frauds,  §  175,  note. 


454  PROMISES   TO   ACCEPT  BILLS   OF   EXCHANGE. 

undertake  to  accept  a  1)ill  in  consicleration  tliat  another  will 
purchase  one  already  drawn,  or  to  be  thereafter  drawn,  and  as 
an  inducement  to  the  purchaser  to  take  it,  and  the  bill  is  pur- 
chased upon  the  credit  of  such  promise  for  a  sufficient  con- 
sideration, such  promise  to  accept  was  binding  upon  the 
party,  and  that  it  was  an  original  promise,  and  not  a  promise 
to  pay  the  debt  of  another  within  the  statute  of  frauds.  In 
this  case  the  suit  was  for  damages  for  breach  of  the  con- 
tract, and  therefore  it  was  not  decided  that  such  a  promise 
constituted  acceptance.' 

'  Townley  v.  Sumrall,  2  Pet.  170.  Story,  J.,  said:  "This  is  not  a  case  fall- 
ing within  the  object  or  mischiefs  of  the  statute  of  frauds.  If  A.  says  to  B., 
pay  so  much  money  to  C,  and  1  will  repay  it  to  you,  it  is  an  original,  independent 
promise;  and  if  the  money  is  paid  on  the  faith  of  it,  it  has  been  always  deemed 
an  obligatory  contract,  even  though  it  be  by  parol,  because  there  is  an  original 
consideration  moving  between  the  immediate  parties  to  the  contract.  Damage 
to  the  promisee  constitutes  as  good  a  consideration  as  a  benefit  to  tlie  promisor. 
In  cases  not  absolutely  closed  by  authority,  this  court  has  already  expressed  a 
strong  inclination  not  to  extend  the  operation  of  tiie  statute  of  frauds  so  as  to 
embrace  original  and  distinct  promises  made  by  different  persons  at  the  same 
time  lipon  the  same  general  consideration,  D'Wolf  v.  Rabaud,  1  Pet.  476. 
■■¥  -f  --f  Tlie  question  whether  a  parol  promise  to  accept  a  non-existing  bill 
amounts  to  an  acceptance  of  tlie  bill  when  drawn,  is  quite  a  different  question, 
and  does  not  arise  in  this  case.  If  the  promise  to  accept  were  binding,  the 
plaintiff  would  be  entitled  to  recover,  although  it  should  not  be  deemed  a 
virtual  acceptance;  and  the  point,  whether  it  was  au  acceptance  or  not,  does 
not  appear  to  have  been  made  in  the  court  below.'' 


CHAPTER  XX. 


PRESENTMENT    FOR    PAYMENT. 


§571.  The  engagement  entered  into  by  the  acceptor  of  a 
bill  and  the  maker  of  a  note  is,  that  it  shall  be  paid  at  its 
maturity — that  is,  on  the  day  that  it  ftxlls  due,  and  at  the 
place  specified  for  payment,  if  any  place  be  designated — 
upon  its  presentment.  This  engagement  is  absolute,  but 
that  of  the  drawer  of  a  bill  and  the  indorser  of  a  bill  or  note 
is  conditional,  and  contingent  upon  the  due  presentment  at 
maturity,  and  notice  in  case  it  is  not  paid.  The  maker  and 
acceptor  are  bound,  although  the  bill  or  note  be  not  pre- 
sented on  the  day  it  falls  due ;  but  the  drawer  and  indorsers 
are  discharged  if  such  ^presentment  be  not  made,  unless  some 
sufficient  cause  excuses  the  holder  for  failure  to  perform  that 
duty.*  It  is  imjjortant,  therefore,  to  ascertain  how  the  pre- 
sentment should  be  provided  for  by  the  holder  of  the  bill  or 
note,  lest  by  failure  to  observe  the  necessary  precautions,  the 
drawer  and  indorsers  may  be  discharged,  and  the  solvency  of 
his  debt  destroyed  or  impaired.  We  shall  consider,  there- 
fore, in  order : 

(1.)  The  person  by  whom  the  bill  or  note  should  be 
presented. 

(2.)  The  person  to  whom  the  bill  or  note  should  be 
presented. 

(3.)  The  time  of  presentment. 

(4  )  Days  of  grace,  and  computation  of  time. 

(5.)  The  place  of  presentment. 

(6.)  The  mode  of  presentment. 

•  Chitty  on  Bills  13  Am.  ed.)  [*353].  395  ;    Story  on  Notes,  §  201 ;  Bayloy  on 
Bills,  ch.  T,  §  I ;  Magruder  v.  Bank  of  Washington,  3  Pet.  93. 


450  PRESENTMENT  FOR  PAYMENT. 

SECTIOISr  I. 

BY   WHOM   PKESENTMEKT   FOB   PAYMENT   MUST   BH   MADE. 

§  572.  Any  hona  fide  holder  of  a  negotiable  instrument, 
or  any  one  lawfully  in  possession  of  it  for  the  purpose  of  re- 
ceiving payment,  may  present  it  for  payment  at  maturity.* 
A  notary  pu])lic,  or  any  agent  duly  authorized,  may  make 
presentment  of  the  instrument  for  payment;  and  it  is  well 
settled  that  his  authority  need  not  be  in  writing.^ 

§  573.  The  mere  ^possession  of  a  negotiable  instrument 
which  is  payable  to  the  order  of  the  payee,  and  is  indorsed 
by  him  in  blank,  or  of  a  negotiable  instrument  payable  to 
bearer,  is  in  itself  sufficient  evidence  of  his  right  to  present 
it,  and  to  demand  payment  thereof^  And  payment  to  such 
person  will  always  be  valid,  unless  he  is  known  to  the  payor 
to  have  acquired  possession  Avrongfully.  And  if  the  party 
holding  possession  of  a  negotiable  instrument  which  is  not 
indorsed  by  the  j^^y^e,  or  has  been  indorsed  by  him  specially 
to  another,  and  has  not  been  indorsed  over  by  such  indorsee, 
but  has  been  placed  in  the  holder's  hands  as  agent  for  the 
purpose  of  receiving  payment,  such  agent  may  present  it  for 
payment,  and  payment  to  him  will  be  valid ;  even,  as  it  has 
been  held,  althou2:h  made  in  a  manner  diiferent  from  that 
provided  for  in  the  instructions  to  the  agent.  The  fact  that 
the  instrument  is  not  indorsed  by  the  owner  is,  as  has  been 
held,  under  such  circumstances,  of  no  im])ortance.  Such  in- 
dorsement would  be  necessary  to  the  negotiation  of  the  in- 
strument, but  it  would  not  be  necessary  to  the  validity  of  the 
payment.* 

'  Lefty  V.  Mills,  4  T.  R.  170;  Bacliellor  v.  Priest,  13  Pick.  399;  Sussex  Bank 
V,  Baldwin,  2  Harrison,  487. 

'  Seaver  v.  Lincoln,  21  Pick.  2G7,  in  wliicli  case  presentment  was  made  by  a 
sheriff;  Shed  v.  Brett,  1  Pick.  40;  Hartford  Bank  v.  Bany,  17  Mass.  94;  Free- 
man V.  Boynton,  7  Mass.  483;  Sussex  Bank  v.  Baldwin,  2  Harrison,  487  ;  Hart- 
ford Bank  V.  Stedman,  3  Conn.  489;  Bank  of  Utica  v.  Smith,  18  Johns.  230: 
Williams  v.  Matthews,  18  Cow.  252. 

'Bachellor  v.  Priest,  12  Pick,  399;  Cone  v.  Brown,  15  Rich.  (S.  C.)  262 
(1868). 

*  See  Doubleday  y.  Kress,  CO  Barb.  190  (1871),  and  §  575. 


BY   WHOM   MADE.  i-u 

§  574.  Wlien,  however,  a  bill  or  note  unindorsed  by  the 
payee,  or  indorsed  T)y  tlie  payee  specially,  and  unindorsed  by 
the  indorsee,  is  in  the  possession  of  another  person,  the  ques- 
tion whether  or  not  its  bare  possession  is  evidence  of  his 
right  to  demand  payment,  is  of  a  diflerent  character.  With- 
out the  indorsement  of  the  payee  or  special  indorsee,  such 
possession  would  clearly  not  entitle  the  holder  to  the  privi- 
leges of  a  bo}ia  fide  holder  for  value,  as  at  best  he  w^ould 
only  hold  the  equitable  title  to  the  instrument,^  and  could 
not  sue  at  law  upon  it  as  a  ground  of  action.^  But  it  might 
be  contended  (and  w^e  were  at  one  time  of  the  opinion)  that 
such  possession  should  be  regarded  as  evidence  of  the  holder's 
right  to  demand  payment  as  the  agent  of  the  payee  or  special 
indorsee ;  and  that  a  payment  to  him  would  be  valid,  al- 
tliouo-h  he  was  in  fact  not  authorized  to  receive  it.^  But  this 
we  are  now  satisfied  was  a  misconception  of  the  law.*  Cer- 
tainly if  he  were  in  fact  the  owner's  agent,  a  payment  to 
him  would  be  valid,  although  he  had  produced  no  other  evi- 
dence of  the  fact  than  the  unindorsed  instrument  at  the  time 
when  he  received  it.  But  the  payment  w^ithout  other  evi- 
dence of  ownership  or  agency  w^ould  be  at  the  payor's  risk. 
Possession  without  the  indorsement  might  have  been  acquired 
by  fraud  or  theft,  and  alone  could  not  constitute  sufficient 
evidence  of  any  right  to  the  instrument  whatever,  being 
w^ithout  transfer  of  title,  or  any  collateral  circumstance  of 
a  transfer  in  trust.  Had  the  owner  authorized  the  holder 
to  act  as  his  ao-ent,  an  indorsement  ''  for  collection  "  in  terms, 
an  indorsement  in  blank,  or  a  written  authority  to  collect  it, 
would  be  the  natural  and  proper  mode  of  communicating 
the  fact. 

§  575.  Mr.  Chitty  says  that  any  person  who  happens, 


'  See  Chapter  XXII,  on  Transfer  by  Assignment;  also  Chapter  XXIV,  Sec.  VI. 

-  Hull  V.  Conover,  35  Ind.  372  (1871);  Porter  v.  Cushman,  19  111.  572. 

'  See  Southern  Law  Review  for  April,  1873,  p.  273. 

*  See  ante,  §  573;  Story  on  Agency,  §  98;  Doubleday  v.  Kress,  50  N.  Y.  413 
(overruling  same  case  in  60  Barb.  181),  Peckham,  J.,  saying:  "  Mere  possession 
of  the  note  by  the  assumed  agent,  Murray,  unindorsed,  without  any  otlier  sus- 
taining facts,  is  not  sufficient  to  authorize  payment  to  him." 


458  PRESENTMENT  FOR  PAYMENT. 

wlietlier  by  accident  or  otherwise  (as  by  tlie  feilure  of  an 
agent),  to  be  the  holder  at  the  time  the  bill  or  note  becomes 
due,  and  although  he  has  no  right  to  require  payment  for  his 
own  benefit,  may  and  ought  to  demand  payment,  and  give 
notice  of  non-payment  so  as  to  2:)revent  loss.^ 

Doubtless  the  act  of  such  unauthorized  person  would  be 
sufficient  to  prevent  loss,  as  the  owner's  ratification  of  it 
would  be  presumed ;  but  it  is  not  j^robable  that  the  learned 
author  intended  to  intimate  the  opinion  that  a  payment  to 
him  would  be  valid  unless  ratified,  or  that  his  mere  j^osses- 
sion  of  the  instrument,  unless  it  was  payable  to  bearer  or 
indorsed  in  blank,  was  in  itself  evidence  of  a  right  to  act  as 
or  for  the  owner.  The  doctrine  of  the  text  is  sustained  by 
high  authority;^  and  since  the  foregoing  was  written  has 
been  judicially  established  in  New  York,*^  and  found  favor 
in  Ohio.*  If  the  holder  have,  and  exhibit  extraneous  evi- 
dence of  his  ownership  of  the  instrument,  such,  for  instance, 
as  an  assignment  and  mortgage  duly  executed,  this  will  suf- 
fice without  indorsement,  and  the  party  to  whom  it  is  pre- 
sented would  then  have  no  rio-ht  to  insist  on  an  indorsement.^ 

§  576.  Presentment  hy  indorser. — Whether  or  not  an 
indorser  of  a  bill  or  note  which  has  upon  it  a  subsequent 
special  indorsement,  and  no  prior  indorsement  in  blank,  is 
shown  by  mere  possession  of  the  paper  to  be  entitled  to 
demand  payment,  has  been  much   questioned.     There  are  a 

'  Chitty  on  Bills  (13  Am.  ed.)  [=^365],  410;  see  also  [*394],  445.  In  a  very 
early  case  it  is  said  :  "  If  a  wrong  person  do  show  the  bill,  by  the  custom  of  mer- 
chants this  is  a  good  payment."  Anonymous,  Styles,  366  (1652);  Edwards  on 
Bills,  494. 

2  Thomson  on  Bills,  245 ;  Pothier,  168. 

'  Wardrop  v.  Dunlop,  1  Ilun  (8  N.  Y.  S.  C.  R.),  325  (1874) ;  Doubleday  v. 
Kress,  50  N.  Y.  410  (1872). 

*  Dodge  V.  National  Exchange  Bank,  80  Ohio  St.  1. 

'  Pease  v.  Warren,  25  Mich.  9  (1874).  The  bank  denied  the  right  of  the 
holder  to  insist  on  payment  without  proving  the  payee's  indorsement.  Cooley,  J., 
said  :  "  The  indorsement  would  hav^  been  necessary  to  enable  him  (the  holder) 
to  sue  at  law  on  the  notes  in  his  own  name,  Ijut  if  he  was  the  real  owner  he  was 
entitled  to  demand  and  receive  payment  whether  they  were  indorsed  or  not,  and 
the  formal  assignment,  duly  acknowledged  and  recorded,  was  the  best  possible 
proof  of  ownership.'' 


BY   WHOM   JNIADE.  459 

number  of  cases  which  hold  that  such  an  indorser  cannot 
demand  payment,  for  the  reason  that  it  would  seem  from  the 
face  of  the  paper  itself  that  he  had  parted  with  his  title ; 
and  that  a  receipt  from  the  last  indorsee,  or  a  re-indorsement 
to  him  would  be  necessary  to  re-establish  it.  This  doctrine 
was  laid  down  in  an  early  case  by  the  Supreme  Court  of  the 
United  States/  and  some  of  the  State  tribunals  have  taken 
the  same  view;^  but  in  a  more  recent  case  the  Supreme 
Court  of  the  United  States  expressed  the  opposite  opinion, 
which  seems  to  us  the  correct  one.^  Some  of  the  cases  hold 
that  possession  of  the  bill  by  a  prior  indorser  is  sufficient 
where  the  subsequent  indorsements  are  canceled ;  *  but  the 
better  view  seems  to  be,  and  it  is  sustained  by  most  respect- 
able authority,  that  it  makes  no  difference  that  the  subse- 
quent  indorsements  remain  uncanceled.^  The  party  may  not 
be  still  the  proprietor  in  interest  of  the  instrument,  but  his 
possession  of  it  would  be  prima  faeie  evidence  that  he  had 
paid  it  himself  to  a  subsequent  indorsee,  and  had  re-acquired 
the  right  to  demand  payment.  And  it  would  also  be  con- 
sistent with  the  idea  that  he  was  holding  it  and  suing  for 
the  benefit  of  a  subsequent  indorsee.*^ 

§  577.  It  is  intimated  by  Story  that  a  different    rule 


'  Welch  V.  Lindo,  7  Cranch  S.  C.  159. 

"  Thompson  v.  Flower,  13  Mart.  (La.)  301,  where  it  was  held  that  the  last 
indorsement  l)eing  canceled  was  insufficient;  see  also  Sprigg  v.  Cuny,  19  lb.  253. 
In  Dehers  v.  Harriott,  1  Show.  163,  it  was  held  that  a  bill  payable  to  A.,  and 
indorsed  by  him  to  B.,  and  by  B.  to  C,  might  be  sued  on  by  B.,  it  appearing, 
however,  that  C.  had  no  interest.  And  in  Mendez  v.  Carreroon,  I  Ld.  Raym. 
742,  the  prior  indorser  suing  the  acceptor  was  non-suited,  it  appearing  tliat  he 
had  been  sued  by  a  subsequent  indorser,  and  not  appearing  that  he  had  paid  the 
bill. 

=  Dugan  V.  United  States,  3  Wheat.  172  (1818)  ;  see  Domingo  Franca  v. , 

12  Mod.  345  (1699). 

'  Bank  of  Utica  v.  Smith,  18  Johns.  230;  Bowie  v.  Duvall,  1  Gill.  &  J.  175; 
Chautauqua  Co.  Bank  v.  Davis,  21  Wend.  584;  Dollfus  v.  Frosch,  1  Dcnio,  3G7 ; 
Biinkley  v.  Going,  Breese,  288 ;  Kyle  v.  Thompson,  3  Scam.  433. 

'  Dugan  V.  United  States,  3  Wheat.  172;  Lonsdale  v.  Brown,  3  Wash.  C.  C. 
404;  Picquet  v.  Curtis,  1  Sum.  478;  Norris  v.  Badger,  6  Cow.  449. 

'  See  Batchellor  v.  Priest,  12  Pick.  399;  Bank  U.  S.  v.  U.  S.  2  IIow.  711; 
Jones  V.  Fort,  9  B.  &  C.  764  ;  Merz  v.  Kaiser,  20  La.  Ann.  377. 


400  TRESENTMENT  FOR  PAYMENT. 

iniglit  a]^ply  where  the  note  was  not  originally  negotiable 
to  order,  or,  if  uegotia1)le,  had  been  indorsed  restrictively  to 
a  particular  person  only  ;  and  where,  of  course,  in  either 
case,  the  holder  in  possession  is  not  the  payee  or  the  special 
indorsee  thereof.  Under  such  circumstances  he  considers  the 
mere  production  of  the  note  is  not  ordinarily  deemed  a  suf- 
ficient title  or  authority  to  demand  payment.^  This  is  not 
in  accordance  with  the  views  of  Chitty,  or  the  ratio  de- 
cidendi of  cases  already  quoted  ;  for  while  title  to  the  in- 
strument cannot  pass  without  the  indorsement,  the  posses- 
sion, it  has  been  thought,  may  still  be  evidence  of  agency  to 
demand  payment.  For  reasons  already  stated,  we  think  the 
views  of  Story  are  correct.^ 

§  578.  When  Iwlder  is  dead. — If  the  holder  die  before 
the  time  for  presentment  for  payment,  it  must  be  made  by 
his  pei'sonal  representative.'^  If  there  be  no  personal  repre- 
sentative at  the  time,  presentment  and  demand  within  a  rea- 
sonable time  after  his  appointment  ^vill  be  sufficient  to 
charge  subsequent  parties,  although  presentment  and  de- 
mand were  not  made  at  maturity."* 

If  the  holder's  estate  has  passed  to  an  assignee  in  bank- 
ruptcy, tiie  assignee,  or  some  person  authorized  by  him, 
should  make  presentment.^ 

If  the  holder  is  a  feme  sole,  and  she  has  become  a  married 
woman  at  maturity,  the  ]3resentment  should  be  made  by'  her 
husband;  and  a  presentment  by  her,  without  his  consent  or 
authority,  would  be  insufficient  to  charge  the  maker,  or  vali- 
date a  payment.  If  the  note  belonged  to  a  partnership,  and 
one  member  be  dead  at  maturity,  presentment  should  be 
made  by  the  survivor. 

§  579.  Whether  or  not  demand  of  payment  of  a  foreign 
hill  hy  a  notary^ s  cleric  is  sufficient  as  ground  of  protest. — 


'  story  on  Notes,  ?  247.  ^  See  ante,  §§  574,  575. 

=  1  Parsons  K  &  B.  360;  Story  on  Prom.  Notes,  §  249. 

*  White  V.  Stoddard,  11  Gray,  528. 

*  1  Parsons  N.  &  B.  360;  Edwards  on  Bills,  494 


BY   WHOM   MADE.  4G1 

There  is  no  doubt,  as  we  linve  already  seen,  that  any  person, 
whether  he  be  a  notary  or  not,  having  a  bill  or  note  in  pos- 
session, and  whether  the  bill  be  foreign  or  inland,  may  de- 
mand payment  and  receive  the  amount  due ;  and  that  a  pay- 
ment to  such  person  by  the  drawee  will  discharge  his  obliga- 
tion. 

But  in  respect  to  foreign  bills  which  are  dishonored  by 
refusal  of  acceptance  or  payment,  the  liability  of  the  drawer 
and  indorsers  can  only  be  preserved  by  a  protest  and  no- 
tice— notice  alone  being  necessary  in  the  case  of  inland  bills. 
And  the  custom  is,  when  a  foreign  bill  is  dishonored,  to 
cause  it  to  be  placed  in  the  bands  of  a  notary  public,  and 
again  presented  on  the  same  day,  if  indeed  it  were  not  pre- 
sented by  a  notary  in  the  first  instance,  and  to  be  protested 
by  him  for  non-acceptance  or  payment,  as  tlie  case  may  be.^ 
The  question  has  been  much  debated  whether  or  not  a  pre- 
sentment by  a  notary's  clerk  will  suffice  as  the  foundation  of 
such  protest,  and  the  authorities  are  at  war  upon  it. 

§  580.  English  A'utliorities.—ln  Leftly  v.  Mills,-  Buller, 
J.,  said  :  "  I  am  not  satisfied  that  it  was  a  proper  demand, 
for  it  was  only  made  by  the  banker's  clerk.  The  demand  of 
a  foreign  bill  must  be  made  by  a  notary  public,  because  he  is 
a  public  officer."  This  dictum  led  Mr.  Chitty,  in  an  early 
edition  of  his  work,  to  give  appai-ent  approval  of  the  doctrine 
that  the  notary  in  person  must  make  the  demand.  A  corre- 
spondence then  ensued  between  him  and  the  notaries  of  Lon- 
don, tbe  latter  insisting  "  not  only  that  by  mercantile  usage 
such  presentment  is  regular  (l)y  a  notary's  clerk),  and  is 
almost  invariably  adopted,  but  that  as  far  back  as  the  memo- 
ry of  the  oldest  notary  here  can  extend,  it  has  always  been 
the  custom  so  to  present  them."  And  further,  that  commer- 
cial business  must  instantly  come  to  a  stand  if  a  ditterent  rule 
prevailed ;  "  because  it  would  be  just  as  impossible  for  all  the 
bills  in  this  country  to  be  presented  in  person  by  notaries  as 
by  bankers."     In  reply,  Mr.  Chitty  insisted,  after  careful  con- 


•  Brooks'  Notary,  3d  cd.  71  (1867).  "  4  Term  R.  170  (1791). 


462  PRESENTMENT  FOR  PAYMENT. 

sideration,  tliat  "  it  was  clear,  that  strictly  the  notary  himself 
must  in  all  cases  make  demand  of  payment  before  he  pro- 
tests ; "  ^  though  he  observes  elsewhere  in  his  work,  that  "  the 
number  of  bills  I'equiring  presentment  is  frequently  so  great 
as  to  render  a  jDresentment  by  the  notary  himself  impossible ; 
and  the  constant  practice  is  for  the  clerk  to  make  the  pre- 
sentment."* And  in  a  recent  edition,  it  is  said  in  a  note  by 
the  learned  editor,  that  the  practice  to  allow  the  notary's  clerk 
to  make  the  demand,  "  is  amply  justified  by  the  law  of  prin- 
cipal and  agent,  and  not  questioned  in  any  case  whick  has 
occurred  before  the  courts  of  Eno-land."  ^  Professor  Parsons 
quotes  this  language  with  seeming  approbation,"*  and  there 
are  considerations  which  go  far  to  show  that  at  common 
law  demand  by  the  notary's  clerk  is  sufficient.  In  Scotland 
it  is  considered  sufficient,^  and  sufficiency  of  such  demand,  it 
has  been  said,  is  implied  from  a  case  in  the  Common  Pleas,^ 
but  it  seems  tliat  in  that  case  the  bill  was  not  foreign. 

And  in  another  English  case,'  rej^orted  more  fully  in 
Chitty  on  Bills  ^  than  by  the  reporters,  and  cited  in  New 
York,^  it  would  seem  that  Puller's,  J.  dictum  is  considered 
the  law  of  the  realm.  It  appeared  that  the  notary's  clerk 
presented  a  foreign  bill,  drawn  in  Jamaica  on  London,  and 
afterward  drew  up  the  certificate  of  protest,  which  was- 
signed  and  sealed  by  the  notary  himself,  in  due  form.  It  is 
stated  in  Chitty,  though  not  by  the  reporters,  that  Lord  Ten- 
terden,  C.  J.,  said  it  was  a  void  protest — that  it  was  a  false 
certificate — that  the  notary  had  signed  a  paper  stating  "  I 
presented  and  demanded,"  when  it  appeared  in  evidence  that 
only  his  clerk  had  presented  the  bill,  and  he  himself  knew 
nothing  of  it.  And  the  predominant  view  is  that  in  En- 
gland the  demand  should  be  made  l)y  the  notary  in  person. 

»  Chitty  on  Bills  (13th  Am.  ed.)  [♦490],  519. 

»  Chitty  on  Bills  (13th  Am.  ed.)  [*333],  374 

'  Chitty  on  Bills  (10th  Eng.  ed.)  355,  note  4. 

*  1  Parsons  N.  «&  B.  3G0.  ■•  Tliomson  on  Bills  (Wilson's  ed.)  311. 

'  Poole  V.  Dicas,  1  Bing.  N.  C.  G49  (1835) ;  see  1  Parsons  K  &  B.  641. 

'  Vandewall  v.  Tyrrell,  1  Mood.  &  Malk.  87  (22  E.  C.  L.  R.)  258. 

'  Chitty  on  Bills  (8th  Lond.  ed.)  p.  495,  note;  13th  Am   ed.  519,  note. 

°  Onondaga  County  Bank  v.  Bates,  3  Hill,  57. 


BY   WHOM   MADE.  4G3 

§  581.  State  of  the  authorities  in  the  United  States. — If  it 
were  a  question  of  original  impression  we  should  strongly 
favor  the  admissibility  of  demand  by  a  notary's  clerk  ;  and 
upon  principle  we  cannot  perceive  any  sufficient  reason  why 
it  should  not  be  allowed.  In  point  of  fact,  the  custom  is  al- 
most universal  for  the  demand  to  be  made  by  the  clerk,  and 
whenever  such  custom  is  proved  as  existing  in  a  particular 
place,  it  is  recognized  as  controlling.  When  the  demand  is 
made  by  the  clerk,  the  responsibility  of  the  notary  is  nevei"- 
theless  as  binding,  as  the  clerk  is  merely  his  agent ;  and  every 
consideration  of  convenience  would  seem  to  sustain  the  prac- 
tice. 

But  in  the  United  States  the  courts  have,  almost  without 
dissent,  held  that  at  common  law  it  is  necessary  that  the 
notarv  himself  should  make  the  demand  of  a  foreign  bill ; 
and  that  in  order  to  establish  the  sufficiency  of  a  demand  by 
his  clerk,  a  general  custom,  or  a  statutory  enactment  author- 
izing such  practice,  must  be  proved.^ 

In  a  recent  case  decided  in  Missouri,^  in  an  action  upon  a 
foreign  bill  drawn  in  St.  Louis  on  New  York,  and  in  its 
sequel  decided  in  ]^ew  York  ^  in  an  action  against  the  notary 
for  negligence  in  not  protesting  it  duly,  the  necessity  of  de- 
mand by  the  notary  in  person  was  illustrated  in  the  most 
positive  form. 

In  the  first  case  (Commercial  Bank  v.  Barksdale),  it  ap- 
peared that  the  bill  was  protested  in  New  York  city  on  the 
5th  of  January,  18G1 ;  that  payment  was  demanded  by  Tur- 
ney,  a  notary ;  that  the  protest  was  made  out  by  Varnum, 

'  Sacricler  v.  Brown,  3  McLean,  481  (1844r);  Ocean  National  Bank  v.  Williams, 
102  Mass.  143;  Cribbs  v.-Adams,  13  Gray,  597;  Chenowith  v.  Cbamberlin, 
6  B.  Men.  60  (1845) ;  Bank  of  Kentucky  v.  Carey,  6  B.  Mon.  629  (1846) ;  McClane, 
V,  Fitcb,  4  B.  Mon.  600  (1844);  Carter  v.  Brown,  7  Humph.  548;  Commercial 
Bank  V.  Barksdale,  36  Mo.  563  (1865);  Wittenberger  v.  Spalding,  33  Mo.  421 ; 
Commercial  Bank  v.  Varnum,  3  Lans.  86  (1870) ;  is  overruled  in  49  N.  Y.  275 
(1872);  Burch  v.  Hill,  24  Tex.  153;  Locke  v.  Huling,  24  Tex.  311;  Donegan 
V.  Wood,  49  Ala.  242. 

'  Commercial  Bank  v.  Barksdale,  30  Mo.  563  (1865.) 

'  Commercial  Bink  v.  Varnum,  49  N.  Y.  275  (1872) ;  overruling  same  case 
in  3  Lans.  86. 


404  PRESENTMENT   FOR  PAYMENT. 

also  a  notary,  who  was  a  copartner  witli  Tiirney  in  the  notarial 
business.  Holmes,  J.,  delivering  the  opinion,  said:  "It  is 
well  established  that  the  presentment  and  demand  must  be 
made  by  the  same  notary  who  protests  the  Inll ;  it  cannot 
be  done  l)y  a  clerk,  or  by  any  other  person  as  his  agent, 
though  he  be  also  a  notary.  The  protest  is  to  be  evidence 
of  the  facts  stated  in  it,  of  which  the  notary  is  supposed  to 
have  personal  knowledge,  and  credit  is  given  to  his  official 
statements  by  the  commercial  world  on  the  faith  of  his  pub- 
lic and  official  character."  ^ 

In  court,  the  instrument  speaks  as  a  witness.  Such  state- 
ments made  merely  upon  the  information  of  another  person 
would  amount  to  hearsay  only,  if  the  notary  were  himself 
upon  the  stand  as  a  witness. 

'  "The  notarial  protest  must  state  facts  known  to  the  person  who  makes  it, 
and  he  cannot  delegate  his  official  character  or  his  functions  to  another.  The 
presentment  and  protest  are  governed  by  the  law  of  the  place  where  the  bill  is 
payable  ;  and  on  this  principle  it  has  been  held  that  where  the  statute  law  of  the 
State  (as  iu  Louisiana),  authorizes  notaries  to  appoint  deputies,  a  protest  made  by 
such  deputy,  duly  appointed,  would  be  recognized  as  sufficient.  Carter  v.  Brown, 
7  Humph.  548.  But  no  case  seems  to  have  gone  further  than  this:  Such  deputy 
may  be  considered  as  having  a  semi-official  character,  and  sufficient  authority  by 
force  of  the  statute;  but  without  some  change  in  the  general  rule  of  law,  one 
notary  can  neither  delegate  his  functions  nor  impart  his  own  official  character  to 
another.  Here,  two  notaries  were  in  partnership  in  general  business,  and  one  of 
them  imdertook  to  present  the  bill  and  make  the  demand,  and  the  other  to  draw 
up  the  protest  and  give  the  notice.  They  were  both  notaries,  but  as  such  they 
were  distinct  public  officers,  and  there  can  be  no  partnership  in  such  matters. 
No  law  or  custom  was  proved  to  have  existed  in  the  State  or  city  of  New  York, 
which  changes  the  general  rule  of  tiie  law  merchant  on  this  subject.  It  must 
follow  that  the  protest  made  by  Varnum  can  have  no  validity;  nor  will  that 
made  by  Turney  any  more  avail.  It  seems  to  be  clearly  established  by  tlie  gen- 
eral current  of  authority  that  the  protest  must  be  made  on  the  same  day  with 
the  presentment  and  demand,  though  a  noting  of  tjjg  protest  on  the  bill  itself 
may  be  regarded  as  an  incipient  protest,  or  preliminary  step  toward  a  protest 
which  may  be  completed  afterward,  at  any  time,  by  drawing  up  the  protest  in 
form.  Here  there  was  no  noting  of  the  bill  for  protest,  or  any  memorandum  marked 
on  the  bill  by  Turney;  nor  is  there  any  proof  of  any  distinct  note,  entry  or  memo- 
randum of  protest  made  by  him  on  that  day,  in  any  other  way  than  upon  the  bill 
itself.  It  would  appear  that  he  did  not  make  the  demand  for  the  purpose  of 
protesting  the  bill  himself,  Imt  as  the  agent  of  his  partner,  the  other  notary.  He 
neither  protested  the  bill  nor  noted  it  for  protest  at  the  time;  and  his  drawing 
up  of  a  protest,  long  afterward  must  be  regarded  as  having  no  basis  of  con- 
temporaneous fact  or  present  authority,  and  as  being  entirely  void." 


BY  WnOM  MADE.  4G5 

§  5S2.  In  the  case  in  New  York,  the  Commercial  Bank 
sued  the  notary,  Varnum,  into  whose  hands  the  bill  was 
placed  for  demand,  and  protest  if  necessary,  for  negligence  in 
not  duly  performing  his  function.  And  it  appeared  that  he 
gave  the  bill  to  his  partner,  Turney,  who  presented  it  for 
payment ;  and  on  the  same  day  an  entry  was  made  in  Var- 
num's  protest  book  under  the  joint  supervision  of  Turney  and 
himself,  stating  that  the  bill  was  presented  and  protested  by 
Varnum.  This  was  signed  by  Varnum.  Turney's  name  not 
being  mentioned,  but  his  initials  were  placed  opposite.  It 
was  held  that  by  the  common  law  the  defendant  would  be 
liable,  but  that  evidence  of  a  general  custom  would  be  ad- 
missible to  show  that  in  New  York  the  practice  for  a  notary's 
clerk  to  make  the  demand  was  recognized.* 

To  the  same  eftect  are  numerous  cases,^  and  we  know  of 

*  Commercial  Bank  v.  Varnum,  49  N.  Y.  275  (1872),  overruling  same  case  in 
3  Lans.  8G  (1870),  Peckbam,  J.  saying:  "Conceding  the  rule  at  common  law 
to  be,  in  the  absence  of  any  custom  or  usage  on  the  subject,  that  the  presentment 
and  demand  must  be  made  by  the  notary  in  person,  was  the  testimony  offered, 
of  tlie  universal  usage  in  the  city  of  New  York  for  the  clerk  of  the  notary  to 
make  such  presentment  and  demand  admissible  ? 

"  It  may  be  remarked  that  the  usage  of  merchants  has  established  the  great 
body  of  the  law  in  reference  to  bills  of  exchange. 

"  It  gave  grace  to  such  bills,  and  this  changed  the  contract.  .It  has  settled  the 
particuhir  time  of  demand  by  the  notary.  The  rule  of  law  that  requires  a  protest 
of  a  foreign  bill  is  wholly  founded  upon  the  custom  of  merchants.  Dennistoun  v. 
Stewart,  17  How.  GOG. 

"  In  the  absence  of  any  established  rule  of  law  in  this  State,  by  decision  of  the 
court  or  by  any  statute  requiring  a  demand  to  be  made  by  the  notary  in  person, 
it  is  not  perceived  why  a  usage  such  as  was  aj^proved  was  not  admissible  as  proof 
upon  the  subject.  This  was  the  view  of  the  learned  justice  who  tried  this  case, 
but  he  was  of  opinion  that  the  law  had  been  otherwise  settled  in  this  State.  In 
this,  I  think,  he  was  clearly  in  error.  All  the  decisions  referred  to  by  him  or 
upon  the  argument  at  bar  were  confined  to  the  admissibility  of  certificates  of 
protest,  and  notice  of  bills,  and  notes  under  the  statute  of  1833,  p.  895.  That 
statute  made  no  provision  as  to  what  constituted  a  protest,  but  provided  simply 
what  the  notary's  certificate  should  prima  facie  prove,  and  had  no  reference  Avhat- 
ever  to  the  admissibility  of  this  offered  evidence,  or  to  the  duties  of  notaries  at 
common  law  in  protesting  a  foreign  bill." 

=  Chenowith  v.  Chamberlin,  G  B.  Mon.  60  (1845);  Ellis'  Adm'r  v.  Com- 
mercial Bank,  7  How.  (Miss.)  294  (1843);  Sacrider  v.  Brown,  3  McLean,  381 
(1844). 

Vol.  I.— 30 


4GG  PRESENT3IENT   EOR  PAYMENT. 

no  case  in  the  United  States  in  which  a  contrary  doctrine  has 
been  distinctly  held  ;  so  that  however  weighty  may  seem  the 
considerations  which  nphold  a  contrary  view,  in  this  countiy 
the  principle  may  be  regarded  as  settled. 

§  583.  Distinction  tciken  in  iLentuchj  hetiveen  cleric  and 
deputy. — In  Kentucky  a  distinction  exists  between  the  infer- 
ences to  be  drawn  from  a  demand  by  the  notary's  clerk  and 
by  Ms  deputy,  which  seems  to  us  too  refining,  and  not  to  be 
sustained.  There  it  v/as  held  that  proof  of  a  general  custom 
for  the  notary's  clerk  to  make  demand  prevailing  in  New 
Orleans  Avas  admissible,  and  proof  of  presentment  by  the 
clerk  sufficient.^  In  a  subsequent  case,  where  the  present- 
ment was  also  made  in  New  Orleans  by  a  notary's  clerk,  it 
was  held  insufficient  as  foundation  for  the  protest,  because 
no  evidence  of  the  custom  authorizing  it  appeared  in  the 
record.^  These  two  decisions  were  doubtless  correct ;  but  in 
a  still  later  case  it  was  held  that  where  the  notary  certified 
respecting  a  foreign  bill  that  he  "  presented  the  bill  for  pay- 
ment by  his  deputy  Auguste  Commandeur,"  it  was  sufficient, 
althougli  there  was  no  evidence  that  by  the  laws  of  Louisiana 
a  deputy  was  authorized  to  perform  such  functions.  The 
court  held  that  official  authority  or  authority  of  the  principal 
might  be  implied  in  the  deputy,  when  no  such  authority 
would  be  implied  in  a  mere  clerk.  And  while  it  could  find 
no  authority,  as  was  observed,  for  presentation  by  a  deputy, 
it  considered  that  the  impracticability  of  the  notary  acting 
in  person  in  a  great  commercial  city,  in  all  cases,  and  the 
seeming  necessity  for  authorizing  action  by  deputy,  furnished 
prima  facie  presumption  that  the  presentation  and  protest 
were  made  in  accordance  with  the  law  or  usage  of  New  Or- 
leans.'' 

This  decision  is  directly  controverted  by  the  cases  in  Mis- 
souri and  New  York,  befoi-e  cited,  and  seems  to  us  objection- 
able, on  the  double  ground  that  the  notary  who  makes  the 

'  McClane  v.  Fitch,  4  B.  Mon.  600  (1844). 

'  Chenowith  v.  Chamberlin,  5  B.  Mon.  60  (1845). 

•  Bauk  of  Kentucky  v.  Gary,  6  B.  Mon.  629  (1846). 


BY   WHOM   MADE.  407 

presentment  must  also  make  the  protest,  and  that  departures 
from  the  common  law,  whether  by  statute  or  custom,  must  be 
proved.  Indeed,  the  courts  of  Kentucky  could  take  no  judicial 
notice  of  a  statute  of  Louisiana,  which  must  be  placed  before 
them  in  evidence  in  authentic  form  before  it  can  be  noticed. 

§  584.  The  rule  applies  to  protests  of  inland  hills  and 
promissory  notes  ivlien  protest  of  such  instruments  is  allow- 
able.— The  rule  requiring  the  demand  and  protest  to  be 
made  by  the  notary  in  person  applies,  in  order  to  give  it  full 
force  and  effect,  although  the  instrument  protested  may  be 
an  inland  bill  or  a  promissory  note.  As  to  them,  no  pro- 
test is  necessary,  but  by  statute  in  many  of  the  States  it  may 
be  made,  and  be  accorded  the  same  effect  as  in  the  case  of 
a  foreign  bill.  But  in  such  cases,  in  order  to  possess  the 
same  effect,  it  must  be  made  by  the  same  person,  and  based 
upon  the  same  preliminary  notarial  demand,  as  in  the  case 
of  a  foreign  bill.  For  quoad  the  form  and  effect  of  the  pro- 
test they  are  placed  on  the  same  footing  as  foreign  bills. 
Thus,  in  New  York,  where  the  protest  certified  that  the  no- 
tary caused  the  note  to  be  presented,  it  was  held  insufficient, 
because  he  could  not  delegate  his  functions  to  another ;  and 
that  indeed  such  certificate  would  be  objectionable  as  evi- 
dence of  presentment,  because  the  notary  had  no  personal  or 
official  knowledge  of  the  fact,  and  it  was  but  hearsay  evidence 
at  most.^  So  it  was  held  that  certificate  of  the  notary  that 
the  note  was  presented  by  his  clerk  would  be  defective  on 
like  grounds.^ 

§  585.  But  it  is  to  be  observed  respecting  inland  bills 
and  promissory  notes  that  as  no  protest  is  necessary,  and 
although  no  protest  when  relied  on  will  be  valid  unless  made 
by  the  notary  in  person,  yet  demand  of  payment  of  an  inland 
bill  or  of  a  promissory  note  maybe  made  l)y  the  clerk,  which 
will  be  sufficient  as  the  foundation  of  notice  from  the  notary, 


'  Ouon.laga  County  Bank  v.  Bates,  3  Hill,  5G  (1842). 

'  Sheldon  v.  Benham,  4  Hill,  129  (1843);  to  same  efifect,  Warnick  v.  Crane,  4 
Denio,  460  (1847);  Gawtry  v.  Doane,  61  N.  Y.  90  (1872). 


4G8  PRESENTMENT  FOR  PAYMENT. 

or  otlier  person  actiug  for  the  holder.  But  the  testimony  of 
the  clerk  would  be  necessary  to  show  tlie  due  presentment, 
and  the  testimony  of  the  notary  or  other  party  acting  for 
the  holder  to  show  due  transmission  or  service  of  the  notice.^ 

§  586.  Statutory  authority  or  general  custom  may  he 
proved. — It  is  clear  upon  principle,  and  it  is  agreed  by  the 
authorities,  that  where  there  is  a  statute  authorizins:  the  de- 
mand  or  protest  to  be  made  by  a  notary's  dejiuty  or  clerk,  or 
by  any  other  official,  or  where  there  is  a  general  custom  recog- 
nizing such  practice,  it  may  be  proved,  and  that  in  such  cases 
it  ^vill  be  sufficient  to  show  that  the  statute  or  custom  was 
observed.  Thus,  it  has  been  held  by  the  United  States  Su- 
preme Court  that  where,  as  in  Mississippi  (as  was  proved),  a 
justice  of  the  peace  is  authorized  by  statute  to  perform  the 
functions  and  duties  of  a  notary,  his  act  of  protest  is  equally 
valid  as  that  of  a  lYotary.  ^'- Quoad  hoc ^''  said  the  court,  "he 
acts  as  a  notary."  ^  And  so,  where  it  was  in  evidence  that, 
by  the  laws  of  Louisiana,  each  notary  was  authorized  to  ap- 
point one  or  more  deputies  to  assist  him  in  making  protests 
and  delivering  notices,  and  the  protest  on  its  face  stated  that 
the  notary  A.,  by  his  deputy  B.,,  presented  the  bill,  etc.,  it 
was  held  sufficient.^ 

So,  it  has  been  held  in  a  number  of  cases,  that  evidence 
of  a  custom  for  a  notary  to  act  by  his  clerk  is  admissible,^ 
and  in  Massachusetts  the  doctrine  was  well  expressed  by 
Bigelow,  J.^ 

'  Hunt  V.  Maybep,  3  Seld.  269  (1852). 

=  Burke  V.  McKay.  2  How.  6(!  (1844). 

"  Carter  v.  Union  Bank,  7  Humph.  548  (1847). 

*  Commercial  Bank  v.  Varnum,  49  N.  Y.  275  (1872),  OTcrrnling  s.  c.  3  Lans. 
86  (18T0) ;  Commercial  Bank  v.  Barksdale,  36  Mo.  563  ;  Willenberger  v.  Spald- 
ing, 33  Mo.  421 ;  Nelson  v.  Fotteral,  7  Leigh,  179.     See  ante,  §  582,  note. 

^  In  Cribbs  v.  Adams,  13  Gray,  600,  Bigelow,  J.,  said:  "  By  the  common  law, 
as  we  understand  it,  and  according  to  the  uniform  practice  in  the  common- 
wealth, the  duties  of  a  notary  must  be  performed  personally,  and  not  by  a  clerk 
or  deputy.  He  is  a  sworn  officer,  clothed  with  important  public  duties,  which 
in  their  nature  imply  a  public  confidence  and  trust.  Doubtless,  by  well  settled 
usage  in  some  places,  and  in  others  by  express  provision  of  statute,  notaries  are 
authorized  to  employ  clerks  or  deputies  to  perform  official  acts  coming  within 


BY   WHOM   MADE.  4()0 

In  Virginia,  the  Court  of  Appeals  was  unanimous  as  to 
this  doctrine,  but  divided  equally  as  to  whether  or  not,  at 
common  law,  presentment  by  the  notary's  clerk  was  suf- 
ficient.^ 

It  is  quite  clear  that  in  no  case  can  the  clerk  make  the 
protest,  however  it  may  be  determined  as  to  the  presentment 
and  demand.^ 

§  587.  Custom  f 01' notai^'if  s  cleric  to  make  presentment  must 
he  shoivn  to  relate  to  foreign  hills. — Tliere  may  be  a  custom 
for  notaries'  clerks  to  make  presentment  as  foundation  of 
protest  of  inland  bills  and  of  promissory  notes,  and  yet  it 
may  not  extend  to  include  foreign  bills.  And  when  a 
protest  of  a  foreign  bill  has  been  based  on  presentment 
by  a  notary's  clerk,  the  plaintiff  must  not  only  show  a 
general  custom  or  practice  for  the  clerk  to  make  present- 
ment of  bills  and  notes,  but  must  show  distinctly  that  the 
custom  extended  to  foreio-n  bills.  As  said  in  a  recent  case 
in  Massachusetts,  by  Ames,  J. :  ^  "  The  plaintiff  wholly 
failed  to  prove  the  the  existence  of  any  well  settled  local 
usage  in  New  York  that  would  authorize  a  notary  in  the 
case  of  a  foreign  bill  to  make  a  presentment  and  demand  of 
payment  by  his  clerk  or  deputy,  and  to  certify  and  authenti- 
cate notarial  acts  so  performed,  in  the  same  manner  as  if  he 
had  performed  them  himself.  The  witnesses  who  testify 
that  it  is  customary  in  the  city  of  New  York  for  the  clerks 
of  notaries  to  present  and  demand  payment  of  drafts,  and 
for  notaries  to  protest  upon  such  presentment  and  demand, 
wholly  fail  to  give  any  information  upon  the  point  whether 


the  sphere  of  their  duty,  and  are  employed  to  certify  and  authenticate  their  acts 
by  their  own  notarial  certificates  in  like  manner  as  if  such  acts  had  been  per- 
formed by  themselves  personally.  But  such  us:ige  or  provision  of  law  is  a  fact 
to  be  proved  by  evidence.  At  the  trial  of  this  case  the  plaintiff  offered  no  evi- 
dence that  a  notary  in  Louisiana  (where  the  bill  was  protested)  was  authorized, 
either  by  usage  or  statute,  to  employ  a  deputy,  or  to  authenticate  his  acts  by  his 
own  certificate." 

'  Nelson  v.  Fotteral,  7  Leigh,  180. 

=  Sacrider  v.  Brown,  3  McLean,  481  (1844). 

=  Ocean  National  Bank  v.  Williams,  102  Mass.  143. 


470  PRESENTMENT  FOR  PAYMENT. 

that  custom  applies  to  and  includes  the  case  of  foreign  bills. 
One  of  tliem  says  tliat  his  attention  had  never  been  called 
to  that  distinction,  and  the  otlier  makes  no  allusion  to  it.  It 
hardly  need  be  said  that  a  local  usage,  in  derogation  of  "the 
general  rules  of  law,  requires  clearer  and  better  evidence  of 
its  existence  and  validity." 

In  Pennsylvania,  ^vhere  a  promissory  note  was  dishon- 
ored, and  the  plaintiff  offered  in  evidence  the  certificate  of  a 
notary,  by  which  it  was  certified  that  the  notary  had  given 
the  indorser  notice  of  non-payment ;  but  the  notary,  on  the 
trial,  testified  that  the  certificate  was  in  the  handwriting  of 
his  son,  then  absent  in  the  West  Indies ;  that  his  son  had 
attended  to  the  presentment  and  notice,  and  he  liimself  had 
no  personal  knowledge  on  the  subject.  Tliis  testimony  was 
not  objected  to,  and  it  was  held  that,  under  the  peculiar  cir- 
cumstances of  the  case,  and  tlie  Pennsylvania  statute  making 
notarial  certificates  competent  evidence,  that  the  certificate 
was  admissible  as  matter  of  evidence,  to  be  weighed  with  the 
rest  of  the  testimony  by  the  jury.^ 

SECTIOK  II. 

TO   WHOM   PRESENTMENT   FOR   PAYMENT   MUST   BE   MADE. 

§  588.  Presentment  for  payment  must  ])e  made  to  the 
drawee  or  acceptor  of  the  bill,  or  maker  of  the  note,  or  to  an 
authorized  agent.  A  personal  demand  is  not  necessary,  and 
it  is  sufficient  to  make  the  demand  at  his  usual  residence  or 
place  of  business,  of  his  wife  or  other  agent ;  for  it  is  the  duty 
of  an  acceptor  or  promisor,  if  he  is  not  present  himself,  to 
leave  provision  for  tlie  payment  of  his  bills  or  notes.^ 

There  is  no  doubt  that  a  clerk  found  at  the  counting:  room 
of  the  acceptor  or  promisor  is  a  competent  party  for  present- 
ment for  payment  to  be  made  to,  without  showing  any 
special  authority  given  him.'"^     But  where  the  protest   stated 

'  Stewart  v.  Allison,  6  Serg.  &  R,  324. 

'  Matliews  v.  Ilaydon,  2  Esp.  509;  Brown  v.  McDermott,  5  Esp.  2Go. 

'  Stainback  v.  Bank  of  Virginia,  11  Grat.  260;  Nelson  v.  Fottcrall,  7  Leigh, 


TO  WHOM  MADE.  471 

the  mere  fact  of  presentment  "  at  the  office  of  the  maker,"  it 
will  be  considered  insufficient,  as  not  showing  that  the  paper 
was  presented  to  party  at  the  office  authorized  to  pay  or  re- 
fuse payment.^  A  demand  upon  the  servant  of  the  owner 
"  wlio  used  to  pay  money  for  him  "  was  held  sufficient  in 
England.^ 

§  589.  It  has  been  indicated  by  Chitty,  in  his  work  on 
Bills,^  tliat  while  in  making  presentment  for  acceptance  the 
bolder  should,  if  possible,  see  the  drawee  personally,  in  the 
presentment  for  payment  it  is  not  necessary,  it  being  sufficient 
if  it  be  made  at  the  house  of  the  acceptor.  But  we  concur 
with  Story ,"*  that  there  is  no  just  foundation  for  the  distinc- 
tion. If,  indeed,  the  drawee  does  not  happen  to  be  present 
when  the  call  is  made  at  his  house  or  counting  room  to  pre- 
sent the  bill  for  acceptance,  the  holder,  it  seems,  is  not  bound 
to  consider  it  as  a  refusal  to  accept,  but  may  wait  a  reasona- 
ble time  for  the  return  of  the  drawee  who  has  as  yet  incurred 
no  obligation  respecting  the  bill,  and  may  indeed  be  ignorant 
of  its  existence.  The  holder  may  even  wait  until  the  next 
day  to  renew  his  call  to  present  for  acceptance.^  But  no  such 
delay  is  allowable  in  making  presentment  to  the  acceptor  for 
payment. 

It  is  the  duty  of  the  acceptor,  who  is  the  principal  debtor, 
to  provide  for  the  payment  of  the  bill ;  and  if  he  is  not  in 
himself,  and  there  is  no  one  present  to  answer  for  him,  when 
the  holder  calls  at  his  house  or  counting  room,  the  bill 
should  be  treated  as  dishonored,  and  protested  for  nonpay- 
ment. 

§  590.  If  presentment  be  made  at  the  place  specified  in 
the  instrument,  or  in  the  case  of  one  payable  generally  at  the 

180 ;  Draper  v.  Clemons,  4  Mo,  53 ;  Stewart  v.  Eden,  2  Caiuos,  131 ;  Reynolds  v. 
Chettle,  3  Camp.  506. 

'  Nave  v.  Richardson,  3G  Mo.  130. 

'  Bank  of  England  v.  Newman,  13  Mod.  341 ;  s.  c.  1  Lord  Raym.  443. 

'  Chitty  on  Bills  (13th  Am.  ed.)  [*3GG],  413. 

*  Story  on  Bills  (Bennett's  ed.),  §  350. 

*  Ibid.;  Bank  of  Washington  v.  Tripljtt,  1  Pot.  35;  Mitchell  v.  De  Grand,  1 
Mason,  170. 


472  PRESE2TTMENT  FOR  TAYMEKT. 

place  of  business  of  the  acceptor  or  maker  during  business 
hours,  or  at  his  domicile  during  a  reasonable  hour  of  the  day, 
it  is  sufficient  if  it  be  made  to  any  person  to  be  found  upon  the 
premises,  especially  if  the  maker  be  absent  or  inaccessible.^ 
Where  presentment  was  made  to  the  wife  of  the  maker,  she 
informing  the  holder  that  her  husband  was  out  of  town,  it 
was  held  sufficient.^  And  so  it  was  deemed  sufficient  to 
charge  the  indorser  where  the  holder  presented  the  bill  to  an 
inmate  of  tbe  maker's  house,  who  was  coming  out,  and  who 
stated  that  the  acceptor  had  removed — the  bolder  leaving  a 
card  containing  notice  for  the  acceptor  of  tbe  maturity  of  the 
bill.*^  Where  there  is  no  one  to  answer,  presentment  at  the 
maker's  dw^ellino;  is  sufficient.^ 

The  general  rule  as  to  the  presentment  and  demand  of 
commercial  paper  may  be  stated  as  follows :  The  present- 
ment and  demand  must  be  made  within  reasonable  hours  on 
the  day  of  maturity.  For  the  purpose  of  fixing  the  liability 
of  indoi'sers,  the  note  or  bill  is  payable  on  demand  at  any 
time  during  those  hours.  AVhat  are  reasonable  hours  will 
depend  upon  the  question  whether  or  not  the  note  or  bill  is 
payable  at  a  place  or  bank,  where,  by  the  established  usage 
of  trade,  business  transactions  are  limited  to  certain  stated 
hours.  If  there  are  such  stated  hours  wdiere  the  note  or  bill 
is  payable,  the  presentment  and  demand  must  be  made 
within  those  hours ;  but  if  there  are  no  stated  hours,  and  no 
place  of  payment  is  designated  in  the  note  qr  bill,  the  present- 
ment and  demand  may  be  made  either  at  the  place  of  business 
or  residence  of  the  maker  or  acceptor ;  if  at  his  place  of  busi- 
ness, it  must  be  within  the  usual  business  hours  of  the  city 
or  town ;  if  at  his  residence,  then  within  those  hours  when 
the  maker  or  acceptor  may  be  presumed  to  be  in  a  condition 
to  attend  to  business.^ 


'  Cromwell  v.  Hynson,  2  Camp.  59G;  Phillips  v.  Astberg,  2  Taunt.  20G; 
Draper  v.  demons,  4  Mo.  52. 

=  Moodie  v.  Morrall,  1  Const.  R.  3G7. 

»  Buxton  V.  Jones,  1  Man.  &  G.  83;  1  Scott  N.  R.  19;  Story  on  Bills  (Ben- 
nett's ed.),  §  350,  note,  1. 

*  Stivers  v.  Prentice,  3  B.  Mon.  4G1.  ^  McFarland  v.  Pico,  8  Cal.  631. 


TO  WUOM  MADE.  473 

§  591.  When  aceejyto?'  or  maker  is  dead, — If  the  acceptor 
or  maker  be  dead  at  the  time  of  the  maturity  of  the  bill  or 
note,  it  should  be  presented  to  his  personal  representative,  if 
one  be  appointed,  and  his  ])lace  of  residence  can,  by  reasona- 
ble inquiries,  be  ascertained.^  If  there  be  no  personal  repre- 
sentative, then  presentment  should  be  made,  and  payment 
demanded,  at  tbe  dwelling-house  of  the  deceased,  if  the  in- 
strument were  payable  generally.^  But  if  it  was  drawn 
payable  at  a  particular  place,  then  it  will  be  sufficient  tliat  it 
was  presented  at  such,  place.^ 

§  502.  In partnersJdp  cases. — Presentment  of  a  bill  drawn 
upon  or  accepted  by,  and  of  a  note  executed  by,  a  copartner- 
ship firm,  is  sufficient,  if  made  to  any  one  of  the  members  of 
such  firm.'*  And  if  the  signature  of  the  parties  entitled  to 
presentment  be  apj^arently  that  of  a  partnership,  as,  for  in- 
stance, if  signed  ''  Waller  &,  Buit,"  presentment  to  either  is 
sufficient.^ 

Even  after  the  dissolution  of  the  firm,  presentment  to  any 
one  of  the  partners  is  sufficient,  for  as  to  the  bill  or  note 
upon  which  they  are  liable,  the  liability  continues  until  duly 
satisfied  or  discharged.^  As  said  in  Maryland,  where  present- 
ment of  a  partnership  note  was  made  to  one  of  the  firm  after 
dissolution,  by  Archer,  C.  J. :  ^  "  It  might  be  sufficient  to  say 
that  this  dissolution  had,  by  no  evidence  in  the  case,  been 
brought  home  to  the  knowledge  of  the  holder  of  the  note. 

'  Gower  v.  Moore,  25  Me.  16 ;  Price  v.  Young,  1  Nott  &  iMcC.  438 ;  Stoiy 
on  Notes,  §§  241-253;  Magruder  v.  Union  Bank,  3  Pet.  87;  Juniata  Bank  v. 
Hale,  10  Serg.  &  R.  167. 

=■  Ibid. ;  Story  on  Notes,  §  253;  Story  on  Bills,  §  346  ;  see  Chapter  XVII,  §458. 

'  Boyd's  Adni'r  v.  City  Savings  Bank,  15  Grat.  501 ;  Price  v.  Young,  1  Nott 
&  McC.  438 ;  Philpot  v.  Bryant,  1  Moore  &  P.  754 ;  3  Carr.  &  P.  244 ;  4  Bing.  717  ; 
Holtz  V.  Boppe,  37  N.Y.  634  ;  Thomson  on  Bills  (Wilson's  ed.),  285.  Sac  ante,  §  455. 

'  Branch  of  State  Bank  v.  McLeran,  20  Iowa,  300  ;  Shed  v.  Brett,  1  Pick.  401, 
Thomson  on  Bills  (Wilson's  ed.),  281. 

■*  Erwin  v.  Downs,  15  N.  Y.  (1  Smith),  375. 

•  Crowley  v.  Barrj',  4  Gill,  194;  Fourth  Nat.  Bank  v.  Heuschuk,  52  Mo.  207; 
Hubbard  v.  Matthews,  54  N.  Y.  50;  Brown  v.  Turner,  15  Ala.  N.  S.  632;  Coster 
V.  Thomason,  19  Ala.  N.  S.  717. 

'  Crowley  v.  Barry,  4  Gill,  194. 


474  PRESENTMENT  FOR  PAYMENT. 

But  we  do  not  desire  to  determine  the  question  on  tliis 
ground,  because  we  are  clearly  of  opinion  that  a  demand  on 
one  of  the  partners  was  sufficient,  as  each  partner  represents 
the  partnership.  Before  a  dissolution,  it  clearly  would  not 
be  necessary  to  make  a  demand  on  both,  nor  could  it  be  nec- 
essary after  a  dissolution,  for  the  partnership  as  to  all  ante- 
cedent transactions  continues  until  they  are  closed." 

And  it  has  been  held  that  demand  on  the  ao-ent  of  one 
partner,  after  dissolution,  in  the  absence  of  the  other  part- 
ner, was  sufficient.^ 

§  503.  In  the  event  of  the  death  of  one  of  the  members 
of  the  firm  to  which  presentment  should  be  made  before  the 
maturity  of  the  bill  or  note,  the  presentment  should  be  made 
to  the  survivors,  and  not  to  the  personal  representative  of 
the  deceased,  because  the  liability  devolves  upon  the  surviv- 
ing partner.^ 

§  594.  Where  tliere  are  several  jyromisors  not  partners. — 
When  the  note  is  executed  by  several  joint  promisors  who 
are  not  partners,  but  liable  only  as  joint  promisors,  it  has 
been  held,  and,  as  we  think,  correctly,  that  presentment 
should  be  made  to  each,  in  order  to  fix  the  liability  of  an  in- 
dorser.*^  But  a  difficulty  presents  itself  which  might  seem 
to  characterize  this  doctrine  as  harsh  and  unreasonable,  and 
which  has  caused  it  to  be  held  that  quoad  hoc  the  promisors 
are  to  be  regarded  as  partners,  and  presentment  to  one  equiv- 
alent to  presentment  to  all.  "Now,  suppose,"  it  has  been 
said,  in  Ohio,  by  Hitchcock,  J.,^ "  the  makers  resided  in  differ- 


'  Brown  v.  Turner,  15  Ala.  833. 

»  Cayuga  County  Bank  v.  Hunt,  2  Hill,  635  ;  Story  on  Bills,  §§  346-362;  1 
Parsons,  N,  &  B.  362. 

=  Blake  V.  McMillcn,  22  Iowa,  258;  s.  o.  33  Iowa,  150  (1871);  Union  Bank  v. 
Willis,  8  Mete.  504;  Arnold  v.  Dresser,  8  Allen,  435.  Nelson,  J.  C,  in  Willis  v. 
Green,  5  Meta  232,  a  case  respecting  notice  to  joint  indorsers,  says:  "I  do  not 
see  but  the  case  of  joint  indorsers,  not  partners,  stands  on  the  same  footing  as 
that  of  joint  makers  of  a  note  avIio  are  not  partners;  and  in  respect  to  them,  it  is 
settled  that  presentment  must  be  made  to  each,  in  order  to  charge  an  indorser.*' 
See  also  ante,  §  455,  and  Gates  v.  Beecker,  60  N.  Y.  523. 

*  Harris  v.  Clark,  10  Ohio,  5. 


TO    WHOM   MADE.  475 

ent  States,  or  in  (liftc'i-eiit  and  distant  parts  of  the  same  State, 
how  could  demand  be  made  of  all  in  order  to  charge  an  in- 
dorser  ?  It  must  be  made  on  the  day  the  note  falls  due,  or, 
where  days  of  grace  are  allowed,  on  the  last  day  of  grace. 
Will  it  be  said  that  the  demand  can  be  made  at  different  and 
distant  places  on  the  same  day,  through  the  agency  of  letters 
of  attorney  ?  I  believe  such  a  practice  has  not  been  heard 
of,  at  least  we  have  found  nothing  like  it  in  the  books," 
And  the  court  concluded  that  they  were  to  be  regarded  as 
partners. 

§  595.  These  views  are  more  plausible  than  satisfactory, 
and  the  argument  ah  inconvenienii  is  well  presented.  But 
joint  promisors  are  no  more  partners  than  joint  indorsers. 
To  construe  them  to  be  partners  is  to  make  a  new  contract 
between  them,  and  to  vary  the  condition  precedent  of  the  in- 
dorser's  liability.  And  although  it  might  be  more  convenient 
if  they  were  partners,  the  inconvenience  in  enforcing  their 
contract  does  not  change  it. 

If  they  were  in  different  places  at  the  maturity  of  the 
note,  and  it  could  be  only  presented  to  one,  due  diligence 
would  only  require  its  presentment  to  the  others  in  such 
time  as  they  could  be  reached ;  and  the  impossibility  of  pre- 
senting to  all  on  the  day  of  maturity,  would  excuse  non- 
presentment  to  those  at  other  places.  Such,  at  least,  is  our 
conception  of  the  true  solution  of  the  question,  and  it  is 
borne  out  by  high  authority,  and  certainly  by  much  more 
satisfactory  reasoning  than  that  above  quoted.^ 

§  596.  Where  the  note  is  several  as  well  as  joint,  the  in- 
dorser  m\<A\i  be  held  as  indorser  of  the  maker  to  whom  the 
note  was  duly  presented,  as  the  holder  would  have  the  right 
to  treat  the  note  as  the  several  note  of  each  maker.  But  he 
would  have  lost  recourse  against  the  indorser  as  upon  the 
joint  note  of  the  co-makers,  or  the  several  note  of  the  maker, 
as  to  whom  no  presentment  was  made  or  excuse  given.^ 

•  See  1  Parsons  N.  &  B.  363,  note  w ;  Story  on  Notes,  §  239,  and  especially 
§  25i),  and  note  3.     There  seems  to  be  no  English  precedent  on  the  question, 
'  Story  on  Promissory  Notes,  §  355,  note  2. 


470  PRESENTMENT  FOR  PAYMENT. 

In  the  event  of  the  death  of  a  joint  maker,  present- 
ment slioiild  be  made  to  the  survivor,  upon  whom  the  debt 
devolves.  If  the  note  were  several  also,  it  might  be  diifer- 
ent,  as  the  holdei-  is  at  liberty  to  elect  "  upon  whom  he  will 
make  demand.''  ^ 


SECTION  III. 

TBIE   OF    PRESENTMENT   FOE   PAYMENT. 

§  597.  1/2)071  what  day  iJre%entment  should  he  made. — In 
respect  to  the  maker  of  a  note  and  the  acceptor  of  a  bill,  it 
is  not  important  ujoon  what  day  the  presentment  is  made, 
provided  it  be  made  at  some  time  before  the  statute  of  limi- 
tations bars  action  against  them.^  And  provided,  also,  that 
the  note  is  not  made,  nor  the  bill  drawn  or  accepted,  payable 
at  a  certain  place.  In  such  cases  only  is  it  desirable  that,  as 
respects  tlie  maker  or  acceptor,  the  bill  or  note  should  be 
presented  on  the  exact  day  of  its  maturity  ;  and  even  in  such 
cases  it  makes  no  difference  that  the  presentment  was  not 
punctually  made  on  that  very  day,  unless  the  maker  or  ac- 
ceptor should  suffer  some  loss  or  damage  by  the  delay. 

§  598.  In  respect,  however,  to  the  drawer  of  a  bill  and  the 
indorser  of  a  bill  or  note,  it  is  essential  to  the  fixing  of  their 
liability  that  the  presentment  should  be  made  on  the  day  of 
maturity,  provided  it  is  within  the  power  of  the  holder  to 
make  it.^  If  the  presentment  be  made  before  the  bill  or  note 
is  due,  it  is  entirely  premature  and  nugatory,  and,  so  fiir  as  it 
affects  the  drawer  or  indorsei",  a  perfect  nullity.^  And  if  it 
be  made  after  the  day  of  maturity,  it  can,  as  matter  of 
course,  be  of  no  effect,  as  the  draw^er  or  indorser  will  already 
have  been  discharged,  unless  there  were  sufficient  legal 
excuse  for  the  delay.^      The    evidence  must  be  distinct  as 

*  Story  on  Promissory  Notes,  §  256. 

'  Chitty  on  Bills  (13th  Am.  ed.)  [*3r)4],  396.  '  1  Parsons  N.  &  B.  373, 

*  Griffin  v.  Goff,  12  Johns.  423;  Jackson  v.  Newton,  8  Watts,  401;  Farmers' 
Bank  v.  Duvall,  7  Gill  &  J.  78;  Mechanics'  Bank  v.  Merchants'  Bank,  6  Mete.  13. 

'  Windham  Bank  v.  Norton,  22  Conn.  213. 


TIME   OF.  477 

to  the  promjitiiess  of  tlie  presentment    or   the   excuse  for 
delay.^ 

§  5dd.  If  a  note  he  'payable  in  imtallments^  the  present- 
ment should  be  made  on  each  consecutive  instalhnent  as  it 
falls  due,  as  if  it  were  (as  in  fiict  it  is  legally  considered)  a 
separate  note  in  itself.-  It  would  be  different,  prohal)]y,  if 
the  condition  were  annexed  to  the  note  that  upon  failure  to 
meet  any  installment,  the  whole  should  fall  due,  in  which 
case  notice  should  be  communicated  to  the  drawer  or  in- 
dorser  that  the  whole  sum  was  due,  and  the  holder  looked 
to  him  for  payment.^  If  no  time  for  payment  be  named  in 
the  bill  or  note  it  is  payable  on  demand ;  *  and  payable  "  on 
demand  at  sight,"  is  equivalent  to  payable  "  at  sight."  °  "  On 
call,"  or  "  when  called  for,"  means  the  same  as  "  on  demand."  ® 

§  600.  At  what  hour  of  the  day  presentment  should  he 
made. — When  the  bill  or  note  is  made  payable  at  a  bank,  it 
should  be  presented  during  banking  hours,  the  parties  exe- 
cuting their  paper  payable  at  a  particular  place,  being  bound 
by  its  usage;  and  in  such  case  a  presentment  after  banking 
hours  is  sufficient.'^  But  it  is  settled  that  when  a  bill  or 
note  is  payable  at  a  bank,  a  demand  made  at  the  bank  after 
banking  hours,  the  officers  being  there,  and  a  refusal,  the 
cashier  or  teller  stating  that  there  were  no  funds,  is  sufficient.^ 

And  likewise,  if  any  person  is  left  at  the  bank  to  give  an 

'  Robinson  v.  Blen,  20  Me.  109.  '  Oridge  v.  Sherborne,  11  M.  &  W.  374. 

'  See  1  Parsons  N.  &  B.  374. 

*  Tliompson  v.  Ketcham,  8  Johns.  189;  Cornell  v.  Moulton,  3  Denio,  12; 
Michigan  Ins.  Co.  v.  Leavenworth,  30  Vt.  11;  Finer  v.  Clary,  17  B.  Mon.  GG3  : 
Bowman  v.  McChesney,  22  Grat.  GOO;  Whitlock  v.  Underwood,  2  B.  &  C.  157. 
See  ante,  §§  88,  89. 

'  Bowman  v.  McChesney,  22  Grat.  609. 

*  Dixon  V.  Nutall,  1  Cromp.  M.  &  R.  307. 

'  1  Pars.  419;  Parker  v.  Gordon,  7  East,  385;  Elford  v.  Teed,  1  Maule  &  S. 
28;  Thomson  on  Bills  (Wilson's  ed.)  302;  Bylcs  on  Bills  (Sharswood's  ed.),  340. 
Story  on  Bills,  §§  236,  349;  Story  on  Notes,  §  235. 

*  Salt  Springs  Nat.  Bank  v.  Burton,  58  N.  Y.  432;  Bank  of  Syracuse  v.  Hol- 
lister,  17  N.  Y.  46;  Bank  of  Utica  v.  Smith,  18  Johns.  230;  First  National  Bank 
V.  Owen,  23  Iowa,  185;  Goodloe  v.  Godley,  13  Smede3&  M.  227;  Cohen  v.  Hunt, 
2  Id.  227;  Flint  v.  Rogers,  15  Me.  67. 


478  PRESENTMENT   FOR  PAYMENT. 

answer/  autl  it  matters  not  that  the  notary  making  the  pre- 
sentment enters  by  the  back  door.^  It  seems  tliat  if  the 
maker  of  a  note  payable  at  a  bank  goes,  and  remains  there 
during  business  hours,  prepared  to  pay,  or  places  funds  in 
bank  and  holds  them  there  until  the  close  of  business,  and 
then  withdraws  them,  in  consequence  of  the  non-presentment 
of  the  note,  the  indorser  would  be  discharged,  notwithstand- 
ing presentment  to  an  officer  found  at  the  bank  after  business 
hours.^ 

In  an  action  against  the  acceptor  on  a  bill  payable  in 
London,  and  accepted  payable  at  D.  &  Co.'s,  a  presentment 
at  D.  <fe  Co.'s  between  7  and  8  o'clock  in  the  evenino^,  was 
proved,  and  that  a  boy  returned,  as  answer,  "no  orders." 
Lord  Ellenborough  said  that  if  the  banker  appointed  a  pei- 
son  to  give  an  answer,  a  presentment  at  any  time  while  that 
person  was  in  attendance,  was  sufficient.'^ 

Where,  by  usage  of  the  bank  at  which  the  instrument  is 
payable,  the  payor  is  allowed  until  the  expiration  of  bank- 
ing hours  for  payment,  a  demand  made  before  that  time,  un- 
less the  instrument  continues  in  bank  until  banking  hours 
have  expired,  is  sufficient.^ 

§  601.  If  the  bill  or  note  he  'payable  generally  '■''at  banh'''' 
— no  particular  bank  being  named — the  liour  will  be  deter- 
mined by  the  usual  banking  hours  at  the  several  banks  of  the 
place  where  it  is  payable.^  It  is  for  the  jury  to  say  what  are 
business  hours,  and  in  fixing  them  otherwise  than  in  respect 
to  the  banks,  they  are  to  have  reference  to  the  general  hours 
of  business  at  the  place,  rather  than  to  the  custom  of  any  par- 
ticular trade."^     The  courts  of  England  take  judicial  notice 


'  Garnett  v.  Woodcock,  1  Stark,  475;  6  Maule  &  S.  44;  Salt  Springs  Nat. 
Bank  v.  Burton,  56  K  Y.  432. 

"  Commercial  Bank  v.  Ilamcr,  7  How.  (Miss.)  448. 

'  Salt  Springs  Nat.  Bank  v.  Burton,  58  N.  Y.  431. 

*  Garnett  v.  Woodcock,  f<upra. 

'•Planters'  Bank  v.  Markliam,  5  How.  (Miss.)  397;  Harrison  v.  Crowdcr,  6 
Sraedcs  &  M.  404. 

°  U.  S.  Bank  v.  Carneal,  2  Pet.  543;  Church  v.  Clark,  21  Pick.  310. 

'  Thomson  on  Bills,  302. 


TIME   OF.  470 

of  the  hankino;  hours  of  London,^  Ijiit  not  of  outside  cities  or 
places.^  Morse  says :  "  American  courts  are  wont  to  take 
judicial  notice  of  the  banking  hours  of  any  large  city  lying 
within  the  area  of  the  jurisdiction  of  the  court;  tliough 
there  is  no  authority  for  supposing  that  the  banking  hours 
of  the  city  of  New  York  would  be  considered  as  judicially 
known  to  the  courts  of  Boston  or  Chicago,  or  vice  versa. 
Unquestionably  proof  would  have  to  be  introduced/'  ^ 

§  G02.  When  the  instrument  is  not  payahle  at  a  hanh^ 
presentment  may  be  made  at  any  reasonable  hour  during  the 
day — during  what  are  termed  "  business  hours,"  which,  it  is 
held,  range  through  the  whole  day  to  the  hours  of  rest  in 
the  evening/  But  the  mere  fact  that  the  payor  had  retired 
to  rest  would  not  vitiate  the  presentment,  unless  it  was  at  an 
hour  when,  according  to  the  habits  and  usages  of  the  commu- 
nity, it  might  be  expected  that  he  had  retired.^  If  the  pre- 
sentment be  during  the  hours  of  rest  it  will  be  entirely  un- 
availing;.^ 

§  603.  When  presentment  is  at  the  place  of  business  it 
must  be  during  the  hours  when  such  places  are  customarily 
open,'^  or  at  least  while  some  one  is  there  competent  to  give 
an  answer.     It  is  only  when  presentment  is  at  the  residence 

•  Parker  v.  Gordon,  7  East,  385 ;  Jameson  v.  Svvinton,  2  Taunt.  225. 
^  Hare  V.  Henty,  10  C.  B.  K  S.  65. 

'  Morse  on  Banking,  371. 

*  Nelson  V.  Fotterall,  7  Leigh,  194;  Cayuga  County  Bank  v.  Hunt,  2  Hill, 
G35 ;  Salt  Springs  National  Bank  v.  Burton,  58  N.  Y.  432. 

^  Farnsworth  v.  Allen,  4  Gray,  453,  in  which  case  presentment  was  made  at  9 
p.  M.,  at  the  makers  residence,  ten  miles  from  Boston.  He  and  his  lamily  had 
retired.  Held,  sufficient.  In  Barclay  v.  Bailey,  2  Camp.  527,  Lord  EUenborough 
sustained  a  presentment  made  as  late  as  8  p.  m.,  at  the  house  of  a  trader. 

"  Wilkins  v.  Jadis,  2  B.  &  Ad.  188,  in  which  case  the  bill  was  presented  at 
the  place  named  in  the  acceptance,  between  7  and  8  p.  m.,  but  the  door  was  shut 
and  no  one  answered.  Dana  v.  Sawyer,  22  Me.  294,  in  which  presentment  was  a 
few  minutes  before  midnight,  the  maker  being  waked  up  at  his  residence. 

'  Lunt  V.  Adams,  17  Me.  230,  in  which  case  presentment  at  8  A.  M.,  at  the 
maker's  storehouses  was  held  insufficient ;  see  Dana  v.  Sawyer,  22  Me.  244.  Pre- 
sentment at  8  P.  M.  at  an  attorney's  office,  was  held  sufficient  in  Triggs  v.  Ncuen- 
ham,  1  Car.  &  P.  G31 ;  and  in  Morgan  v.  Davison,  1  Stark.  114,  presentment  at 
a  counting-room  between  G  and  7  p.  M  was  held  sufficient. 


480  PRESENTMENT  FOK  PAYMENT. 

tliat  tlie  time  is  extended  to  the  Lours  of  rest.^  But  pre- 
sentmeut  at  any  Lour  cannot  be  considered  unreasonable  if 
any  person  competent  to  answer  be  found  there  who  gives  an 
answer  refusing  to  pay.^ 

Wliere,  however,  a  bill  was  presented  for  payment  at  a 
bank  in  tLe  morning,  and  refused  for  want  of  effects,  and 
afterward  presented  at  six  o'clock  in  the  evening  (effects 
being  lodged  in  the  meantime),  and  again  refused,  business 
hours  having  closed  at  five  o'clock,  it  was  decided  that  they 
were  not  liable  in  damages  to  the  draAver,  their  customer,  for 
the  refusal — they  had  paid  the  bill  and  expense  of  notary 
next  day.^ 

§  604.  Witliin  ivliat  time  hills  and  notes  specifying  no 
time  of  payment  must  he  presented  for  iMyment. — All  the 
text  writers  and  the  adjudicated  cases  tell  us  that  a  bill  pay- 
able at  sight,  or  at  a  fixed  time  after  sight,  or  on  demand, 
and  a  note  payable  on  demand,  must  be  presented  for  ac- 
ceptance or  payment,  as  the  case  may  be,  "  within  a  reason- 
able time."  But  in  determining  what  is  reasonable  time  we 
are  left  a  riddle  wliich  it  is  diflicult  to  solve.  The  maker  of 
the  note,  who  is  the  principal  debtor,  is  bound  to  pay  when- 
ever payment  is  demanded  (unless  it  be  barred  by  limitation), 
no  matter  what  period  of  time  may  have  elapsed  since  its 
execution,  and  when  a  bill  payable  at  so  many  days  after 
sight  has  been  presented  and  accepted,  tLe  acceptance  fixes 
the  period  at  which  it  must  be  presented  to  the  acceptor  for 
payment.  But  within  what  time  such  a  bill  must  be  pre- 
sented in  order  to  preserve  the  liability  of  the  drawer  and 
indorsers ;  and  the  note  presented  in  order  to  preserve  that  of 
the  indorsers  is  a  problem  which  has  puzzled  courts  and  juries 
no  little.  And  an  eminent  jurist  has  said  in  respect  to  the  time 
within  wLicL  it  is  necessary  to  present  for  payment  a  note 

*  In  Barclay  v.  Bailey,  2  Camp.  427,  presentment  at  8  p.  m.  at  the  maker's 
residence  was  held  sufficient. 

""  Henry  v.  Lee,  2  Chitty's  Rep.  125 :  Garnett  v.  Woodcock,  1  Stark.  R.  475  ; 
6  Maule  &  S.  44;  Thomson  on  Bills,  303;  Chitty  (13th  Am.  ed.)  [*387],  438. 

'  Whitaker  v.  Bank  of  England,  Tyrwh.  2G8. 


TIME   OF.  481 

payable  on  demand  in  order  to  eliarge  an  indorser,  that  "  it 
depends  upon  so  many  circumstances  to  determine  what  is  a 
reasonable  time  in  a  particular  case,  tliat  one  decision  goes 
but  little  way  in  establishing  a  precedent  for  another."^ 
Some  of  the  text  writers  treat  of  bills,  promissory  notes, 
bankers'  cash  notes  and  checks,  as  falling  within  one  rule ; 
and  a  failure  to  discriminate  between  these  various  classes  of 
commercial  paper  has  confused  the  decisions  upon  the  sub- 
ject, and  left  them  in  a  state  of  contrariety  and  antagonism 
which  it  is  impossible  to  reconcile.  In  a  previous  chapter 
on  presentment  for  acceptance  we  have  discussed  the  question 
of  reasonable  time  in  respect  to  the  presentment  for  accept- 
ance of  bills ;  and  the  doctrines  there  laid  down  are  almost 
entirely  applicable  to  the  presentment  of  bills  for  payment.'^ 
The  reasonable  time  for  presentment  of  checks,  which  are  of 
a  different  nature,  will  hereafter  be  discusssed;^  and  we  shall 
endeavor  here  to  give  the  principles  which  determine  within 
what  time  a  bill  or  note  payable  on  demand  must  be  pre- 
sented for  payment. 

§  605.  In  the  first  place^  respecting  hills  iiayaUe  on  de- 
mand.— Such  instruments  would  seem  to  be  closely  assimila- 
ted to  bank  checks,  and  to  contemplate  the  immediate  pay- 
ment of  the  amount  called  for.  They  are  payable  inune- 
diately  on  presentment,  without  grace,  and  if  the  drawee 
and  the  payee  or  indorsee  reside  in  the  same  place,  it  is  laid 
down  by  a  number  of  the  authorities  that  they  must  be  pre- 
sented within  business  hours  of  the  day  on  which  they  are 
drawn  in  order  to  hold  the  drawer  in  the  event  of  the  failure 
of  the  drawee  to  honor  them.*  And  that  if  the  drawee  re- 
sides in  a  different  place  they  must  be  forwarded  by  the 
regular  post  of  the  day  after  they  are  received.^  But  these 
rules  are  not  inflexible.     What  is  reasonable  time  must  de- 


'  Shaw,  C.  J.,  in  Scavcr  v.  Lincoln,  21  Pick.  267. 

'  Chapter  XVII,  Sec.  III.  '  Chapter XLIX,  on  Checks,  Sec.  III.  Vol.  2. 

*  Bylcs  on  Bills  (SharswoocTs  ed.)  337-8;  Thomson  on  Bills  (Wilson's  ed.), 
297;  Chitty  on  Bills  (13  Am.  ed.)  431 ;  Finer  v.  Clary,  17  B.  Mon.  645. 

*  Ibid. ;  Chitty,  432. 

Vou  I.— 31 


482  presentme:nt  for  payment. 

pend  upon  circumstances  and  in  many  cases  upon  the  time, 
the  mode  and  the  place  of  receiving  the  bills,  and  upon  the 
relations  of  the  parties  V)etweeu  whom  the  question  arises.^ 
Wheie  the  draft  required  indorsement  by  a  school  board, 
wliich  had  to  be  convened,  delay  of  a  week  to  forward  it 
was  held  justifiable.'  The  question,  in  so  far  as  it  relates 
to  sight  drafts,  has  been  heretofore  considered,  and  the  cases 
collated.^ 

§  606.  Promissory  notes  'payable  on  demand  would  seem 
to  stand  on  a  different  footing.  It  is  difficult  to  perceive  why 
the  maker  should  execute  his  promise  to  pay  on  demand  if 
immediate  payment  ^vere  contemplated ;  and  although  the 
holder  may  present  it  at  once  for  payment,  if  he  be  so  in- 
clined, this  would  seem  to  be  a  privilege  rather  than  a  duty. 
Why  not  pay  the  money  at  once,  if  the  note  must  be  pre- 
sented at  once  in  order  to  charge  tlie  indorser?  In  England, 
a  note  on  demand  is  regarded  as  a  continuing  security,  which 
it  is  not  necessary  to  present  for  ])ayment  on  the  next  day 
when  the  parties  reside  in  the  same  place ;  or  to  send  by  the 
post  of  the  next  day  when  they  reside  in  different  places ;  * 
but  in  the  United  States,  as  a  general  rule,  a  different  view 
is  taken,  and  payment  must  be  speedily  demanded,  in  order 
to  preserve  recourse  against  the  indorser,  and  to  pi'eserve  the 
note  from  defenses  which  may  be  made  against  overdue 
paper.^  It  is  better  in  all  cases  where  the  question  is  not 
settled,  to  decline  taking  a  note  on  demand  by  indorsement, 
or  if  taken  to  present  it  with  the  utmost  dispatch. 

§  607.  When  note  given  for  a  loan. — When  the  note  paya- 
ble on  demand  has  been  given  for  a  loan  of  money,  it  would 
then  seem  clear  that  it  was  intended  as  a  continuing  security, 
and  the  immediate  presentment  would  not  be  necessary  in 

'  story  on  Notes,  §  493.     See  ante,  §  468  to  §  478  inclusive. 

'  Muncy  Borough  School  Dist.  v.   Couimonwcalth,  84  Pcnn.  St.  464. 

*  Ante,  §  473.     Montclius  v.  Charles,  76  111.  305. 

*  Brooks  V.  Mitchell,  9  M.  &  W.  15  ;  Stat,  of  Lim.  runs  from  date  of  note  on 
demand.     Wheeler  v.  Warner,  47  N.  Y.  519. 

"  See  i  Parsons  N .  «fc  B.  376-7 ;  Keys  v.  Fenstermaker,  34  Cal.  331 ;  delay  of 
two  weeks  held  to  discharge  indorser. 


TIME   OF.  483 

order  to  charge  the  indor.'^er.^  In  Scotland,  as  well  as  in  the 
United  States,^  this  view  has  been  taken ;  and  though  high 
authority  has  maintained  a  different  doctrine,^  we  can  but  re- 
gard it  as  one  that  strikes  the  mind  with  the  utmost  force. 
Where  demand  was  hot  made  for  twenty-one  months,  it  has 
been  considered  sufficient  in  such  a  case ;  *  and  in  Scotland, 
where  a  bill  on  demand  was  granted  as  a  loan,  and  not  as  a 
remittance,  presentment  six  months  after  date  was  held  suffi- 
cient.^ 

§  608.  Notes  pay  able  on  demand  "  with  interest.'''' — "When 
the  note  is  payable  on  demand  with  interest,  it  would  seem 
to  have  been  intended  as  a  continuino;  interest  bearino;  secu- 
rity ;  but  upon  this  question,  as  upon  those  already  discussed 
respecting  notes  payable  on  demand,  the  authorities  are  in 
painful  contrariety. 

In  England,  where  a  note  of  £1,000  payable  on  demand 
with  interest  liad  been  indorsed  and  transferred  several  years 
after  its  date,  and  the  question  was  whether  the  indorsee 
took  it  subject  to  equities  between  prior  parties,  the  Court 
said :  "  If  a  promissory  note,  payable  on  demand,  is  after  a 
certain  time  to  be  treated  as  overdue,  although  payment  has 

'  Thomson  on  Bills  (Wilson's  ed.),  301,  citing  Leith  Banking  Company  v. 
Walker's  Trustees,  14  S.  D.  B.  332. 

°  Vreeland  v.  Hyde,  2  Hall,  429,  the  Court  saying:  "  The  rule  requiring  pre- 
sentment within  a  reasonable  time  was  intended  for  and  is  applicable  to  negoti- 
able instruments  made  for  commercial  purposes  only.  It  was  not  intended  for 
cases  of  suretyship,  or  notes  of  a  like  description,  and  the  iiresent  one  is  evi- 
dently excluded  from  the  rule  by  the  peculiar  circumstances  attending  it.  Here 
the  holder  was  an  old  man,  not  connected  with  business,  residing  at  soms  dis- 
tance from  the  city.  The  defendant  knew  the  circumstances,  and  cannot  claim 
any  peculiar  indulgence  from  a  consideration  of  these  facts,  as  each  case  must  be 
governed  by  the  circumstances  attending  it.  In  this  there  must  be  judgment  for 
ths  plaintiff.'' 

'  1  Parsons  N".  &  B.  380,  note  d;  Bayley  on  Bills,  ch.  vii.  p.  142,  note;  Perry 
V.  Green,  4  Ilarr.  61 ;  Sice  v.  Cunningham,  1  Cow.  397,  in  whicli  case  a  delay  of 
five  months,  all  the  parties  residing  in  New  York  city,  was  held  to  discharge  the 
indorser;  Martin  v.  Winslow,  2  Mason,  241,  seven  months'  delay  held  fatal; 
Field  V.  Nickerson,  13  Mass.  131,  seven  months'  delay  held  fatal,  although  the 
accommodation  indorser  was  told  by  one  of  the  makers  that  the  note  would  not 
be  demanded  immediately. 

*  Vreeland  v.  Hyde,  2  Hall,  429.  '  Note  supra^  Thomson,  301. 


484  PBESEXTMENT  FOR  TAYMEKT. 

not  been  demanded,  it  is  no  longer  a  negotiable  instrument. 
But  a  promissory  note,  payable  on  demand,  is  intended  to  be 
a  continuing  security.  It  is  quite  unlike  tlie  case  of  a  check, 
wbich  is  intended  to  be  presented  speedily."  ^  The  circum- 
stance that  the  note  bore  interest  did  not  control  the  decision 
of  the  court ;  but  in  New  York  that  feature  was  considered 
material;  and  where  such  a  note  was  transferred  three  or 
four  weeks  after  date,  it  was  said,  "  it  would  be  contrary  to 
the  general  course  of  business  to  demand  payment  short  of 
some  proper  point  for  computing  interest,  such  as  a  quarter, 
half  a  year,  a  year,  <fec.,"  and  it  was  held  that  the  note  was  not 
overdue  so  as  to  admit  a  plea  of  Avant  of  consideration."  But 
in  a  late  case,  where  the  note,  payable  on  demand,  Avith  in- 
terest, was  transferred  nearly  three  months  after  date,  the 
parties  having  their  places  of  business  in  the  same  street  of 
the  same  city,  it  was  held  overdue,  so  as  to  admit  equities;^ 
and  in  an  earlier  case  a  similar  note,  transferred  two  and  a 
half  months  after  date,  was  held  oj^en  to  defense  of  part  pay- 
ment before  transfer.*  In  Vermont  the  note  was  held  over- 
due at  time  of  indorsement,  ten  months  after  date.'^  In  Con- 
necticut, a  note  payable  "  on  demand,  with  interest,"  need 
not  be  demanded  for  four  months,  by  statute.^ 

§  609.  In  respect  to  the  time  within  which  a  note,  paya- 
ble on  demand,  with  interest,  must  be  presented,  in  order  to 
charge  an  indorser,  the  like  contrariety  exists.  Eight 
months'  delay  was  held  to  discharge  an  indorser  in  one 
case;*^  seven  months  in  another;^  five  months  and  a  balf  in 
another,  all  the  parties  residing  in  the  same  place.^ 

On  the  other  hand,  a  delay  of  twenty-one  months  to  pre- 
sent a  note  payable  on  demand  with  interest,  has  been  held 
Dot  to  discharge  the  indorser.^''     And  in  a  later  case,  in  New 


'  Brooks  V.  Mitchell,  9  M.  &  "W.  15;  see  also  Borongli  v.  White,  4   B.  &  C. 
225;  Gascoyne  v.  Smith,  1  M.  &  Y.  338.  "  Wethcy  v.  Andrews,  3  Hill,  583. 

'  Hcrrick  v,  Woolverton,  41  N.  Y.  581.        ■*  Losee  v.  Dunkin,  7  Johns.  R.  70. 
''  Morcy  v.  Wakefield,  41  Vt.  24.  °  Rhodes  v.  Seymour,  36  Conn.  6. 

'  Field  V.  Nickerson,  13  Mass.  131.  *  Martin  v.  Winslow,  2  Mason,  241. 

"  Sice  V.  Cunningham,  1  Cow.  397;  see,  also,  Perry  v.  Green,  4  Hurr.  61. 
'"  Vreelaad  v.  Hyde,  2  Hall,  429 ;  see  ante,  §  607,  note  2. 


TIME   OF.  485 

York,  where  the  note,  payable  on  demand,  with  interest,  was 
indorsed  for  accommodation  at  the  time  of  its  date,  which 
was  the  5th  of  May,  1852,  and  the  interest  was  paid  ]jy  the 
maker  for  three  years,  and  demand  of  payment  was  made  and 
refused,  and  notice  given  on  the  24th  of  December,  1855,  it 
was  held  that  the  indorser  was  still  bound.^ 

Seven  days'  delay  was  not  considered  too  long  in  Massa- 
chusetts, under  the  circumstances,  the  court  not  paying  con- 
sideration to  the  fact  that  the  note  bore  interest.^ 

§  610.  The  true  principle  to  he  deduced. — Where  these 
questions  remain  undetermined,  the  authorities  are  so  mucli 
at  war  that  it  would  be  difficult  to  predict  what  rule  would 
commend  itself  to  the  court.  It  seems  to  us  that  where  the 
note  was  indorsed  at  the  time  of  making,  and  whether  it 
bore  interest  or  not,  it  should  be  regarded  as  a  continuing 
security,  and  would  not  be  overdue  in  the  hands  of  the 
payee,  either  so  as  to  open  equities  or  to  discharge  the  in- 
dorser until*  payment  was  demanded  and  refused.  But  when 
transferred  by  indorsement,  it  woidd  become,  by  the  very  act 
of  indorsement,  a  draft  by  the  indorser  upon  the  maker  ;  and 
the  indorsee  holding  it  should  regard  it,  as  it  is  in  fact,  a  de- 
mand throuo'h  him  for  the  amount  due  the  indorser.  And  it 
should,  therefore,  be  presented  immediately,  subject  only  to 
such  qualifications  as  apply  to  a  bill  payable  at  sight. 

The  following  observations,  in  "  Byles  on  Bills,"  ^  on  this 
subject,  seem  to  us  worthy  of  quotation.  Says  the  author : 
"  A  common  promissory  note  payable  on  demand  differs  from 
a  bill  payable  on  demand,  or  a  check,  in  this  respect  :  the 
bill  and  check  are  evidently  intended  to  be  presented  and 
paid  immediately,  and  the  drawer  may  have  good  reasons  for 
desirinof  to  withdraw  his  funds  from  the  control  of  the 
drawee  without  delay ;  but  a  common  promissory  note  pay- 
able on  demand  is  very  often  originally  intended  as  a  con- 
tinuing security,  and  afterward  indorsed  as  such.     Indeed,  it 


'  Merritt  v.  Todd,  23  N.  Y.  28  (1861). 

'  Seaver  v.  Lincoln,  21  Pick.  267.  '  Sharswood's  ed.  338. 


486  PRESENTMENT  FOR  TxiYMEXT. 

is  not  uncommon  for  the  payee,  and  afterward  the  indorsee, 
to  receive  from  the  maker  interest  periodically  for  many 
years  on  such  a  note.  And  sometimes  the  note  is  expressly 
made  payable  with  interest,  which  clearly  indicates  the  in- 
tention of  the  i)arties  to  be,  that  though  the  holder  may  de- 
mand payment  immediately,  yet  he  is  not  bound  to  do  so. 
It  is,  therefore,  conceived  that  a  common  promissory  note 
payable  on  demand,  especially  if  made  payable  with  interest, 
is  not  necessarily  to  be  presented  the  next  day  after  it  has 
l^een  received  in  order  to  charge  the  indorser ;  and  when  the 
indorser  defends  himself  on  the  ground  of  delay  in  presenting 
the  note,  it  will  be  a  question  for  the  jury  wdiether,  under  all 
the  circumstances,  the  delay  of  presentment  was  or  was  not 
unreasonable." 

§  611.  Presentment  for  jpayment  tvlien  the  instrument 
was  overdue  at  time  of  indorsement. — When  a  negotiable 
instrument  is  indorsed  after  maturity,  payment  must  be  de- 
manded of  the  payor  within  a  reasonable  time,  and  notice,  in 
the  event  of  a  refusal,  given  to  the  indorser,  in  order  to 
charge  him — it  being  regarded  as  equiv^alent  to  one  payable 
on  demand.^ 

The  same  circumstances  and  considerations  which  deter- 
mine the  question  whether  or  not  a  hill  or  note  payable  on 
demand  has  become  overdue,  so  as  to  let  in  equitable  defenses 
by  the  original  parties  against  the  transfei'ee,  alike  determine 
the  question  whether  or  not  the  presentment  has  been  in  a 
reasonable   time    so    as   to  chaj'ge  the  drawer  or  indorser.^ 

'  Light  V.  Kingsbury,  50  Mo.  331;  McKewerv.  Kiitland,  33  Iowa,  352;  Tyler 
V,  Young,  G  Casey,  143;  McKiuney  v.  Crawford,  8  Scrg.  &  R.  351 ;  Patterson  v. 
Todd,  18  Penn.  St.  426,  overruling  Bank  of  N.  A.  v.  Barriere,  1  Yeates,  300; 
Loavitt  V.  Putnam,  1  Sandf.  190;  Berry  v.  Robinson,  9  Johns.  121;  Beebe  v. 
Brooks,  12  Cal.  308;  Bishop  v.  Dexter,  2  Conn.  419  ;  Goodwin  v.  Davenport,  47 
Me.  112;  Dwight  v.  Emerson,  2  N.  H.  159;  Levy  v.  Drew,  14  Ark.  334  ;  Jones 
^.  Middleton,  29  Iowa,  188;  Benton  v.  Gibson,  1  Hill  (S.  C.)  56 ;  Poole  v.  Tolle- 
son,  1  McCord,  199;  Course  v.  Shackleford,  2  Nott.  &  McC.  283;  Ecpert  v.  Con- 
drcs,  3  Const.  R.  69;  Union  Bank  v,  Ezell,  10  Hum.  385;  Stothart  v.  Parker,  1 
Tcnn.  260.     See  2  vol.  §  996. 

-  Field  V.  Nickerson,  13  Mass.  131 ;  Beriy  v.  Robinson,  9  Johns.  121 ;  Sice  v. 
Cunningham,  1  Cow.  397;  Bishop  v.  Dexter,  2  Conn.  417;  Course  v.  Shackleford, 


TIME   OF.  487 

Such  at  least  is  the  doctrine  in  the  United  States  according 
to  the  weight  of  authority,  though  there  are  cases  ^vllich  dis- 
sent from  it.  Some  of  them  maintain  that  when  the  note  is 
overdue  at  the  time  of  transfer,  the  rule  requiring  present- 
ment is  to  l)e  less  string.ent  than  where  it  has  some  time  to 
run.^  While  by  others  a  more  stringent  rule  is  applied ;  - 
and  it  has  been  said  that,  "if  the  indorsement  be  made  after 
the  note  falls  due,  the  demand  of  payment  must  be  made  as 
if  the  note  fell  due  the  day  of  indorsement."  ^ 

§  612.  How  question  of  reasonahle  time  determined. — 
Many  of  the  authorities  hold  that  the  question  of  reasonable 
time  is  for  the  jury  to  determine  as  matter  of  fact ;  *  while 
others  maintain  that  it  is  matter  of  law  for  the  court.^  But 
neither  is  strictly  correct.  It  is  a  mixed  question  of  law  and 
fact  in  most  cases,  to  be  determined  upon  hypothetical  in- 
structions of  the  court,  like  all  other  contested  matters.  And 
those  authorities  seem  to  us  unassailable  which  hold  that 
when  the  facts  are  few  and  simple,  or  are  presented  upon  a 
special  v^erdict  or  demurrer  to  evidence,  it  is  within  the  prov- 
ince of  the  court  to  determine.^  When  they  are  complicated 
and  doubtful,  and  are  not  so  presented,  they  must,  of  course, 
be  left  for  the  ascertainment  and  judgment  of  the  jury,  under 

2  Nott.  &  McC.  283;  Kennon  v.  McRca,  7  Port.  (Ala.)  175.  "A  bill  negotiated 
after  day  of  payment  is  like  a  bill  payable  at  sigbt."  Dehers  v.  Harriott,  1  Show. 
163;  1  Parsons  N.  &  B.  372-376,  382;  Bayley  on  Bills,  ch.  vii,  sec.  1,  p.  125. 

•  Rugby  V.  Davidson,  4  Const.  R.  (3.  C.)  33;  Hall  v.  Smith,  1  Bay  (S.  C.)  330; 
McKinney  v.  Crawford,  8  S.  &  R.  351. 

'  Nasb  V.  Harrington,  2  Aik.  9  ;  Aldis  v.  Johnson,  1  Vt.  136. 
'  Aldis  V.  Johnson,  1  Vt.  136. 

*  Field  V.  Nickerson,  13  Mass.  131 ;  Hankey  v.  Trotman,  1  W.  Bl.  1 ;  Goupy 
V.  Harden,  7  Taunt.  159;  Straker  v.  Graham,  4  M.  &  W.  721.  In  case  of  notes 
indorsed  after  maturity,  it  has  been  so  held  in  Eccles  t,  Ballard,  2  McCord,  888; 
Gray  v.  Bell,  2  Rich.  67,  and  other  decisions  in  South  Carolina. 

'  Himmelman  v.  Hotaling,  40  Cal.  Ill;  Gray  v.  Hell,  2  Rich.  67  ;  Sylvester  v. 
Crapo,  15,  Pick.  92;  Sice  v.  Cunningham,  1  Cow.  408;  Dennntt  v.  Wyman,  13 
Vt.  485. 

"  See  Chapter  XVII.  on  Presentment  for  Acceptance,  Sec.  Ill ;  Darbishire  v. 
Parker,  6  East,  3  ;  Tindal  v.  Brown,  1  T.  R.  167  (reasonable  notice  which  stands 
on  same  footing) ;  Mellish  v.  Kawdon,  9  Bing.  416 ;  Wyman  v.  Adams,  12  Cush. 
210 ;  Taylor  v.  Breden,  3  Johns,  136  (case  of  notice) ;  Anderson  v.  Royal  Exchange 
Assurance  Co.  7  East,  43;  Ball  v.  Wardell,  Willes,  204. 


488  PRESENTMENT  FOR  PAYMENT. 

instructions  from  the  court.  When  the  facts  are  ascertained 
it  is  for  the  court  to  determine  what  is  reasonable  time  as 
matter  of  law.^ 


.      SECTION  lY. 

DAYS    OF   GRACE   AND   COMPUTATION    OF   TIME. 

§013.  A  bill  of  exchange,  or  a  negotiable  promissory 
note  importing  in  its  language  to  be  payable  upon  a  certain 
day,  is  not  in  reality  payable  to  all  intents  and  purposes 
upon  that  day;  but  ordinarily  not  until  three  days  after,  ac- 
cording to  the  rules  of  the  law  merchant,  as  it  prevails  in 
England  and  the  United  States.  This  period  of  extension  of 
time  of  payment  is  termed  "  Days  of  Grace." 

§  614.  They  were  originally  days  allowed  by  way  of 
favor  to  the  drawee  of  a  foreign  bill  to  enable  him  to  provide 
funds  for  its  payment  without  inconvenience ;  and  were 
called  "  days  of  grace,"  or  "  respite  days,"  because  they  were 
gratuitous,  and  dependent  on  the  holder's  pleasure,  and  not 
to  be  claimed  as  a  right  by  the  person  on  whom  it  was  in- 
cumbent to  pay  the  bill.^  By  custom,  however,  they  became 
universally  recognized ;  and  although  still  termed  "days  of 
grace,"  they  are  now  considered  wherever  the  law  merchant 
prevails  as  entering  into  the  constitution  of  every  bill  of  ex- 
change and  negotiable  note,  both  in  England  and  the  United 
States,  and  form  so  completely  a  part  of  it  that  the  instru- 
ment is  not  due  in  fact  or  in  law  until  the  last  day  of  grace.^ 
Therefore  a  demand  of  payment  on  the  day  before  or  after 
the  third  day  of  grace  would  not  authorize  a  protest,  or 
charge  drawer  or  indorser.*  And  interest  is  chargeable  on 
the  period  of  grace  allowed  without  impeachment  as  usu- 

'  Muncy  Borough  School  District  v.  Conimoinvealth,  84  Penu.  St.  471. 

*  Chitty  on  Bills  (13th  Am.  ed.)  [*374],  422. 

'  Chitty,  p.  423;  Bauk  of  Washington  v.  Triplctt,  1  Pet.  25;  Ogden  v,  Saun- 
ders, 12  Wheat.  213. 

*  Bank  of  Washington  v.  Triplett.  1  Pet.  25;  Donegan  v.  Wood,  49  Ala.  243. 


DAYS  OF  GRACE  AND  COMPUTATION   OF  TIME.  480 

rioiis.^  This  indulgence  was  often  important  to  tlie  drawee, 
who  might  not  be  instantly  in  funds,  nor  advised  that  the 
bill  would  at  that  time  be  presented  for  payment ;  and  also 
even  when  it  was  accepted,  because  of  the  scarcity  of  the 
precious  metals  hi  which  payment  was  to  be  made.  And 
they  fixed  a  limit  to  the  time  which  the  holder  might  in- 
dulge the  payor  without  being  guilty  of  laches  in  not  pro- 
testing it.'^ 

§  615.  All  the  parties  to  the  hill  or  note^  being  parties  to 
the  same  contract,  are  bound  by  one  construction,  and  the 
law  which  fixes  grace  for  drawer  or  maker  fixes  it  also  as  to 
the  indorser,  and  vice  versa ;  ^  and  a  special  usage  varying 
the  allowance  of  grace  from  that  recognized  by  the  law 
merchant,  as  to  notes  discounted  in  bank,  will  be  binding 
u])on  indorser  as  well  as  maker,  although  he  had  no  knowl- 
edge of  it.** 

§  GIG.  Inland  hills  and  promissory  notes. — It  was  doubt- 
ful at  one  time  whether  sfrace  was  allowable  on  inland  bills 

o 

as  well  as  foreign ;  ^  but  this  was  in  the  remote  past.*'  In 
England  it  was  also  at  one  time  cj^uestioned  whether  or  not 
promissory  notes  were  entitled  to  grace ;  "^  but  it  was  long 
since  settled  that  they  were,  the  statute  of  3  tfe  4  Anne  (1704) 
placing  them  on  the  same  footing  as  bills.^  In  the  United 
States  some  cases  have  denied  that  grace  was  allowable  on 
inland  bills,^  or  promissory  notes  ;^"  but  they  have  generally 

'  Bank  of  Utica  v.  Wager,  2  Cow.  712;  Ogdcu  v.  Saunders,  12  Wlaeat.  213. 

'  Story  on  Bills,  §  333. 

'  Central  Bank  v.  Allen,  16  Me.  41;  Hogan  v.  Cuyler,  8  Cow.  203;  Love  v. 
Nelson,  Mart  &,  Yerger,  237. 

^  Mills  V.  Bank  U.  S.  11  Wheat.  431. 

'  Cramlington  v.  Evans,  2  Vent.  307  (1C91),  no  mention  of  grace;  Tassell  v. 
Lewis,  1  L.  Rayni.  743  (1G96). 

•  Brown  v.  Ilarraden,  4  Term  R.  148  (1791),  Lord  Kenyou,  C.  J.,  said:  "It 
has  been  settled  for  more  than  half  a  century  that  they  are  payable  at  the  same 
time  as  foreign  bills  of  exchange."     Leftly  v.  Mills,  4  T.  R.  170  (1791). 

'  May  V.  Cooper,  Fortescue,  37G  (1722);  Dexlaux  v.  Hood,  Buller  N.  P.  274 
(1752) 

"  Brown  v.  Harraden,-  4  T.  R.  148  (1791).  "  1  Parsons  N.  &  B.  322. 

"  Jones  V.  Fales,  4  Mass.  245 ;  Cook  v.  Gray,  Hempstead  C.  C.  47  (1827) ;  Har- 
rel  V.  Bixler,  Walk.  17G. 


490  PRESENTMENT  FOR  PAYMENT. 

been  declared  to  be  as  mucli  entitled  to  it  as  foreign  bills, 
and  except  where  statute  provides  otherwise  they  are  so 
everywhere  regarded.^ 

§  617.  All  bills  of  exchange  and  negotiable  notes  are 
entitled  to  grace ;  ^  except  those  payable  on  demand^  or  with- 
out specification  of  time,  in  which  case  on  demand  without 
grace  is  understood,*  or  those  expressly  payable  without 
grace.^  The  authorities  are  uniform  in  support  of  this  state- 
ment of  the  law,  except  in  respect  to  its  inclusion  of  sight 
bills  and  notes,  which  by  some  is  denied  and  by  others 
doubted.  In  England  there  has  not  been,  that  we  are  aware 
of,  a  direct  decision  of  the  question ;  but  it  has  been  taken 
for  granted  in  some  cases,  and  distinctly  intimated  iu  others, 
that  a  sight  bill  or  note  is  entitled  to  three  days'  grace ;  ^  and 
the  authority  of  text  writers,  both  foreign  and  American,  as 
well  as  of  adjudicated  cases  in  this  country,  greatly  pre- 
ponderates in  favor  of  such  allowance.  It  seems  clearly  rea- 
sonable that  bills  at  sight  should  have  grace,  as  they  are 
never  presented  for  acceptance,  but  for  payment;  and  the 

'  Ogden  V.  Saunders,  12  Wheat.  213,  note;  Norton  v.  Lewis,  2  Conn.  478 
(1818),  note;  Cook  v.  Darling,  2  R.  I.  385,  note;  Hudson  v.  Matthews,  Morris, 
Iowa,  94  (1841), note;  Crenshaw  v.  M'Kiernan,  Minor,  295,  note;  Beck  v.  Thomp- 
son, 4  Harr.  &  J.  531  (1819),  note. 

■  Bro\A-n  V.  Harraden,  4  T.  R.  148;  Cook  v.  Darling,  2  R.  I  385 ;  1  Parsons 
N.  &  B.  404 ;  Story  on  Bills,  §  342 ;  Story  on  Notes,  §  224. 

Mbid.;  Chitty  (13  Am.  ed.)  [*377],  426;  Bylcs  [*201];  Edwards,  523; 
Oridge  y.  Sherborne,  11  M.  &  W.  374;  Barbour  v.  Bayen,  5  La.  Ann.  303;  Cam- 
mer  v.  Harrison,  2  McCord,  246;  Woodruff  y.  Merchants'  Bank,  25  Wend.  G73. 

*  Story  on  Bills,  §  343.  '  See  post,  §  633. 

«  In  Webb  v.  Fairmauer,  3  M.  &  W.  473,  Bolland,  B.,  said:  "In  the  case  of 
a  bill  payable  at  sight,  it  has  been  decided  over  and  over  again  that  the  holder 
cannot  sue  upon  it  until  after  the  expiration  of  the  third  day  after  sight."  In 
Coleman  v.  Sayer,  1  Barn.  303,  the  chief  justice  said  that  by  the  custom  of 
London  grace  was  allowed  on  sight  bills.  In  Dehers  v.  Harriott,  1  Show.  163 
(1691),  it  seemed  agreed  that  sight  bills  should  be  demanded  on  the  third  day  of 
grace.  In  Jansen  v.  Thomas,  3  Doug.  421  (1784),  Lord  Mansfield  said:  "I  be- 
lieve there  is  great  doubt  as  to  the  usage  about  the  three  days'  grace."  Buller, 
J.,  said:  "In  a  case  before  Willes,  C.  J.  (1743),  a  special  jury  certified  that  on 
bills  at  sight  three  days  were  allowed.  That  was  an  action  on  an  inland  bill.  I 
know  that  they  differ  about  it  in  the  city,  but  in  general  it  is  taken."  The 
decision  was  that  a  bill  at  sight  should  have  been  stamped,  not  coming  wilhin 
the  provision  of  the  stamp  act  excluding  bills  on  demand. 


DAYS  OF  GRACE  AND  COMrUTATlON  OF  TlMi:.     491 

tlieoiy  of  indulgence  to  the  drawee,  upon  wliich  grace  is 
allowed  upon  drafts  payable  at  a  speciiied  time  after  date,  or 
after  siglit,  would  apply  with  greater  force  to  those  payable 
at  sight.  And  we  have  no  hesitation  in  saying,  in  concur- 
rence with  the  doctrine  expressly  stated,  or  to  be  derived 
from  what  is  said  by  Chitty,  Chitty,  Jr.,  Bayley,  Byles, 
Maxwell,  Roscoe,  Edwards,  Story,  Parsons,  Kent  and  others, 
that  negotiable  instruments  payable  at  sight  are,  and  should 
be,  entitled  to  grace,^  though  there  is  respectable  authority 
and  opinion  to  the  contrary.^  The  w^eight  of  authority  in 
the  United  States  is  to  this  effect.^  In  Scotland  the  question 
does  not  appear  to  have  been  decided,  but  the  inclination  of 
opinion  is  to  the  allowance  of  grace.'^  A  bill  payable  one 
day  after  sight  is  really  payable  four  days  after  sight,  three 
days'  grace  Ijeing  added.^ 

§  618.  Such  being  the  rule  of  the  law  merchant,  it  will 
be  presumed  that  a  bill  or  note  payable  at  sight  is  entitled 
to  grace.  In  a  number  of  the  States,  however,  it  is  provided 
by  statute  that  such  instruments  shall  not  have  grace,  and 
in  others  that  they  shall  have  grace.  In  some  States  it  may 
be  that  well  established  custom  or  usage  has  settled  tlie  prac- 
tice to  disallow  it.^  If  such  be  the  law  or  custom  of  a  par- 
ticular State  or  locality,  it  wall  be  incumbent  on  the  party 

'  In  Chitty  ou  Bills  (13th  Am.  ed.)  426,  and  Bayley  on  Bills,  151,  it  is  so  dis- 
tinctly laid  down.  Cliitty,  Jr.,  on  Bills,  50.  In  Byles  on  Bills  (Sharswood's  ed.) 
336,  it  is  said:  "The  weiglit  of  authority  has  been  considered  to  incline  in  favor 
of  such  an  allowance."  Maxwell  on  Bills.  81-2;  Roscoe's  Digest,  162;  Edwards 
on  Bills,  523;  Story  on  Notes,  §  224;  Story  ou  Bills,  §§  228,  342;  in  §  342  Story 
says:  "The  doctrine  seems  now  well  established,  both  in  England  and  America, 
that  days  of  grace  are  allowed  on  bills  payable  at  sight."  1  Parsons  N.  &  B. 
405-6;  3  Kent  Com.  103;  Redfield  &  Bigelow'sLcad.  Cas.  307  ;  See  also  1  Bell 
Com.  416;  Selwyn^s  K  P.  Bills  of  Exch.  6. 

="  Johnson  on  Bills,  9;  Kyd  on  Bills,  10;  Bcawes,  by  Chitty,  Vol.  1,  p.  608; 
Trask  v.  Martin,  1  E.  D.  Smith,  505. 

=  The  following  cases  are  to  this  effect;  "Walsh  v.  Dart,  12  Wis.  635  ;  Cribbs 
V.  Adams,  13  Gray,  597;  Hart  v.  Smith,  15  Ala.  807;  Knott  v.  Venable,  42  Ala. 
186;  Lucas  v.  Ladew,  28  Mo.  596 ;  Nimick  v.  Martin,  1  Monthly  Law  Mag.  15 ; 
17  West.  Law.  J.  380. 

♦  Forbes  on  Bills,  142.  '  Craig  v.  Price,  23  Ark.  634. 

^  This  is  supposed  to  be  the  case  in  Virginia. 


492  PRESENTMENT  FOR  PAYMENT. 

alleging  to  show  it ;  and  otherwise  the  rule  of  the  general 
law  merchant  j^revailing  throughout  the  United  States  must 
govern.^ 

§  619.  The  expression  "  after  sight"  in  a  bill  of  exchange 
has  a  different  signification  from  the  like  expression  in  a 
promissory  note.  In  a  bill  of  exchange  it  means  after  accept- 
ance, or  protest  for  non-acceptance,  and  not  after  a  mere  private 
exhibition  to  the  drawee,  for  the  sight  must  appear  in  a  legal 
way.^  But  a  note  is  incapable  of  accej^tance,  and  the  words 
"  at  or  after  sight"  used  in  it  would  merely  import  that  pay- 
ment was  not  to  be  demanded  until  it  had  been  again  exhibited 
to  the  maker.^  Marius  says  :  "  A  bill  payable  so  many  days 
after  sight  is  to  be  accounted  so  many  days  next  after  the  bill 
shall  be  accepted,  or  else  protested  for  non-acceptance,  and  not 
from  the  date  of  the  bill,  nor  from  the  day  that  the  same  came  to 
hand  or  was  privately  exhibited  to  the  party  on  whom  it  is 
drawn,  to  be  accepted,  if  he  do  not  accept  thereof;  for  the 
sight  must  appear  in  a  legal  way,  which  is  approved  either 
by  the  parties  underwriting  the  bill,  acceptance  thereof,  or 
by  protest  made  for  non-acceptance."  * 

§  620.  Only  those  instruments  whicli  are  negotiable  by  the 
law  merchant,  or  those  which  are  placed  upon  the  same  foot- 
ing by  statute,  and  are,  strictly  speaking,  commercial  instru- 
ments, are  entitled  to  grace.  In  England,  where,  under  the 
statute  of  3  &  4  Anne,  a  note  payable  to  a  particular  person 
is  neo-otiable,  althouf^fh  the  words  "  or  order  "  or  "or  bearer" 
be  not  added,  it  would  have  grace ;  ^  and  so  whenever  such  a 
note  is  negotiable ;  ^  but  where  such  a  note  is  not  negotiable, 
it  would  be  other\vise.^ 

*  See  Cribbs  v.  Adams,  13  Gray,  497. 

''Campbell  v.  French,  6  T.  R.  213;  Mitchell  v.  De  Grand,  1  Mason,  176; 
Byles  [*76],  170  ;  [*201],  336. 

=>  Holmes  V.  Korrison,  2  Taunt.  323;  Sutton  v.  Toomer,  7  B.  &  C.  416 ;  Dixon 
V.  Nuttall,  1  C.  M.  &  R.  307. 

"  Marius,  19,  cited  and  approved  in  Campbell  v.  French,  s»pra,  by  Lord 
Kenyon.  '  Smith  v.  Kendall,  6  T.  R.  123  (1794). 

"  See  Dutchess  Cotton  Man.  Co.  v.  Davis,  14  Johns.  238;  Downing  v.  Back- 
enstoes,  3  Caines,  137. 

'  Backus  V.  Danforth,  10  Conn.  297;  Avery  v.  Stewart,  10  Conn.  69;  Lamkin 
V.  Nye,  43  Miss.  241. 


DAYS  OF   GRACE  AND  COMPUTATION  OF   TIME.  493 

§  C21.  If  tlic  bill  or  note  Tjo  payable  in  installments,  it  is 
entitled  to  grace  on  each  installment,  for  it  is  really  so  many 
instruments  in  one  form.^  If  it  is  payable  "  on  demand  at 
sight,"  it  is  the  same  as  if  payable  "at  sight." ^ 

The  days  are  always  calculated  exclusively  of  the  nom- 
inal day  of  payment."^ 

§  622.  Number  of  days  allowed  hy  laiu  merchant  and  hy 
custom. — The  law  merchant,  as  it  prevails  in  England  and  the 
United  States,  limits  the  allowance  of  grace  to  three  days/ 
and,  although  it  is  settled  that  by  special  established  usage 
in  a  particular  locality  it  may  be  denied  altogether,  or  a  differ- 
ent number  of  days  may  be  granted,Hhe  courts  take  judicial 
notice  of  the  period  fixed  by  the  law  merchant,  and  will  rec- 
ognize that  only  unless  the  usage  varying  it  is  alleged  and 
proved.^  In  the  District  of  Columbia,  the  usage  at  one  time 
prevailed  to  allow  four  days,  and  it  was  sustained  as  binding 
upo)i  parties  to  negotiable  instruments  there  payable,  by  the 
United  States  Supreme  Court.'  It  extended,  however,  only 
to  notes  discounted  in  bank.^  In  Louisiana,  at  one  time,  ten 
days  were  allowed ;  but  this  was  changed  by  statute  to  con- 
form to  the  law  merchant  in  the  United  States,^  and  of  course 
no  custom  can  affect  a  positive  enactment.^'^ 


'  Oridge  v.  Sberbome,  11  M.  &  W.  374. 

»  Dixon  V.  Nuttall,  1  Cromp.  M.  &  R.  307.  '  Story  on  Bills,  §  335. 

^  Chitty  on  Bills  (13  Am.  ed.) ;  Hill  v.  Lewis,  Skin.  410  (1694) ;  Wood  v. 
Corl,  4  Mete.  203. 

'  Jackson  v.  Henderson,  3  Leigh,  197  ;  Renncr  v.  Bank  of  Columbia,  9  Wheat. 
581;  Mills  v.  Bank  U.  S.  11  Id.  431 ;  Wood  v.  Corl,  4  Mete.  203;  KJlgore  v.  Bulk- 
ley,  14  Conn.  362 ;  Bank  of  Columbia  v.  Magrader,  6  Har.  &  J.  172 ;  City  Bank 
V." Cutter,  3  Pick.  414;  Morse  on  Banking,  335;  but  contra,  Woodruff  v.  Mer- 
chants' Bank,  25  Wend.  673;  G  Hill,  174;  Bowen  v.  Newell,  4  Seld.  190;  Ed- 
wards on  Bills,  520,  521. 

*  Jackson  v.  Henderson,  3  Leigh,  197;  Renner  v.  Bank  of  Columbia,  9  Wheat. 
581;  Bank  of  Columbia  v.  Magrader,  6  Harr.  &  J.  172;  Dollfus  v.  Frosch,  1 
Den.  367 ;  Wood  v.  Corl,  4  Mete.  203 ;  Lucas  v.  Ladero,  28  Mo.  242.  In  Ken- 
tucky it  ha-;  been  held  to  be  entirely  a  mutter  of  local  custom.  Goddin  v.  Shep- 
ley,  7  B.  Mon.  575. 

'Renner  v.  Bank  U.  S.  11  Wheat.  431;  see  Fowler  v.  Brantley,  14  Pet. 
318.  '  Cookendorfer  v.  Preston,  4  How.  317. 

''  In  1805,  and  see  statutes  of  1855-1858;  Dubreys  v.  Farmer,  22  La.  Ann. 
478.  "  Perkins  v.  Franklin  Bank,  21  Pick.  4S3. 


494  PRESENTMENT  FOR  PAYMENT. 

§  623.  The  Supreme  Court  of  the  United  States  lias,  by 
several  decisions,  sanctioned  the  usages  of  banks  in  particular 
localities,  in  making  demand,  and  giving  notice  of  non-pay- 
ment, in  a  manner  or  at  a  time  varying  from  the  general  law 
merchant,^  and  its  views  are  concurred  in  by  other  high  au- 
thorities. The  following  principles  on  this  subject  may  be 
regarded  as  established:  First,  That  the  usage  must  be  no- 
torious, in  order  that  an  inference  may  be  drawn  that  it  is 
known  to  the  public,  and  especially  to  those  dealing  with  the 
bank,  and  therefore  create  the  further  inference  of  expressed 
or  implied  assent.  Second,  That  when  a  usage  has  been 
sanctioned  by  judicial  decision  it  becomes  settled  law.  No 
further  proof  is  necessary  to  establish  it,  and  no  evidence  is 
admissible  to  controvert  the  law  laid  down  by  the  court.^ 
Third,  That  it  should  apply  to  a  place  rather  than  to  a  par- 
ticular bank.^  Fourth,  That  it  need  not  be  known  to  the 
party  dealing  with  the  bank  at  a  particular  place.^ 

§  624.  The  ter)n  '■^  months — By  the  common  law  of  Eng- 
land, a  month  is  deemed  a  lunar  month,  and  is  computed 
accordingly  in  construing  common  law  contracts  and  stat- 
utes ;  ^  but  by  the  law  merchant,  both  in  England  and  the 
United  States,  a  month  is  construed  to  mean  a  calendar 
month  in  all  cases  of  negotiable  instruments,  and  of  mercan- 
tile contracts.^  Therefore  a  bill  dated  the  first  day  of  Jan- 
uary, and  payable  one  month  after  date,  would  be  payable 
(grace  included)  on  the  fourth  day  of  February ;  and  one 
dated  February  first,  payable  one  month  after  date,  would 


'  Renner  v.  Bank  of  Columbia,  9  Wheat.  587  ;  Adams  v.  Otterback,  15  IIow. 

539. 

••'  Cookendorfer  v.  Preston,  4  How.  317;  Edie  v.  East  India  Co.  2  Burr.  1221. 

=  Renner  v.  Bank  of  Columbia,  9  Wheat.  587;  Mills  v.  Bank  U.  S.  11  Wheat. 
430;  Adams  v.  Otterback,  15  IIow.  539;  Dorchester,  &c.  Bank  v.  Mjlton  Bank,  1 
Cush.  177. 

^  Mills  V.  Bank  U.  S.  11  Wheat.  431;  Fowler  v.  Branily,  14  Pet.  318  ;  Lime 
Rock  Bank  v.  Ilcwctt,  52  Me.  531  ;  Morse  on  Banking,  372-3. 

'  Chitty  on  Bills  (13  Am.  ed.),  [*373],  420. 

•  Thomas  v.  Shoemaker,  6  Watts  &  S.  179;  McMurchey  v.  Robinson,  10  Ohio, 
496;  Lang  v.  Gale,  1  Maule  &  S.  Ill;  Matter  of  Swonford,  G  Id.  226. 


DAYS  OF   GRACE  A>sD  COMPUTATION    OF   TIME.  495 

likewise  be  payable  (grace  included)  on  the  fourth  day  of 
Mai'ch,  although  February  is  two,  or  three  days  (in  leap 
year),  shorter  than  January.  When  one  month  is  longer  than 
the  next  sitcceeding  month,  the  computation  of  a  month  does 
not, carry  it  into  a  third  month.  Thus  a  month  dating  from 
the  thirty-first  of  January  would  expire  on  the  28th  or  29th 
of  February,  as  the  case  might  be  ;  antl  in  leap  year,  a  month 
counting  from  the  thirty-first,  thirtieth,  or  twenty-ninth  of 
January,  would  end  on  the  twenty-ninth  of  February,  and 
the  last  day  of  grace  would  be  March  the  third.  But  if  a 
bill  or  note  were  dated  Jauuary  twenty-eighth,  a  month 
therefrom  would  terminate  on  February  twenty-eighth,  and 
presentment  sliould  be  on  March  the  second.^  The  general 
rule  was  recently  stated  in  a  New  York  case  ^  by  Folger,  J.  : 
"  In  computing  the  time  when  a  note,  payable  at  a  certain 
number  of  months  after  date  Avill  become  due,  the  rule  is  to 
exclude  the  day  of  the  date  from  the  calculation,  and  include 
the  day  of  payment,  when  no  days  of  grace  are  allowed.' 
When  a  promissory  note  is  dated  on  a  day  of  any  month, 
and  made  payable  at  a  specified  number  of  months  after 
date,  without  days  of  grace,  it  accrues  due  and  payable  on 
the  same  day  in  the  stipulated  number  of  mouths  afterward 
with  the  day  of  the  date  of  the  note."  ^ 

§  625.  And  whenever  a  note  is  made  on  the  last  day  of  a 
month,  the  corresponding  day  of  the  next  month  is  estimated 
as  the  termination  of  a  month  from  date.  Thus  if  payable 
a  month  from  February  29th,  in  leap  year,  presentment 
should  be  on  the  first  of  April,  and  if  on  the  30tli  of  Septem- 
ber, presentment  should  be  on  the  second  of  November.^  If 
dated  on  an  impossible  date,  such  as  the  31st  of  September, 

*  Wagner  V.  Kenner,  2  Rob.  (La.)  120;  Chitty  (13  Am.  ed.),  [*373],  421;  1 
Parsons  N^«fe  B.  409. 

=  Roehner  V.  Knickerbocker  Life  Ins.  Co.  03  N.  Y.  163  (1875). 

'  Citing  Bellasis  v.  Hester,  1  Ld.  Raym.  28f;  Campbell  v.  French,  GT.  R.  2!2. 

*  Citing  Hartford  Bank  v.  Barry,  17  :\ras3.  94;  Ripley  v.  Grcenlcaf,  2  Vt.  129. 

*  Wagner  V.  Kenner,  2  Rob.  (La.)  129;  Wood  v.  Mullen,  3  Rob.  (La.)  299; 
Chitty,  [*373],  421;  1  Parsons  N.  &  B.  409;  Story  on  Notes,  §  213a;  Story  on 
BiUs,  §  330 ;  Edwards,  515. 


490  PRESENTMENT  FOR  PAYMENT. 

the  law  adopts  the  nearest  day  by  the  doctrine  of  cy  2}res  (as 
near  as  may  be)  ;  and  the  comjxitation  ^^■ill  be  from  the  30th 
of  Sejjtember.^ 

§  626.  As  to  the  computation  of  days. — In  computing  the 
number  of  days  which  a  bill  or  note,  payable  at  or  in  so 
many  days  from  date,  has  to  run,  the  day  of  date  is  always 
excluded ;  ^  and  if  payal)le  at  so  many  days  after  sight,  after 
demand,  or  after  a  particular  event,  the  day  of  sight,^  de- 
mand, or  of  the  hai:)pening  of  the  event  is  likewise  excluded.* 
So  if  it  be  presented  on  one  day,  and  accepted  on  another,  the 
day  of  acceptance  is  excluded.^  The  expression,  "  in  thirty 
days  ; " — ''  in  tliirty  days  from  date ; " — "  at  thirty  days," — 
and  "  thirty  days  after  date,"  are  synonymous.^  As  said  in 
Maine,  by  Howard,  J. :  "  If  there  be  several  notes  of  the  same 
date,  some  payable  in  six  months,  some  in  six  months  from 
date,  and  some  in  six  months  after  date,  they  all  have  the 
same  pay  day.  In  all  of  them  the  day  of  the  date  is  ex- 
cluded.'^ 

§  627.  Hoiv  Sundays  and  days  of  religious  ohservance  and 
holidays  counted. — There  is  a  peculiarity  about  the  calcula- 
tion of  grace,  which  denotes  its  origin  as  arising  from  indul- 
g»ence.  If  a  bill  or  note  without  grace,  or  any  non-commer- 
cial instrument  for  payment  of  money,  falls  due  on  a  Sunday 
or  a  legal  holiday,  it  is  not  payable  until  the  next  regular 

■  Wagner  v.  Kenner,  2  Rob.  (La.),  130 ;  1  Parsons  N.  &  B.  410. 

^  Coleman  v.  Saver,  1  Barn.  308;  Ilenry  y.  Jones,  8  Mass.  453;  Ammidown 
V.  Woodman,  31  Me.  580 ;  Taylor  v.  Jacoby,  2  Peun.  St.  495  ;  Hill  v.  Norvell,  3 
McLean,  583.     Formerly  otherwise,  Bellasis  v.  Hester,  1  Ld.  Raym.  303. 

'  Coleman  v.  Saj'er,  1  Barn.  303 ;  Lester  v.  Garland,  15  Ves.  248  ;  Stm'dy  v. 
Henderson,  4  B.  «fe  Aid.  592  ;  Loring  v.  Hailing,  15  Johns.  120  ;  Mitchell  v.  De 
Grand,  1  Mason,  176. 

■*  Ibid. ;  Barlow  v.  Planters'  Bank,  9  How.  (Miss.)  129. 

'  Mitcliell  V.  De  Grand,  1  Mason,  176. 

^  Ammidowm  v.  Woodman,  31  Me.  580  ;  Henry  v.  Jones,  8  Mass.  453.  In  this 
case  the  Court  said:  "In  the  case  at  bar  the  note  "was  made  payable  at  sixty 
days,  without  adding,  as  is  customary,  from  the  date.  But  tlie  intention  is  ap- 
parent, and  the  Court  will  supply  the  omission.  The  meaning  must  be  the  same 
as  in  sixty  days  from  the  date,  otherwise  a  note  payable  in  one  day  would  be 
payable  immediately,  which  would  be  an  absurdity." 

'  Ammidown  v.  Woodman,  supra. 


DAYS  OF  GRACE  AND  COMPUTATJON  OF  TIME.  497 

business  day,  for  the  payor  is  not  compellable  by  law  to  pay 
on  the  exact  day  named,  and  the  next  day  is  the  first  day 
that  the  creditor  can  demand  payment.^  But  the  debtor 
cannot  require  the  creditor  to  extend  his  indulgence  beyond 
three  calendar  days ;  and  therefore  when  grace  on  a  bill  or 
note  entitled  to  it  expires  on  a  Sunday  or  other  non-business 
da)^,  the  bill  or  note  would  fall  due  on  the  day  preceding. 
Thus,  if  grace  expired  on  Sunday,  it  would  fall  due  on  Sat- 
urday ;^  and  if  a  holiday  (such  as  Christmas  day)  fell  on  the 
Saturday  before  the  Sunday  of  its  maturity,  it  would  fall  due 
on  the  Friday  preceding.^  The  latest  business  day  within  or 
before  the  period  of  grace  is  the  day  of  payment,*  even 
though  all  grace  be  excluded.^  If  a  holiday  or  Sunday  inter- 
venes, or  is  the  nominal  day  of  grace,  it  is  counted  as  one  of 
the  days  of  grace.^ 

§  628.  Days  observed  according  to  the  religious  usages 
of  a  race  or  sect  differing  from  those  which  generally  pre- 
vail, as  days  of  religious  worship,  fasts  or  festivals,  stand  on 
the  same  footing  as  the  Christian  Sabbath,  in  respect  to 
those  who  belong  to  such  race  or  sect.  Religious  liberty  and 
freedom  of  conscience  require  this.  Thus,  a  Jew,  it  is  said, 
could  not  be  compelled  to  pay  or  receive  payment  on  Sat- 
urday, if  he  observed  it  as  a  day  of  abstinence  from  secular 
business.*^  "  The  law  merchant  respects  the  religion  of  differ- 
ent people."  ^ 

§  629.  W7iat  days  are  legal  holidays  are  determined  by 
statute  law  and  by  the  decisions  of  the  courts  in  the  various 
States.  Christmas  is  universally  regarded  as  a  legal  holiday. 
The  fourth  of  July  is  everywhere  regarded  so  in  the  United 
States ;  and  in  many  of  them  the  twenty-second  of  February 

'  Aveiy  V.  Stewart,  2  Conn.  69 ;  Salter  v.  Burt,  20  Wend.  205  ;  Kuntz  v.  Tom- 
pel,  48  Mo.  75 ;  Barrett  v.  Allen,  10  Ohio,  426. 

'  Bussard  v.  Levering,  6  Wheat.  193;  Kuntz  v.  Tempel,  48  Mo,  75;  Barrett 
V.  Allen,  10  Ohio,  42C;  TasscU  v.  Lewis,  1    Ld.  Raym.  743. 

'  Story  on  Bills,  §  338.  *  Ibid. 

*  1  Parsons  N.  &  B.  402.  '  Wooley  v.  Clements,  1 1  Ala.  229. 
'  Story  on  Bills,  §  340;  1  Parsons  N.  &  B.  530. 

•  Lindo  V.  Unswortb,  2  Camp.  002,  Lord  Ellenboroagh. 

Vol.  I.— 32 


498  PRESENTMENT  FOR  PAYMENT. 

and  fast  and  thanksgiving  days  and  new  year's  day,  likewise. 
In  most  of  the  States  there  are  statutes  specifying  the  legal 
holidays,  and  prescribing  the  practice  with  respect  to  them ; 
but,  independent  of  them,  usage  would  determine  whether 
any  day  was  to  be  so  regarded,  and  also  the  regulations  con- 
cerning it.^  In  Massachusetts,  it  has  been  lield  that  although 
commencement  day  at  Harvard  University  was  not  a  legal 
holiday,  yet  that  a  usage  of  any  bank  in  respect  to  notes 
falling  due  on  that  day,  to  make  a  demand  and  to  send  no- 
tice the  day  previous,  would  bind  an  indorser,  connusant  of 
the  usage  of  a  note  discounted  for  him  at  that  bank ;  and 
whether  the  note  was  payable  at  the  bank  or  not  was  imma- 
:terial.^ 

But  the  usage  of  a  bank  in  a  particular  city  to  regard 
inewyear's  day  as  a  holiday,  would  not  justify  a  demand  the 
(day  previous,  so  as  to  charge  an  indorser,  unless  he  had  ex- 
press knowledge  of  the  usage,  or  previous  dealings  with  the 
ibank,  from  which  such  knowledge  could  be  inferred.^ 

It  has  been  held  that  a  law  makino;  a  lesral  holidav,  and 
thereby  affecting  notes  as  to  grace,  does  not  impair  the  obli- 
gation of  a  contract.'*  This  view,  however,  has  been  recently 
questioned.^ 

§  G30.  A  nil  or  note  operates  as  from  its  date  as  soon  as 
it  is  delivered,  whether  it  l)e  truly  dated,  or  ante-dated,  or 
post-dated,  although  it  does  not  become  an  operative  con- 
tract until  it  is  deliv'ered.®  When  there  is  no  date  or  an  im- 
possible one,  it  operates  from  its  delivery ;  "^  and  if  no  date 
or  delivery  is  shown,  from  the  time  when  it  appears  to  have 
first  been  in  existence.®  The  object  of  tlie  date  is  simply  to 
fix  the  time  of  maturity ;°  and  parol  evidence  cannot  be 
admitted  to  vary  it,^°  unless  between  the  immediate  parties 

•  1  Parsons  N.  &  B.  403.  ■  City  Bank  v.  Cutter,  3  Pick.  414. 
'  Dabney  v.  Campbell,  9  Humph.  080;  see  11  Wheat.  430. 

•  Barlow  v.  Gregory,  31  Conn.  301. 

'  See  Duerson's  Adm'r  v.  Alsop,  27  Grat.  238  (1870),  Staples,  J. 

•  Powell  V.  Waters,  8  Cow.  699 ;  see  ante,  §  83-4-5. 
'  Mechanics'  Bank  v.  Schuyler,  7  Cow.  337. 

•  Mahier  v.  Le  Blanc,  12  La.  Ann.  207. 

"  Brewster  v.  McCardle,  8  Wend.  478.  '°  Huston  v.  Young,  33  Me.  85. 


DAYS   OF   GRACE   AND   COMPUTATION   OF   TIME.  499 

upon    application    to    equity    on    tlio    ground    of  fraud    or 
mistake. 

§  031.  As  to  usance. — •Wlion  Li  lis  are  drawn  in  one 
country  of  Europe  upon  anotlier,  they  are  frequently  made 
payable  at  one,  two,  or  more  usances,  instead  of  at  so  many 
months  or  days.  "  Usance  "  is  a  Frencli  term,  and  signifies 
the  time  which,  according  to  the  usage  of  the  countries  be- 
tween which  the  bills  ai'e  drawn,  is  appointed  for  payment 
of  them.^  The  length  of  the  usance  differs  in  different  coun- 
tries; and  what  period  it  signifies  is  not  taken  judicial  notice 
of  by  foreign  court>!,  but  must  be  averred  and  proved.*^  Be- 
tween the  United  States  and  the  European  nations,  it  seems 
that  no  usances  are  established;*  and  in  Europe  the  practice 
of  drawing  bills  at  a  certain  number  of  days  or  months  is 
taking  the  place  of  drawing  at  usance.*  When  a  month  con- 
stitutes the  usance,  a  half  usance  is  fifteen  days,  and  bills 
may  be  drawn  at  half,  or  double,  or  treble  usance.^  Usance 
is  calculated  exclusively  of  the  day  of  date,  and  grace  is 
allowed  as  in  other  cases.^ 

§  632.  Style. — The  Gregoi-ian  calendar,  or  new  style  of 
computing  time,  is  adopted  in  the  United  States,  and 
everywhere  else,  except  in  Russia  and  those  countries  where 
the  Greek  church  is  the  established  religion.  They  use  the 
Julian  calendar,  or  old  style,  as  it  is  called.  There  is  the 
difference  of  t^velve  days  between  the  two  styles ;  and  the 
addition  of  that  number  to  the  old  makes  the  new  style. 
The  1st  of  January  in  St.  Petersburg,  Russia,  is  therefore  the 
13th  of  January  in  England  and  the  United  States.  The 
style  of  the  place  of  payment,  however,  always  prevails; 
and  if  a  bill  were  drawn  in  London  on  the  1st  of  Septem- 
ber, payable  in  St.  P(;tersburg  on  the  1st  of  January,  it 
would  fall  due  on  the  day  corresponding  to  the  13th  of  Jan- 
uary in  England;  and  vice  versa.'^     This  is  because  the  par- 

'  Cliitty  on  Bills  (13  Ara.  ed.)  [*371].  418;  Story  ou  Bills,  §§  50,  144,  333. 
'  ChittY  [*371],  418.  '  1  Parsons  N.  &  B.  389. 

*  Chitty,  p.  418.  '  Chitty,  p.  418.  '  Ibid. 

'  Story  on  Bills,  §  331 ;  1  Parsons  N.  &  B.  388. 


500  PRESENTIMENT   FOR  PAYMENT. 

ties  are  to  be  regarded  as  contractino;  in  reference  to  the 
meaning  of  terms  at  tlie  place  of  their  fulfillment.^ 

§  633.  Hoiv  grace  dispensed  with. — By  any  language  in 
the  bill  or  note  of  that  import,  grace  may  be  disallowed. 
And  such  \vords  as  "  without  grace,"  or  "  no  grace,"  obviously 
disallow  it ; "-  and  the  word  "  fixed  "  has  been  held  to  have 
the  same  import.^  But  the  expression  "  without  defalcation  " 
does  not;^  nor  would  a  mere  marginal  memorandum  of  the 
day  of  the  month  and  year  on  which  the  time  after  date  at 
which  the  instrument  was  expressed  to  be  payable  fell  due.^ 
But  where  a  bill  at  sixty  days'  sight  was  accepted  on  Septem- 
ber 14th,  payable  November  16th,  it  was  held  that  Novem- 
ber 16th  was  indicated  by  the  acceptor  to  be  the  absolute 
day  of  payment,  he  having  intended  to  allow  for  grace  in 
his  calculation ;  and  that  presentment  on  that  day  was 
necessary." 

§  634.  The  allowance  of  grace  is  always  determined  by 
the  law  of  the  place  where  the  bill  or  note  is  payable.''^ 
But  the  law  merchant  allowing  grace,  and  fixed  it  at  three 
days,  will  be  followed,  unless  it  be  affirmatively  proved  that 
the  law  of  such  place  is  different.  Thus  if  executed  and 
sued  on  in  this  country,  where  three  days  are  allowed,  and 
payable  in  France  where  grace  is  abolished,^  three  days'  grace 
would  be  accorded,  unless  the  law  of  France  were  proved.^ 


SECTION  V. 

PLACE   OF    PRESENTMENT. 

§  635.  At  what  place  presentment  shoidd  he  made,  when 
hill  or  note  is  payahle  generally. — The  presentment  of  the 

'  Chitty<5n  Bills  [*369],  417.       "  Perkins  v.  Franklin  Bank,  21  Pick.  483. 

'  Durnford  v.  Patterson,  7  Mart.  (La.)  460.         '  McDonald  v.  Lee,  12  La.  435. 

'  Pcrkips  V.  Franklin  Bank,  21  Pick.  483. 

*  Kenner  v.  Creditors,  19  Mart.  (La.)  540;  20  Id.  36. 

'  Chitty  on  Bills  (13  Am.  ed.),  [*376],  425;  Story  on  Notes,  §  216;  Story  on 
Bills,  §  3:^4;  Bryant  v.  Edson,  8  Vt.  325;  Bowen  v.  Ne\Yell,  3  Kern.  290;  Bank 
of  Washington  v.  Triplctt,  1  Pet.  25 ;  Kilgore  v.  Buckley,  14  Conn.  302. 

*  Code  of  Commerce,  art.  135.  °  Dollfus  v.  Frosch,  1  Denio,  367. 


PLACE  OF.  501 

bill  or  note  for  payment  slioiild  be  made  at  the  city,  town  or 
other  place  in  whiph  the  acceptor  or  maker  has  his  home  or 
domicile,  or  his  place  of  business,  provided  there  be  no  place 
designated  in  the  instrument  or  agreed  upon  by  the  parties 
as  the  place  where  it  shall  be  paid  at  maturity.^  If  such 
place  is  designated  or  agreed  upon,  it  will  be  sufficient  to 
make  presentment  there.^  And  averment  of  presentment 
there  is  always  sufficient,  without  any  addition.^  If  the 
maker  or  acceptor  has  both  a  dwelling-house,  and  a  business 
house  in  the  same  city,  town  or  other  place,  the  presentment 
may  be  made  at  either.*  And  if  the  maker  or  acceptor  have 
a  dwelling-house  or  domicile  in  one  city,  and  a  place  of 
business  in  another,  it  will,  as  it  seems,  be  sufficient  to  pre- 
sent the  instrument  at  either.^  If  a  bill  be  payable  in  a  par- 
ticular town,  a  presentment  at  all  of  the  bankers'  houses 
there  will  suffice.^  In  an  action  upon  a  draft  upon  N.  F. 
Mills,  "care  of  M.  S.  &  Co.,  No.  lU  South  Main  st.,  St. 
Louis,  Mo.,"  the  notarial  certificate  stated  that  the  notary 
presented  it  "  at  the  place  of  business  of  N.  F.  Mills,  St. 
Louis,  to  the  person  in  charge  thereof"  It  appeared  that 
N.  F.  Mills  had  two  places  of  business  in  St.  Louis,  one  of 
which  was  No.  114;  and  it  was  held  that  the  certified  pre- 
sentment was  insufficient  to  show  due  diligence,  to  charge 
the  indorsers.''^ 

When  the  bill  is  presented  for  acceptance,  the  drawee 
may  detain  it  for  twenty-four  hours,  if  he  desire,  before  act- 
ing, to  examine  his  accounts;  but  when  a  bill  or  note  is  pre- 
sented for  payment,  it  must  be  paid  immediately ;  and  the 

'  Oakej^  V.  Beauvais,  11  La.  487;  Mitchell  v.  Baring,  10  Barn.  &  C.  11. 
^  Brent's  Ex'r  v.  Bank  of  Metropolis,  1  Pet.  93 ;  Easou  v.  IsbcU,  47  Ala.  436 
(1868). 

»  Hawkey  v.  Borwick,  4  Bing.  136  (13  E.  C.  L.  R.) 

♦  Story  on  Bills,  §  236. 

'  Story  on  Bills,  §§  236,  351 ;  1  Pars.  N.  &  B.  422,  note  m. 

•  Hardy  v.  Woodroofe,  2  Stark.  319;  Byles  [*307],  323. 

'  Brooks  V.  Higby,  18  N.  Y.  S.  C.  (11  Hun),  236  (1877),  Smith,  J:  "As  it  ap- 
peared that  the  acceptor  had  two  places  of  business  in  St.  Louis,  the  certificate 
furnished  no  evidence  whatever  that  the  presentment  and  demand  were  at  the 
place  where  the  draft  was  payable.     The  proof  was  fatally  defective." 


502  TRESENTMENT  FOR  PAYMENT. 

place  of  presentment  for  payment  would,  therefore,  seem  more 
important  than  the  place  of  presentment  for  acceptance. 
Presentment  for  acceptance  at  the  private  dwelling  of  the 
drawee  is  sufficient;^  and  the  authorities  support  the  doc- 
trine that  it  is  equally  sufficient  to  make  presentment  there 
for  payment.'^  In  New  York,  the  rule  is  thus  stated  by 
Folger,  J. :  "  Demand  of  payment  at  the  usual  place  of  busi- 
ness of  the  maker,  though  he  be  absent,  is  sufficient ;  or  at 
his  residence ;  or  to  him  in  person."  ^ 

§  636.  When,  however,  the  maker  or  acceptor  has  a  well- 
known  house  or  place  of  business  where  he  is  accustomed  to 
transact  his  financial  affairs,  and  where  demand  may  be 
made,  it  would  be  safer  and  more  appropriate  to  present  it 
there.  Certainly  it  would  seem  unreasonable  to  expect, 
during  the  business  hours  of  the  day,  to  find  any  one  at  a 
jjrivate  residence  to  answer  respecting  the  payment  of  a  ne- 
gotiable instrument,  when  the  maker  or  acceptor,  if  he  have 
any  place  of  business,  would  be  presumably  there ;  and  dur- 
ing such  business  hours  due  diligence  would  not  appear  to 
have  been  exerted  in  demanding  payment  at  his  house."*  If, 
however,  business  hours  had  closed,  a  presentment  at  the 
dwelling  would  seem  sufficient.  It  is  undoubted  that  a  pre- 
sentment and  demand  of  payment  at  the  place  of  business 
of  the  maker  or  acceptor  is  sufficient.^  Where  it  was  con- 
tended that  the  demand  should  have  been  made  at  the 
maker's  house,  it  was  held  otherwise.''     But  if  the  place  of 

•  Chitty  on  Bills  (13th  Am.  ed.)  [*278],  316. 

"  M'Grudcr  v.  Bank  of  Washington,  9  Wheat.  19S,  the  Court  saying :  "  It  ia 
enough  if  the  demand  be  made  at  his  place  of  abode,  or  generally  at  the  place 
where  he  ought  to  be  found."  Sanderson  v.  Judge,  2  II.  Bl.  509,  it  being  said, 
"  It  id  sufficient  if  it  (demand)  be  made  at  the  iiouse  of  the  maker  of  the  note." 
Shamburgh  v.  Comagerc,  10  Mart.  (La.)  18;  Stivers  v.  Prentice,  3  B.  Mou.  4G1. 

'  Gates  V.  Beecher,  GO  N.  Y.  522. 

•  1  Parsons  N.  &  B.  423.  '  Lanussa  v.  Massicot,  8  Mart.  (La.)  361. 

•  Sussex  Bunk  v.  Baldwin,  3  Harrison,  4s7.  In  this  case  it  was  contended 
that  demand  should  have  been  at  the  dwelling,  but  the  Court  said  :  "  It  appears 
by  the  evidence  that  the  office  iu  question  was  the  regular  place  of  business  of 
the  maker;  and  I  have  no  doubt  where  a  person  has  an  office,  or  known  and 
settled  place  of  business  for  the  transaction  of  his  moneyed  concerns,  whether  he 


PLACE  OF.  503 

business  cannot  be  foiiml,  then  demand  should  be  made  at 
the  maker's  house.^  If  a  bill  be  accepted  payable  at  a 
banker's,  and  the  banker  is  bolder  at  maturity,  that  fact  alone 
amounts  to  presentment ;  ^  so  if  it  be  left  there  for  collection.^ 
§  037.  The  place  of  business  must  be  the  "usual  place  of 
business  "  of  the  party,  and  not  that  used  for  a  mere  tempo- 
rary occupation;*  though  if  it  be  really  the  place  where  he 
transacts  his  financial  concerns,  it  matters  not  that  it  is  a 
mere  office,  or  desk-room  in  an  office  with  others,  and  a  de- 
mand there  in  his  absence  made  during  business  hours  will 
be  sufficient.^  If  the  party  lias  closed  and  abandoned  his 
place  of  business  at  the  time  the  bill  or  note  matures,  but  has  ♦ 
a  place  of  residence  in  the  city  or  other  place  where  his  busi- 
ness was  conducted,  Avhich  could  be  ascertained  by  reasonable 
inquiry,  the  presentment  for  payment  should  be  made  at  his 
residence,  and  a  presentment  at  the  former  place  of  business 
will  not  suffice.*^  And,  of  course,  where  the  party  has  no 
place  of  business  other  than  the  dwelling,  the  presentment 
must  be  at  the  dwelling."  And  so,  if  a  partnership  place  of 
lousiness  be  closed  and  abandoned  when  the  note  matures, 
and  one  of  the  partners  resides  in  the  town  or  city,  present- 
be  a  banker,  broker,  merchant,  manufacturer,  mechanic,  or  dealer  in  any  other 
way,  a  presentment  and  demand  at  that  place,  as  well  as  a  presentment  and  de- 
mand at  his  residence  is  sufficient.  It  must  not,  however,  be  a  place  selected 
and  used  temporarily  for  the  transaction  of  some  particular  business,  as  settling 
up  some  old  books  or  accounts  merely,  but  his  regular  and  known  place  of  busi- 
ness for  the  transaction  of  his  moneyed  concerns.  The  counting-room  of  a 
banker  or  merchant  may  be  a  proper  place  for  a  demand,  though  the  manufac- 
tory or  workshop  would  not.  Yet,  if  the  manufacturer  or  mechanic  have  an 
office  or  known  place  of  business  for  the  purpose  aforesaid,  a  good  demand  may 
be  made  there." 

'  Jarvis  v.  Garnett,  39  Mo.  271.  '  Bailey  v.  Porter,  14  M.  &  W.  44. 

'  Nichols  V.  Goldsmith,  7  Wend.  160. 

*  Susses  Bank  v.  Baldwin,  2  Harrison,  457. 

'West  V.  Brown,  6  Ohio  St.  542;  Williams  v,  Hoogewerff,  25  Md.  128; 
Bank  of  Commonwealth  v.  Mudgett,  44  N.  Y.  514  (case  of  protest). 

°  Granite  Bunk  v.  Ayres,  IG  Pick.  392.     See  Vol.  II,  §  1118. 

'  Packard  v.  Lyon.  5  Duer,  82.  Maker  was  a  married  woman  who  kept  a 
boarding-house,  but  her  name  was  not  in  the  directory.  Demand  at  a  bank 
when  note  was  deposited,  with  inquiry  as  to  place  of  residence,  was  held  insuffi- 
cient, and  indorser  was  discharged. 


504  PRESENTMENT   FOR  PAYMENT. 

meut  at  Lis  residence  must  be  made.^  But  ordinarily  tLe 
statement  of  the  notary's  certificate  that  he  called  at  the  place 
of  business  of  the  acceptor  or  maker  to  make  demand,  during 
the  usual  hours  of  business,  and  found  it  closed,  is  sufficient.^ 
§  638.  When  the  presentment  is  made  to  the  maker  or 
acceptor  personally,  the  place  is  not  important,  provided 
there  is  an  express  or  implied  refusal  to  pay.  Presentment 
at  the  barn-yard  has  been  held  sufficient,  the  party  "  mak- 
ing no  objection,  and  intimating  no  readiness  to  pay;"* 
and  even  in  the  street  presentment  would  seem  to  be  usually 
good,  unless  objected  to  as  improper,  or  some  i-eason  were 
given  for  the  refusal.*  This  view  seems  to  us  correct.^  But 
it  would  be  more  business  like  not  to  make  demand  at  such 
a  place,  and  there  are  authorities  which  hold  that  the  party 
is  not  bound  to  pay  any  attention  to  a  demand  so  entirely 
outside  of  the  custom  of  merchants.*^  In  a  case  in  Maine  de- 
mand on  the  street  of  the  maker,  he  having  no  place  of  busi- 
ness, and  raising  no  objection,  was  held  sufficient  to  charge 
the  indorser,  and  the  law  was  laid  down  with  discrimination 
and  sound  judgment  by  Virgin,  J.,  who  said:'  "It  would 
seem  that  such  a  demand  would  be  more  satisfactory  than  a 
mere  formal  ceremony  of  a  demand  gone  through  at  his  place 
of  residence  during  the  maker's  absence.     And  we  have  no 

'  Granite  Bank  v.  Ayres,  16  Pick.  892.  '  See  Vol.  II,  §  1118. 

'  Baklwin  v.  Farnsworth,  1  Fairfax,  414. 

*  1  Parsons  N.  &  B.  421.  '  King  v.  CrowcU,  Gl  Me.  244  (1873). 

•King  V.  Holmes.  11  Penn.  St.  456,  Rogers,  J.,  saying:  "The  Court  cor- 
rectly instructed  the  jury  that  a  demand  in  the  street  of  an  acceptor  of  a  bill  of 
exchange  is  not  a  sufficient  demand :  that  when  a  bill  is  payable  generally,  and 
not  at  a  particular  place,  the  demand  must  be  at  the  place  of  business  of  the  ac- 
ceptor. But  if  the  notary,  on  his  way  to  the  place  of  business  of  the  acceptor, 
meets  him  on  the  street,  and  informs  him  of  his  business  and  where  he  is  going, 
and  the  acceptor  offers,  if  he  will  go  to  his  place  of  business,  to  give  him  only  a 
check  on  a  broker,  it  is  not  necessary  for  the  notary  to  proceed  further.  The 
demand  at  the  place  of  business  is  waived  by  the  payor  or  acceptor.  It  is,  in 
effect,  a  refusal  to  pay,  for  an  offer  to  pay  by  a  check  on  a  banker,  in  legal  con- 
templation, is  nothing.  It  is  not  such  a  tender  as  the  notary  would  be  justified 
in  accepting.  In  Ibis  case,  the  acceptor  had  no  cause  of  complaint,  for  the  notary 
offered  to  receive  a  check  on  one  of  the  banks  in  payment  of  the  bill." 

'  King  v.  Crowell,  01  Me.  244  (1873). 


PLACE  OF.  505 

hesitation  in  declaring  the  demand  sufficient  under  the  cir- 
cumstances, so  far  as  the  pLace  is  concerned,  to  charge  the 
defendant  (an  indorser).  We  are  aware  that  Byles  on  Bills, 
196,  declares  that  a  demand  on  the  street  is  not  sufficient. 
Such  is  the  doctrine  expressed  too  in  the  author's  notes  in 
Lead.  Cas.  on  Bills,  329,  328.  And  there  are  several  cases 
containing  the  dictum  in  general  terms  that  a  demand  must 
be  made  either  at  the  maker's  place  of  business  or  place  of 
residence.  But  our  attention  has  been  called  to  the  case, 
neither  have  we,  after  considerable  research,  been  able  to  find 
any  wherein  the  court  having  the  question  before  it,  decided 
adversely  to  a  demand  made  on  the  street,  under  circum- 
stances similar  to  those  in  this  case." 

§  639.  Place  of  date  'prima  facie  place  of  payment. — The 
place  of  date  in  a  note  does  not,  of  itself,  make  it  payable 
there,  and  when  a  note  is  payable  generally,  the  parties  may 
agree  upon  the  place  where  it  shall  be  presented,  and  parol 
evidence  is  admissible  to  prove  such  an  agreement.^  It  has 
been  held  that  where  the  maker  and  indorsers  have  agrreed 
where  a  note  payable  generally  shall  be  presented  for  pay- 
ment, presentment  at  such  place  is  sufficient  to  charge  the  in- 
dorsers as  well  as  the  maker  ;^  and  the  grounds  upon  which 

'  1  Parsons  N,  k,  B.  424;  Rcdfield  v.  Bigelow's  Leading  Cases,  326;  contra. 
Story  on  Notes,  49 ;  Pierce  v.  Whitney,  29  Me.  188. 

=■  Brent's  Ex'rs  v.  Bank  of  tbe  Metropolis,  1  Pet.  92,  Marshall,  C.  J.,  saying: 
"  The  ]3laintifi[s  in  error  contend  that  the  testimony  ought  not  to  have  been  ad- 
mitted, because  it  was  an  attempt  by  parol  proof  to  vary  a  written  instrument. 
But  this  is  not  an  attempt  to  vary  a  written  instrument.  The  place  of  demand  is 
not  espressed  on  the  face  of  the  note,  and  the  necessity  of  a  demand  on  the  per- 
son, when  the  parties  are  silent,  is  an  inference  of  law,  which  is  drawn  only  M'hen 
they  are  silent.  A  parol  agreement  puts  an  end  to  this  inference,  and  dispenses 
with  a  personal  demand.  The  parties  consent  to  a  demand,  at  a  stipulated  place, 
instead  of  a  demand  on  the  person  of  the  maker,  and  this  does  not  alter  the  in- 
strument so  far  aa  it  goes,  but  supplies  extrinsic  circumstances  which  the  parties 
are  at  liberty  to  supply.  No  demand  is  necessary  to  sustain  a  suit  against  the 
maker.  His  undertaking  is  unconditional;  but  the  indorser  undertakes  condi- 
tionally to  pay,  if  the  maker  dofs  not,  and  this  imposes  on  the  holder  the  neces- 
sity of  taking  proper  steps  to  obtain  payment  from  the  maker.  This  contract  is 
not  written,  but  is  implied.  It  is,  that  due  diligence  to  obtain  payment  from  the 
maker  shall  be  used.     When  the  parties  agree  what  this  due  diligence  shall  be, 


506  TRESENTMEKT  FOR  PAYMENT. 

tlie  decisions  to  this  effect  are  based  are  broad  enou2;li  to  es- 
tablisli  the  sufficiency  of  presentment  at  any  place  agreed 
upon  by  the  maker.  The  contract  of  the  indorsers  is  to  pay 
if  due  diligence  to  obtain  payment  from  the  maker  is  used 
without  effect.  Due  diligence  requires  presentment  to  the 
maker  at  his  dwelling  or  place  of  business  ;  and  if  the  maker 
designates  a  place  of  payment,  it  is  as  much  as  to  say,  I  will 
accept  presentment  at  the  place  named,  and  make  it  my  place 
of  business  so  far  as  this  transaction  is  concerned.  Every 
object  which  would  require  presentment  at  the  place  of  busi- 
ness is  attained.^ 

§  640.  Due  diligence  in  seeleing  malcer  to  mcike  2y^'esent' 
ment. — V/hether  or  not  due  diligence  to  find  the  maker  of  a 
note  at  the  place  where  it  is  dated,  will  be  sufficient,  has  been 
debated.  The  place  of  date  is  prima  facie  evidence  that  it 
is  the  place  of  the  maker's  residence  and  place  of  business ; 
and  it  is  sufficient,  we  should  say,  to  cliarge  an  indorser  to 
have  the  note  in  that  place  at  the  time  of  maturity,  and  to 
make  proper  inquiry  after  the  place  of  the  maker's  residence 
or  place  of  business,  provided  that  the  holder  does  not  know 
that  his  residence  is  elsewhere.^     And  if  it  were  proved  that 

they  do  not  alter  tbe  written  contract,  but  agree  upon  an  extrinsic  circumstance, 
and  substitute  tliat  agreement  for  an  act  ^Yhicll  tlie  Iuav  prescribes  only  vrhcre  they 
are  silent."  This  case  was  based  on  evidence  that  the  indorsers,  as  well  as  the 
maker,  had  agreed  that  demand  should  be  made  at  a  particular  place — the  Bank 
of  the  Metropolis.  State  Bank  v.  Hurd,  12  Mass.  171 ;  Meyer  v.  Hibscher,  47  N. 
Y.  265;  Thompson  v.  Kctchum,  4  Johns.  285;  but  see  Anderson  v.  Drake,  14 
Johns.  114. 

'  1  Parsons  N.  &  B.  424 ;  Sussex  Bank  v.  Baldwin,  3  Harrison,  487,  on  the 
ground  of  estoppel.  This  doctrine  is  doubted  in  Rcdfield  &  Bigelow's  Leading 
Cases,  327. 

'  In  Meyer  v.  Hibscher,  47  N.  Y.  270,  it  is  said  by  the  Court,  per  Folger,  J. : 
"In  such  case  (the  note  being  dated  at  a  place  and  payable  generally)  the  note 
must  be  presented  and  payment  asked  for  at  the  place  of  business  therein  of  the 
maker,  if  he  has  one;  and  if  he  has  no  place  of  business,  then  at  his  place  of 
residence.  And  if  he  have  neither  place  of  business  nor  residence,  then,  if  the 
holder  of  the  note  is  at  the  place  where  it  is  in  general  made  payable,  on  the  day 
of  payment,  with  the  note,  ready  to  receive  payment,  it  is  sufficient  to  constitute 
a  presentment  and  demand."  Apperson  v.  Bynum,  5  Cold.  348;  Staylor  v.  Wil- 
liams, 24  Md.  199;  Moodic  v.  Morrall,  3  Const.  R.  367;  Stewart  v.  Eden,  2  Caines, 
121.     But  see  Apperson  v.  Pritchard,  9  Ileiskell,  793. 


PLACE  OF.  507 

the  maker  resided  elscwliere,  it  would  not  devolve  upon  tlie 
holder  the  burden  of  showing  that  he  made  inquiries  as  to 
his  residence.^  This  doctrine  is  sustained  by  high  authority 
in  America,  and  is  that  adopted  in  Scotland  ;  ^  and  it  seems 
to  us  correct,  notwithstanding  that  there  are  cases  in  which 
a  contrary  view  is  taken,  and  that  it  has  been  criticised  by 
an  eminent  author.^  It  is  true  that  the  execution  of  a  note, 
and  the  dating  of  it  at  a  particular  place,  does  not  make  it 
necessarily  payable  there,*  and  this  is  the  ground  on  which 
Professor  Parsons  bases  the  opinion  that  due  diligence  is  not 
exercised  in  presenting  it  there  without  inquiry ;  but  the 
question  seems  to  us  not  one  as  to  the  contract  of  payment, 
but  simply  as  to  the  likelihood  of  the  maker's  whereabout. 

'  Smith  V.  Philbrick,  10  Gra3%  252,  Menick,  J.,  said:  "This  is  an  action 
brought  by  indorsers  against  a  prior  indorser  to  recover  the  contents  of  a  promis- 
eory  note.  At  its  maturity  the  holder  placed  it  in  the  hands  of  a  notary  public, 
who,  by  his  direction,  went  with  it  to  the  place  of  business  which  the  maker  for- 
merly occupied  in  the  city  of  Boston,  and  there  made  inquiry  for  him,  in  order, 
if  he  were  (bund,  to  present  it  to  him  for  payment.  He  was  not  found,  and  no 
demand  of  jjayment  was  made.  The  defendant  insists  that  he  is  not  liable  as  in- 
dorser, and  that  this  action  cannot  be  maintained.  The  note  is  dated  and  was 
made  at  Boston,  where  the  maker  then  was  on  a  visit  for  a  temporary  purpose 
only.  He  then,  and  has  ever  since,  resided  at  Port  Lavacca,  in  the  State  of 
Texas,  where  he  had  his  only  place  of  business.  At  the  trial  no  evidence  was 
produced  to  show  whether  the  plaintiff,  or  any  of  the  subsequent  holders  of  the 
note,  knew  that  the  maker's  residence  and  place  of  business  were  in  Boston  or 
elsewhere;  there  was  no  evidence  whatever  upon  that  question.  *  *  *  fhe 
defendant  insists  that  the  phiiutiffs  ought  to  have  been  required,  if  they  would 
avail  themselves  of  that  rule,  to  show  affirmatively  that  both  they  and  ;dl  the  sub- 
sequent holders  of  the  note  were  ignorant  of  the  fact  that  the  maker  of  the  note 
had  no  residence  or  place  of  business  in  the  city  of  Boston.  This  is  not  so.  Tlie 
presumption  is,  as  has  been  before  stated,  in  the  absence  of  all  other  evidence 
upon  the  subject,  that  the  residence  of  the  promisor  is  at  the  place  where  the 
paper  to  which  he  subscribes  his  name  is  dated.  Either  party  may  controvert 
this  presumption,  and  overcome  it  I)y  proofs  introduced.  But  no  evidence  to  the 
contrary  having  been  laid  before  the  court,  this  presumption  is  to  stand." 

"  Thomson  on  Bills  (Wilson's  ed.)  286. 

'  1  Parsons  N.  &  B.  458,  But  see  p.  453  of  the  same  volume,  in  which  the 
opinion  concords  with  the  text  substantially,  and  varies  from  that  subsequently 
given ;  also  p.  442.  And  see  Chapter  XXIX,  on  Notice,  Section  VI.  Mason  v. 
Pritchard,  I)  Hiiskell,  797.  In  this  case  the  maker  signed  himself  as  "  Captain 
of  the  Steamboat  Southerner." 

*  Taylor  v.  Snyder,  3  Denio,  145;  Lightner  v.  Hill,  2  Watts  &  S.  14);  Ander- 
son V.  Drake,  14  Johns.  114;  Fisher  v.  Evans,  5  Binu.  541. 


508  PRESENTMENT  FOR  PAYMENT. 

And  in  the  absence  of  other  information,  it  seems  reasonable 
to  presume  that  he  will  be  found  at  the  place  where  he  exe- 
cutes his  business  paper,  and  that  if  it  had  been  intended 
that  it  should  be  payable  elsewhere,  it  would  be  so  expressed 
on  its  face. 

And  when  the  bill  or  note  is  made  on  terms  payable  in  a 
city,  without  specification  .of  a  particular  place,  and  the  ac- 
ceptor or  maker  has  no  residence  or  place  of  business  there, 
it  will  certainly  be  sufficient  to  charge  the  drawer  or  indorser 
if  tlio  holder  have  the  bill  or  note  in  the  city  at  maturity? 
ready  to  be  presented  and  delivered  up,  if  the  maker  or  ac- 
ceptor should  appear.^  And,  indeed,  it  seems  that  it  would 
be  idle  to  make  a  bill  payable  in  a  particular  city,  without 
naming  a  particular  place  therein,  if  the  drawee  does  not 
reside  or  have  a  place  of  business  there.  The  law  requires  no 
useless  ceremony,  and  the  absence  of  the  party  from  the 
place  of  payment  would  dispense  wath  the  necessity  of  going 
where  it  is  known  he  would  not  be  found,  and  it  is  not 
necessary  that  the  bill  should  be  sent  there  and  protested.^ 

§  (341.  Presentment  of  notes  made,  and  of  bills  drawn 
or  accepted^  ])ayahle  at  a  particular  place  in  England. — In 
England  the  steps  necessary  to  fix  the  liability  of  parties  to 
notes  and  bills  made,  drawn  or  accepted,  payable  at  a  par- 
ticular place,  were  for  a  long  time  the  subject  of  much  dis- 
putation, the  histoiy  of  which  it  is  no  longer  necessary  to 
follow  minutely  in  order  to  appreciate  fully  the  settled  con- 
dition of  the  law,  or  to  understand  its  bearings  upon  the 
decisions  in  the  United  States.  A  case  came  finally  before 
the  House  of  Lords,  in  which  the  effect  of  an  acceptance  in 
the  following  language  was  discussed :  "  Accepted,  j:)ayable 
at  Sir  John  Perring  <fe  Co.,  bankers,  London;"^  and  that 
body,  overruling  the  views  of  eight  of  the  twelve  judges 
whose  opinion  had  been  taken  on  the  question,  decided  that 

>  Root  V.  Franklin,  3  Jchns.  207;  Mason  v.  Franklin,  Id.  202;  Edwards  on 
Bills,  500. 

"  Ibid.;  Edwards  on  Bills,  158. 

'  Rowe  V.  Young,  2  Brod.  &  Bing.  1G5;  s.  c.  Bligli,  391. 


PLACE  OF.  ij09 

the  acceptance  was  conditional,  restricting  the  place  of  pay- 
ment, and  that  "the  hr^der  was  bound  to  present  the  bill  at 
the  bankers  named  in  order  to  charge  the  acceptor.  If  the 
holder  brought  an  action  against  the  acceptor,  it  was  held 
necessary  that  he  should  aver  and  prove  such  presentment, 
otherwise  the  declaration  would  be  bad  upon  demurrer. 
This  decision  led  to  the  passage  of  the  statute  1  <fe  2  Geo. 
IV  (generally  called  Sergeant  Onslow's  act),  by  which  it 
was  enacted  that  an  acceptance  payable  at  the  house  of  a 
banker,  or  other  place,  without  further  expression,  should' be 
deemed  a  general  acceptance  ;  but  if  it  were  expressed  pay- 
able at  a  banker's,  or  other  place,  "  only,  and  not  otherwise 
or  elsewhere,"  it  should  be  a  qualified  acceptance,  and  the  ac- 
ceptor should  not  be  liable  except  upon  due  demand  at  the 
place  named. 

§  642.  This  statute,  it  will  be  observed,  did  not  apply  to 
promissory  notes,^  and  the  liability  of  the  drawer  or  indorser 
of  a  bill  remained  unchanged.^  Where  the  place,  therefore,  is 
mentioned  in  the  body  of  a  note,  presentment  must,  in  Eng- 
land, be  averred  and  proved,'^  but  if  the  place  were  mentioned 
in  a  memorandum  beneath  the  maker's  signature,  it  would  be 
regarded  as  directory  only.*  Where  a  bill  is  drawn  with  the 
expression  of  a  particular  place  only,  and  not  elsewhere,  in 
the  body,  and  accepted  without  further  expression  in  the  ac- 
ceptance, it  would  be  within  the  rule  of  the  statute  making 
it  a  qualified  acceptance.^  And  the  words,  "  and  not  else- 
where," alone  would  be  sufficient  to  incorporate  the  qualifi- 
cation.^ 

The  same  principles  apply  where  the  place  of  payment  is 
specified  in  the  body  of  the  bill,  and  the  acceptance  is  simply 
according  to  its  tenor;  and  it  will  be  necessary,  in  order  to 

*  Emblem  v.  Dartnell,  12  M.  &  W.  830.  '  Gibb  v.  Mather,  8  Bing.  214. 

*  Sanderson  v.  Bowes,  14  East.  500. 

*  Sanderson  v.  Judge,  2  H.  Bl.  509 ;  1  Pars.  N.  &  B.  428 ;  but  see  post,  as  to 
rule  in  United  States. 

»  Ualsted  v.  Skelton,  5  Q.  B   86.  *  Higgins  v.  Nichols,  7  Dowl.  551. 


510  PRESENTMENT  FOR  PAYMENT. 

chari^e  the  drawer,  to  present  the  bill  at  the  particular  ])lace, 
if  one  be  named.^ 

g  643.  Presentment  at  a  particular  j^lace  in  the  United 
States. — ^The  Supreme  Court  of  the  United  States,  and  al- 
most all  the  courts  of  last  resort  of  the  several  States,  have 
coincided  with  the  views  presented  by  a  majority  of  the 
judges  in  the  case  of  Rowe  v.  Young  (quoted  in  a  note 
to  the  foregoing  paragraph),  and  differed  from  the  decision 
of  the  House  of  Lords  in  that  case ;  and  in  the  United  States 
it  may  be  considered  as  settled,  that  where  a  note  is  made 
payable  at  a  particular  banker's,  or  other  place,^  or  a  bill  is 
drawn  or  accepted,  payable  in  like  manner,'^  it  is  not  neces- 
sary, in  respect  to  the  maker  or  acceptor,  to  aver  or  prove 
presentment'or  demand  of  payment  at  such  place  on  the  day 
the  instrument  became  due  or  afterward,  in  order  to  main- 
tain an  action  against  him.^  The  only  consequence  of  neg- 
lect of  the  holder  to  present,  as  said  by  President  Tucker,  in 
a  Virginia  case  is,^  "that  the  maker,  if  he  was  ready  at  the 
time  and  place  to  make  the  payment,  may  plead  the  matter 

'  Boydell  v.  Harkness,  3  C.  B.  1G8  (54  E.  C.  L.  R.) ;  Selby  v.  Eden,  3  Bing. 
611 ;  11  J.  B.  Moore,  511 ;  Fayle  v.  Bird,  6  B.  &  C.  531 ;  2  Car.  &  P.  303;  9  Dow. 
&  R.  639.  Bee  the  decisions  as  to  Promissory  Notes,  Byles  on  Bills  (Sharswood's 
ed.)  [*346].  343;  1  Pars.  N.  &  B.  308,  note  z. 

^  Wallace  v.  McConnell,  13  Pet.  136;  Armistead  v.  Armistead,  10  Leigh,  525; 
Watkins  v.  Crouch,  5  Leigli,  522;  Ruggles  v.  Patten,  8  Mass.  480;  Caldwell  v. 
Cassady,  8  Cow.  271 ;  NcNuiry  v.  Bell,  1  Yerg.  502;  Thiel  v.  Conrad,  21  La. 
Ann.  214;  Hills  v.  Place,  48  N.  Y.  520  (1872);  Howard  v.  Bowman,  17  Wis. 
459  ;  McCullough  v.  Cook,  34  Ind.  334  ;  Montgomery  v.  Tutt,  11  Cal.  307;  Reeve 
V.  Pack,  6  Mich.  240:  Yeaton  v.  Berney,  62  III.  02;  Hill  v.  Allen,  37  Ind.  541. 
Kent  and  Story  inclined  to  the  English  rule.  Story  on  Notes,  §§  227,  229;  3 
Kent  Com.  99;  Picquet  v.  Curtis,  1  Snmner,  478;  Merchants'  Bank  v.  Evans,  9 
W.  Va.  373;  Baitzer  v.  Kansas  P.  R.  R.  Co.  3  Mo.  App.  574;  Yeaton  v.  Berney, 
62  111.  61. 

'  Fodcn  V.  Sharp,  4  Johns.  183;  Blair  v.  Bank  of  Tenn.  11  Humph.  84. 

*  Contrary  decisions  have  been  rendered  in  a  few  cases  in  the  United  States. 
In  Indiana,  Palmer  v.  Hughes,  1  Blackf.  328;  Gilly  v.  Springer,  lb.  257; 
Aldcn  Y.  Barbour,  3  Ind.  414,  agreed  with  the  English  doctrine,  but  are  now 
overruled;  Hall  v.  Allen,  37.1nd.  541.  The  decisions  in  Louisiana,  formerly  of 
the  same  lenor,  have  been  overruled,  and  the  general  doctrine  now  prevails  there 

also. 

*  Armistead  v.  Armistead,  10  Leigh,    525,  reaffirming  Watkins  v.  Crouch,  5 

Leigh,  822. 


PLACE   OF.  511 

in  bar  of  damages  and  costs;  but  be  must,  at  tbe  same  time, 
bring  tbe  money  into  court  wbicb  tbe  pbiintift'  will  Ije  enti- 
tled to  receive.  A  furtber  consequence,  indeed,  migbt  fol- 
low, if  any  loss  bad  been  sustained  by  bis  failure  to  present; 
but  tbis  must  be  set  up  as  matter  of  defense."^  If  tbe 
maker  bas  funds  in  tbe  bank,  and  withdraws  tbem  after 
time  of  payment,  tbe  bolder  is  entitled  to  principal  and 
interest  against  bim.^ 

§  614.  Liahility  of  indorser  and  draioer. — Inr  espect  to 
tbe  indorser  of  a  bill  or  note,  or  tbe  drawer  of  a  l)ill,  payable 
at  a  particular  bank  or  otlier  place,  tbe  rule  is  different.  He 
is  not  tbe  original  debtor,  but  only  a  surety.  His  undertak- 
ing is  not  general,  but  conditional  upon  due  diligence  being 
used  against  tbe  principal  debtor,  and  such  diligence  I'equires 
presentment  at  tbe  place  specified,  where  it  is  to  be  presumed 
tbat  funds  bave  been  provided  to  meet  tbe  bill  or  note  at 
maturity .■''  Wben  it  is  necessary  to  present  tbe  paper  at  tbe 
bank  it  is  insufficient  to  show  a  demand  of  tbe  cashier.*  It 
has  been  held  that  presentment  at  a  different  place  from  tbat 
at  wbicb  tbe  note  is  payable,  and  an  absolute  refusal  of  tbe 
maker  to  pay,  and  a  statement  tbat  any  further  presentment 
at  tbe  place  specified  would  be  useless,  because  there  w^ere 
no  funds  there,  would  not  charge  an  indorser.^  And  where 
a  note  payable  at  one  bank  was  by  the  consent  of  an  indorser 
negotiated  at  another,  it  was  held  that  demand  at  the  latter 
would  not  charge  tbe  indorser,  although  there  were  no  funds 
in  the  bank  where  tbe  note  was  made  payable.® 

§  645.  Where  the  instrument  is  ixiyahle  "  on  demand^''  or 
'''' on  demand  after  a  certain  timeP — A  distinction  has  been 

'  To  the  same  eflFect,  see  Stoiy  on  Bills,  §  35G. 

'  Hills  V.  Place,  48  N.  Y.  520  (1872). 

"Bank  U.  S.  v.  Smith,  11  Wheat.  171;  Watkiii3  t.  Crouch,  5  Leigh,  523; 
Shaw  V.  Reed,  12  Pick.  132;  Nichols  v.  Pool,  2  Jones  (N.  C.)  23;  Lawrence  v. 
Dobyns,  30  Mo.  196;  Ferner  v.  Williams,  37  Barb.  9;  Chitty  on  Bills  (13th  Am. 
ed.)  409;  Story  on  Notes,  §  230. 

*  Senoca  Co.  Bank  v.  Neass,  5  Denio,  329. 
'  Smith  V.  McLean,  2  Taylor  (N.  C.)  72. 

•  Watkins  v.  Crouch,  5  Leigh,  522. 


512  TRESENTMEKT  FOR  PAYMENT. 

taken  by  some  of  tlie  courts  in  respect  to  bills  and  notes  pay- 
able "  on  demand,"  or  payable  "  on  demand  after  a  specified 
time,''  and  the  opinion  expressed  that  in  such  cases  averment 
and  proof  of  demand  are  necessary  as  well  against  the  accep- 
tor or  maker  as  against  the  drawer  or  indorser.  In  Virginia, 
the  Supreme  Court  of  Appeals,  while  deciding  according  to 
the  current  of  American  authority  in  respect  to  a  note  pay- 
able at  a  fixed  time,  expressly  restricted  its  application,  and 
Stanard,  J.,  said  :  ^  "  This  decision  does  not  embrace  the  case 
of  a  note  or  obligation  payable  in  terms  on  demand,  at  a  par- 
ticular place  after  the  lapse  of  a  specified  time.  In  such  cases 
it  would  probably  be  held,  that  there  is  no  default  of  the 
maker  or  acceptor,  until  such  demand  be  made,  and  conse- 
quently, that  no  action  would  accrue  to  the  payee  until  such 
demand  should  be  made." 

In  England,  it  was  said  by  Lord  Ellenborough,  that  in 
such  cases  "the  time  of  payment  depends  entirely  on  the 
pleasure  of  the  holder  of  the  note  "  ^  and  that  consideration 
seemed  to  him  to  render  it  impracticable  for  the  maker  or 
acceptor  to  set  up  the  defense  of  readiness  to  pay.  The  Su- 
preme Court  of  the  United  States  has  followed  the  same  line 
of  opinion,  Thompson,  J.,  saying :  ^  "  Where  the  promise  is  to 
pay  on  demand  at  a  particular  place,  there  is  no  cause  of 
action  until  the  demand  is  made,  and  the  maker  of  the  note 
cannot  discharge  himself  by  an  offer  of  payment,  the  note 
not  being  due  until  demanded." 

§  646.  Striking  as  these  views  may  seem,  they  do  not  ap- 
pear to  us  to  bear  analysis  as  aflfording  ground  for  departure 
from  the  general  principle.  A  bill  or  note  payable  on  de- 
mand is  payable  immediately,  and  if  on  demand  after  a  cer- 
tain time,  immediately  upon  that  time  arriving.  Although 
payable  at  a  particular  place,  the  payor  may,  if  he  appre- 


'  Armistead  v.  Armistead,  10  Leigh,  521. 

'  Sanderson  v.  Bowes,  14  East.  500. 

'  Wallace  v.  McConnell,  13  Pet.  136;  Savage,  C.  J.,  to  same  eflfect  in  Caldwell 
V.  Cassidy,  8  Cow.  271,  but  overruled  by  Haxtun  v.  Bishop,  3  Wend.  1,  same 
judge. 


PLACE  OF.  513 

bends  loss  by  delay,  or  desires  to  discharge  it,  pay  it  any- 
where. And  the  mere  circumstance  tliat  it  migiit  be  more 
difficult  for  the  payor  to  show  a  loss  resulting  from  a  failure 
to  present  when  his  liability  was  continuing  to  be  always 
ready,  than  when  he  is  only  required  to  shoulder  the  respon- 
sibility of  being  ready  at  a  fixed  time,  does  not  seem  to  us 
sufficient  to  chansje  the  rule.  He  has  the  advantasre  of  not 
being  subjected  to  a  protest  until  demand  is  made ;  he  may 
pay  at  any  time  if  he  pleases,  and  thus  avoid  all  contingency 
of  loss;  he  may  still  show  loss  if  any  occurs.  Suit  brought 
is  itself  a  demand ;  and  as  presentment  at  the  particular 
place,  although  it  be  expressed,  is  no  condition  precedent  as 
to  him,  we  cannot  perceive  how  the  words  "  on  demand," 
which  relate  to  time  and  not  to  place,  can  impliedly  create  a 
condition  which  even  express  words  without  the  addition  of 
"  not  elsewhere  "  do  not  create.  The  difficulty  of  the  defense 
does  not  change  the  principle  which  requires  it;  and  the 
cases  w^hich  so  determine  seem  to  us  to  adopt  the  true  phi- 
losophy of  the  subject.^ 

§  647.  In  respect  to  hanh  7wtes,  it  has  been  held  that 
when  payable  on  demand — or  on  demand  after  a  certain  time 
— at  a  designated  place,  the  demand  must  be  averred  and 
proved  against  the  bank ;  ^  and  they  have  been  distinguished 
from  individual  notes  by  some  of  the  cases.^  But  there  are 
also  express  decisions  the  other  way;  and  we  can  perceive  no 
sufficient  reason  for  the  distinction."*  Loss,  if  any,  may  be 
shown  by  the  bank  as  well  as  by  the  individual. 

§  648.  When  instrument  is2yciyahle  at  either  of  several  places. 
If  a  bill  of  exchange  be  drawn  payable  at  either  of  two  places, 
and  is  accej^ted  accordingly,  as  for  example,  if  drawn  payable 
at  Maidstone  or  London,  the  holder  has  his  choice  to  present 

'  McKinney  v.  Whipple,  21  Me.  98;  Gammon  v.  Everett,  25  Me.  6G;  New 
Hope  D.  B.  V.  Perry,  11  111.  467;  Cook  v.  Martin,  5  Smedes  &  M.  379  (note  pay- 
able on  demand  five  months  after  date). 

*  Bank  of  North  Carolina  v.  Bunk  of  Cape  Fear,  13  Ircd.  75. 
'  Dougherty  v.  Western  Bank.  13  G;i.  87. 

*  Montgomery  v.  Elliott,  (5  Ala.  701;  Haxtun  v.  Bishop,  B  Wend.  1. 

Vol.  I.— 33 


514  PRESENTMENT  FOR   PAYMENT. 

it  at  eitlier  place  for  payment ;  and  the  like  rule  applies  to  a 
note  made  payable  at  either  of  two  places.  If  the  hill  or  note 
be  not  duly  paid  at  the  place  where  it  is  presented,  the  holder 
may  protest  it  and  give  notice  to  the  drawer  and  indorsers^ 
who  will  he  hound  by  its  presentment  and  dishonor  at  the 
place  of  his  election  ;  althoiio-h  if  presented  at  the  other  place 
it  would  have  heen  duly  paid ;  for  in  such  cases  all  the  par- 
ties agree  to  pay  the  hill  or  note  upon  due  presentment  at 
eithei'  place.^ 

§  649.  Bills  and  notes  payahle  at  either  of  several  hanhs. 
— Sometimes  a  promissory  note  is  made  payable  at  any  or 
either  of  the  hanks  in  a  particular  place,  l)y  some  such  ex- 
pression as  "  payable  at  hank  in  Boston,"  ^  or  "  at  either  of 
the  hanks  in  Boston,"  ^  or  "  at  any  hank  in  Boston."  ^  In  all 
-swch  cases,  the  stipulation  as  to  the  place  of  payment  is  un- 
derstood to  he  foi'  the  accommodation  of  the  payee  or  holder, 
who  is  given  the  right  to  elect  the  hank  at  which  the  note 
should  be  presented  in  order  to  charge  the  indorsers  ;  and  if, 
upon  presentment  at  any  or  either  hank  in  the  place  named, 
payment  is  refused,  the  indorsers,  as  well  as  the  maker,  are 
hound.  The  maker's  promise  is  to  pay  the  note  at  any  of  the 
hanks  in  the  place,  and  the  duty  is  imposed  upon  him  to  look 
at  all  the  banks  for  it,  or  provide  funds  to  pay  it  at  all  of 
them  when  it  is  due.^  The  office  of  a  private  hanker  is  not  a 
hank  within  the  terms  of  a  note  payable  "  at  any  bank  in 
Boston."  « 

§  650.  A  hill  of  exchange  accepted,  payable  in  like  man- 
ner, stands  upon  the  same  footing  as  a  promissory  not«,  and 
the  drawer  and  indorsers,  as  well  as  the  acceptor,  will  he 
bound  if  it  he  presented  at  any  or  either  of  the  banks  in  the 

^  Beecbing  v.  Gower,  1  Holt,    313;    Story  on  Bills,  §354;    Story  on  Notes, 
$231. 

'  Multlen  Bank  v.  Baldwin,  13  Gray,  154. 

'  Page-v.  Webster,  15  Me.  249;  Freeman's  Bank  v.  Ruckman,  IG  Grat.  136. 

*  Langley  V.  Palmer,  30  Me.  467;    Brickett  v.  Spalding,  33  Vt.  109;   Boit  v. 
Corr,  54  Ala.  113. 

'  Maiden  Bank  v.  Baldwin,  13  Gray,  154,  and  cases  cited  above. 

•  Way  V,  Butterworth,  108  Mass.  509. 


PLACE  OF.  515 

place  named.^  This  principle  applies  to  large  cities  ^vith 
mnnv  banks,  as  well  as  to  small  cities  with  few ;  "^  and  the 
o})iniou  once  intimated  that  where  tliere  are  several  banks  in 
a  large  city,  the  holder  must  give  notice  to  the  promisor 
where  the  paper  is,**  may  be  regarded  as  overruled. 

It  has  been  urijed  ajjainst  this  doctrine  in  every  case 
which  has  adopted  it,  that  the  holder  should  give  notice  at 
what  particular  bank  he  elected  to  make  the  demand.  But 
it  has  been  well  answered  that  "to  require  the  holder  to  give 
such  previous  notice  would  not  only  defeat  the  object  of  re- 
lieving liim  from  troul)le  and  risk,  but  would  subject  him  to 
much  greater  than  if  the  bill  or  note  were  made  payable  at 
one  bank  only;  "^  and  that  "if  the  parties  wish  for  more  cer- 
tainty as  to  the  place  of  payment,  let  them  be  more  explicit 
in  the  bill."  ^ 

§  651.  When  drawee  or  acceptor  resides  in  one  place, 
and  hill  is  payahle  in  another. — Where  the  drawee  of  a  bill 
resides  in  one  place,  and  it  is  drawn  payable  in  another  place, 
it  would  be  sufficient  to  present  the  bill  for  acceptance  to  the 
drawee  at  the  place  where  he  resides,  and  if  acceptance  were 
refused,  it  might  be  there  protested.^  And  if  the  bill,  not 
accepted,  were  presented  to  the  drawee  at  his  place  of  resi- 
dence for  payment,  and  payment  refused,  and  there  is  no 
particular  place  designated  in  the  bill  for  presentment,  it 
would  be  sufficient,  although  the  l)ill  was  payable  in  a  cer- 
tain city.  Thus,  where  a  bill  was  drawn  in  Liverpool,  and 
was  payable  in  London,  and  was  protested  for  non-accept- 
ance, and  also  for  non-payment  in  Liverpool,  where  the 
drawee  resided,  Kent,  C.  J.,  said  : ''  "  A  general  refusal  to  pay 
was  a  refusal  to  pay  according  to  the  face  of  the  bill.  It  was 
equivalent  to  a  refusal  to  pay  in  London.     We  do  not  mean 

'  Jackson  v.  Packer,  13  Conn.  342.  '  Langley  v.  Palmer,  30  ^^e.  407. 

'  North  Bank  v.  Abbott,  13  Pick.  465.  Shaw,  C.  J.,  expressed  this  opinion, 
but  the  question  was  not  directly  bclbre  the  court. 
^  Page  V.  Webster,  15  Me.  24,  Sheplcy,  J. 
'  Jackson  v.  Packer,  13  Conn.  342,  Waite,  J. 
•  Mason  v.  Franklin,  3  Johns.  202.  '  Mason  v.  Frankh'n,  3  Johns.  203. 


51 G  PRESENTMENT  FOR  PAYMENT. 

to  say  that  tlie  demand  for  payment  at  Liverpool  was  indis- 
pensable. The  bill  being  payable  at  London,  it  would  have 
been  siiflicieut  for  the  holder  to  have  been  there  when  the 
bill  fell  due,  ready  to  receive  payment.  Li  the  present  case, 
a  protest  at  London,  or  a  demand  and  protest  at  Liverpool, 
were  sufficient,  and  the  holder  might  take  either  course." 
So,  if  the  bill,  drawn  upon  the  drawee  in  one  place  and  pay- 
able in  another,  be  not  accepted  by  the  drawee,  but  is  ac- 
cepted supra  protest  for  his  -honor  by  a  third  person,  the 
presentment  and  demand  should  be  made  of  the  drawee  at 
the  place  where  he  resides,  and  not  at  the  place  where  it  is 
made  payable,  because  there  has  been  no  acceptance  of  the 
bill,  and  consequently  the  drawee  has  not  authorized  any 
presentment  upon  him,  except  at  his  place  of  residence.^ 

§  652.  When  the  bill  has  been  accepted  by  the  drawee, 
and  is  drawn  payable  in  another  place,  the  case  is  different. 
There  the  acceptor  oidy  authorizes  the  presentment  at  the 
place  designated,  and  the  drawer  or  indorsers  will  be  dis- 
charged if  the  bill  be  not  there  presented,  or  ready  for  pre- 
sentment at  maturity.^ 

§  G53.  While  it  is  not  necessary  in  a  declaration  to  aver 
that  a  bill  or  note,  when  due,  w^as  presented  at  the  place  of 
payment  and  not  paid ;  the  place  of  payment  is  a  material 
part  in  the  description  of  the  note,  and  must  be  set  out  in  the 

'  Mitchell  V.  Baring,  10  B.  &  C.  6,  7.  The  decision  in  this  case  led  to  the 
passage  of  the  act  of  2  and  3  Will.  IV,  ch.  90,  by  which  it  was  provided  that 
"  all  bills  cf  exchange  wlierein  the  drawer  or  drawers  thereof  shall  have  expressed 
that  such  bills  of  exchange  are  to  be  payable  in  any  place  other  than  the  place 
by  him  or  them  therein  mentioned  to  be  the  residence  of  the  drawee  or  drawees 
thereof,  and  which  shall  not,  on  the  presentment  for  acceptance  thereof,  be  ac- 
cepted, shall,  or  may  be  without  further  presentment  to  the  drawee  or  drawees, 
protested  for  non-payment  in  the  place  in  which  such  bills  of  exchange  shall  have 
been  by  the  drawer  or  drawers  expressed  to  be  payable,  unless  the  amounts  owing 
upon  such  bills  of  oxchanj::e  shall  have  been  paid  to  the  holder  or  holders  thereof 
on  the  day  on  which  sucli  bills  of  exchange  would  have  become  payable  had  the 
same  been  duly  accept'jd."  Chitty  on  Bills  (13th  Am.  ed.)  [*34G],  390.  This 
act  seems  practically  to  affect  only  acceptors  sujyra  protest.  See  Chapter  XXVIEI, 
on  Protest.  Sec.  II.  Vol.  2. 

^  Mitchell  V.  Baring,  10  B.  &  C.  7;  Story  on  Bills,  §§  282,  353. 


MODE   OF.  517 

declaration.^  And  it  has  been  said  by  the  United  States 
Supreme  (/Ourt :  "Notliing  is  better  establislicd,  botli  upon 
pi'inc'i])le  and  authority,  than  that  if  the  place  wliere  a  note 
is  payable  is  omitted  in  the  declaration,  it  is  fixtal."  ^  As  to 
the  allegations  of  the  declaration,  however,  it  has  been  held, 
that  if  the  legal  effect  of  the  instrument  be  that  it  is  payal)le 
only  at  a  particular  place,  it  must  be  so  averred  in  the  declara- 
tion ;  when  on  the  other  hand,  if  according  to  its  legal  effect, 
it  be  payable  generally,  it  would  be  a  misdescription  to  aver 
it  to  be  payable  only  at  a  particular  place.'^ 

SECTION  yi. 

MODE    OF    PRESENTMENT   FOE   PAYMENT. 

§  654.  Presentment  of  the  bill  or  note,  and  demand  of 
payment,  should  be  made  by  an  actual  exhibition  of  the  in- 
strument itself;*  or  at  least  the  demand  of  payment  should 
be  accompanied  by  some  clear  indication  that  the  instrument 

'  Covington  v.  Comstock,  14  Pet.  40.  -  Sobree  v.  Dorr,  9  Wheat.  558. 

^  Cliilds  V.  Laflin,  55  111.  159.  In  this  case  the  note  was  payable  "  to  the 
order  of  Laflin,  Butler  &  Co.,  at  their  office,"  and  was  dated  at  Chicago,  which 
is  in  Cook  County,  Illinois.  McAllister,  J.,  said :  "  The  note  in  question  is  not 
payable  generally,  but  at  the  office  of  the  appellees.  If  they  had  offices  in  two 
counties,  as  it  appears  they  had,  these  extrinsic  facts  might  show  an  ambiguity 
which  would  require  explanation.  But  is  it  the  legal  efi'ect  of  this  instrument, 
that  it  is  pavable  only  at  their  office  in  Cook  County?  There  is  nothing  upon 
the  face  of  the  instrument  itself,  except  the  place  of  the  date,  which  has  ary  ten- 
dency to  such  a  conclusion.  But  the  place  of  date  is  not  part  of  the  contract. 
It  is  not  material  to  the  validity  of  the  note,  and  is  always  open  to  be  explained. 
It  does  not  make  the  place  of  payment. 

"  The  place  of  the  date  being  only  prim%  facie  evidence,  and  subject  to  be 
rebutted,  lias  no  tendency  to  establish  the  legal  effect  of  the  instriunent,  that  it 
was  payable  only  at  their  office  in  Cook  County,  because  it  is  a  well  establislicd 
principh",  that  the  legal  effect  of  an  instrument  in  writing  can  no  more  be  varied 
by  parol  evidence  than  its  express  terms.'' 

*  Mnsson  v.  Lake,  4  How.  2G2.  In  Draper  v.  Clemens,  7  Mo.  5>.  demand  was 
held  insufficient  because  the  bill  was  not  produced.  In  Freeman  v.  Boynton,  7 
Mass.  4 So,  the  demand  was  held  insufficient  because  it  ajipcared  that  the  pirfy 
demanding  payment  did  not  have  the  bill  wi^h  him.  To  same  effect  see  Shaw 
v.  Reed,  13  Pick.  132;  Arnold  v.  Dresser,  8  Alien,  435;  Posey  v.  Decatur  Bank, 
13  Ala.  802;  Nuilor  v.  Bowie,  3  Md.  251  ;  Smith  v.  Gibbs,  3  Smed.  &  M.  479. 


518  PRESENTMENT  FOR  PAYMENT. 

is  at  Iiancl,  ready  to  be  delivered,  and  such  must  really  be 
the  case.^  This  is  requisite  in  order  that  the  drawee  or  ac- 
ceptor may  be  able  to  judge  (1)  of  the  genuineness  of  the 
instrument;  (2)  of  the  right  of  the  holder  to  receive  pay- 
ment; and  (3)  that  he  may  immediately  reclaim  possession 
of  it  upon  })aying  the  amount.  If,  on  demand  of  payment, 
the  exhibition  of  the  paper  is  not  asked  for,  and  the  party 
to  whom  demand  is  made  declines  to  pay  on  other  grounds, 
a  more  formal  presentment  by  actual  exhibition  of  the  paper 
will  be  considered  as  waived.^  Where  the  uote  was  in  bank, 
a  few  rods  from  the  maker's  house,  and  the  maker  was  in- 
formed by  note  from  the  cashier  that  it  was  there  and  re- 
quested payment,  it  was  held  sufficient;'^  and  it  was  likewise 
so  held,  where  the  statement  in  the  protest  was  that  the  no- 
tary went,  wdth  the  draft,  to  the  bank  and  demanded  pay- 
ment.^ So,  if  the  maker  calls  on  the  holder  on  the  day  of 
payment,  at  his  place  of  business,  declares  his  inability  to  pay 
it,  and  requests  him  to  give  notice  to  the  indorse]*,  it  is  suffi- 
cient to  charge  the  indorser,  as  an  exhibition  of  the  paper 
would  have  been  useless.^  But  it  is  better  in  all  cases  to 
make  an  actual  exhibition  of  the  paper,  in  order  to  avoid  all 
question.  Presentment  and  demand  of  payment  cannot  be 
made  by  letter  through  the  post  office.^  It  seems  that  deliv- 
ery of  written  demand  to  a  servant  at  the  house  of  the  prom- 
isor is  insufficient.^  The  demand  of  payment  should  not  vary 
from  the  tenor  of  the  paper;  and  if  it  be  payable  simply  in 

'  Crandall  v.  Schroeppel,  1  Hun,  557  (8  N.  Y.  S.  C.  R.);  Etheiidge  v.  Ladd, 
44  Barb.  69 ;  see  ante,  §§  402,  4G3. 

'  Lnckwood  V.  Crawford,  18  Conn.  301;  King  v.  Crowcll,  01  Me.  244.  See 
Fall  River  Union  Bank  v.  Willard,  5  Mete.  210,  and  Chapter  XVII,  on  Present- 
ment for  Acceptance,  §  463. 

=•  Tredick  v.  Wendell,  1  N.  II.  80. 

■*  Bank  of  Vergennes  v.  Cameron,  7  Barb.  143. 

''  Gilbert  v.  Dennis,  3  Mete.  495. 

"  Stuckert  v.  Anderson,  3  Whart.  110;  Gillespie  v.  Ilannalian,  4  McCord,  503; 
Hartford  Bank  v.  Green,  11  Iowa,  476;  Barnes  v.  Vauglin,  6  R.  I.  259. 

'  Duke  of  Norfolk  v.  Howard,  2  Show.  235  (1081).  But  query  in  cases  of 
sickness  when  the  promisor  is  inaccessible  on  account  of  sickness.  See  1  Par- 
sons N.  &  B.  271,  272,  note  y. 


f 


MODE   OF.  510 

money,  without  specifying  the  kind,  a  demand  for  gold  coin 
would  be  insufficient  to  charge  au  iudorser/ 

§  655.  A  bill  or  note,  when  presented  for  payment,  can- 
not be  left  in  the  debtor's  hands  as  when  presented  for  ac- 
ceptance; and  if  it  is  so  left,  presentment  cannot  be  consid- 
ered as  made  until  payment  is  demanded.  And  if,  in  the 
meantime,  the  debtor  has  stopped  payment,  the  holder  would 
suffer  to  the  extent  of  the  difference  between  the  value  of  the 
instrument  at  the  time  it  was  handed  the  debtor  and  the 
time  payment  was  actually  demanded.^  The  earlier  cases 
take  a  contrary  view,  and  seem  to  us  more  reasonable,  for  the 
physical  presentment  of  the  paper  would  seem  to  imply  in 
itself  a  demand  of  payment.^ 

§  656.  As  to  mode  of  2^i'6sentment  of  iiegotiahle  paper  paya- 
ble at  a  harih. — When  a  bill  or  note  is  made  payable  at  a  bank, 
it  is  considered  a  sufficient  presentment  of  it  if  it  is  actually 
in  the  bank  at  maturity,  ready  to  be  delivered  up  to  any 
party  who  may  be  entitled  to  it  on  payment  of  the  amount 
due ;  and  if,  at  the  close  of  business  hours,  the  bill  or  note 
remains  unpaid,  it  is  considered  as  dishonored,  and  notice 
should  be  immediately  given  to  the  proper  parties.*  Such 
also  is  the  case  when  the  instrument  is  payable  at  a  particu- 
lar place.^  Sometimes  a  formal  presentment  of  the  bill  or 
note,  in  such  cases,  at  the  bank,  or  upon  the  maker  is  made ; 
and  the  cases  are  uniform  in  holding  that  such  a  presentment 
at  the  bank  is  sufficient,*'  even  when  the  place  is  mentioned 

'  Laiigenberger  v.  Kroeger,  48  Cal.  147. 

"^  Hayward  v.  Bank  of  England,  1  Str.  550;  Thomson  on  Bills  (Wilson's  ed.), 
304.        *  =  Turner  v.  Mead,  1  Str.  41G;  Hoar  v.  Da  Costa,  2  Str.  910. 

*  Chicopce  Bank  v.  Philadelphia  Bank,  8  Wall,  G41:  Bank  U.  S.  v.  Carneal, 
2  Pet.  543;  FuUevton  v.  Bank  U.  S.  1  Pet.  G04;  People's  Hank  v.  Brooks,  31 
Md.  7;  Graham  V.  Sangston,  1  Md.  G8 ;  Goodloe  v.  Godley,  13  8m.  &  M.  233; 
Allen  V.  Miles,  4  Harr.  (Del.)  234;  Woodin  v.  Foster,  IG  Barb.  146;  Nichols  v. 
Goldsmith,  7  Wend.  160;  Folger  v.  Chase,  18  Pick.  63;  Berkshire  Bank  v. 
Jones,  G  ]\Iass.  524;  Apperson  v.  Union  Bank,  4  Cold.  445;  State  Bank  v.  Napier, 
6  Humph.  270;  Ward  v.  Northern  Bank,  14  B.  Mon.  351  :  Reynolds  v.  Chettle, 
2  Camp.  59G;  Saunderson  v.  Judge,  2  II.  Bl.  509;  Uuffaker  v.  National  Bank,  13 
Bush.  (Ky.)  649. 

"  Hunt  V.  Maybee,  3  Seld.  266. 

'Ibid.     See  also,  Woodbridge  v,  Brigham,  13  Mass.   556;   Bank  of  Utica  v  . 


520  TRESENTMEKT  FOE  rAYME:NT. 

in  the  memorandum;^  but  it  is  settled  that  nothing  more 
tlian  the  presence  of  the  paper  there  is  necessary.^ 

But  it  has  been  held  by  the  United  States  Supreme 
Court,^  that  though  commercial  paper  be  physically  in  the 
bank  at  which  it  is  payable,  yet  if.  the  bank  is  ignorant  of 
this  by  reason  of  the  fact  that  the  letter  in  which  it  was  sent 
slipped  through  a  crack  in  the  cashier's  desk  and  disap- 
peared before  it  had  been  seen  by  him,  then  there  would  be 
no  presentment,  though  the  acceptor  had  no  funds  there,  and 
did  not  mean  to  pay  the  bilL  And  such  a  disappearance 
earned  with  it  a  j)resumption  of  negligence  in  the  collecting 
bank,  and  threw  upon  it  the  burden  of  proof  to  rebut  it ; 
and  that  in  the  absence  of  such  proof  the  bank  Vv'ould  be 
responsible  to  the  holder  for  the  amount  of  the  bill  or  note. 

§  657.  When  paper  is  property  of  hcmh. — If  the  paper 
is  the  property  of  the  bank  at  which  it  is  payable,  its 
presence  there  at  maturity  need  not  be  proved  by  the  plain- 
iff,  as  the  presumption  of  law  is  that  the  paper  was  in  the 
bank,  and  the  burden  rests  on  the  defendant  to  show  the 
contrary.*  Even  when  it  is  nOt  the  property  of  the  bank, 
it  is  not  necessary  to  show  that  it  was  in  the  hands  of  the  proper 
officer;^  nor  is  this  material,  its  presence  in  the  bank  being 
sufficient.*^  Sometimes  the  accounts  of  the  promisor  are  ex- 
Smith,  18  Johns.  230 ;  Anderson  v.  Drake,  14  Johns.  114 ;  Bank  of  Syracuse  v. 
Hollister,  17  N.  Y.  46;  Gale  v.  Kemper,  10  La.  205;  Commercial  Bank  v.  Hamer, 
7  How.  (Miss.)  448;  Jenks  v.  Doylesburg,  4  Watts  &  S.  505;  llulun  v.  Philadel- 
phia Bank,  1  Rawle,  335;  Cohen  v.  Hunt,  3  S.  &  Mm.  23*7;  Evans  v.  St.  John, 
9  Port.  (Ala.)  180;  Apperson  v.  Union  Bank,  4  C(jld.  445. 
'  Saunderson  v.  Judge,  3  H.  Bl.  509. 

*  State  Bank  v.  Napier,  6  Humph.  370;  Gillett  v.  Averill,  5  Den.  85;  Ogden 
V.  Dobbin,  3  Hall,  113;  Gilbert  v.  Dennis,  3  Mete.  495;  FuUerton  v.  Bank  U.  S. 
1  Pet.  G04;  Merchant's  Bank  v.  Elderkin,  25  N.  Y.  178;  First  Nat.  Bank  v. 
Crittenden.  3  Tliomp.  &  C.  (N.  Y.)  118. 

'  Chicopee  Bank  v.  Philadelphia  Bank,  8  Wall.  G41. 

'  Chicopee  Bank  v.  Piiiladelphia  Bank,  8  Wall.  G41;  Fullertou  v.  Bank  U.  S. 
1  Pet.  C04;  Bank  U.  S.  v.  Carneal.  3  Pet.  543;  Seneca  Co.  Bank  v.  Neass,  5  Den. 
329;  State  Bank  v.  Napier,  G  Humph.  370;  Folger  v.  Chase,  18  Pick.  G3;  Berk- 
shire Bank  v.  Jones  6  Mass.  524. 

"  Folger  V.  Chase,  18  Pick.  G3. 

•  State  Bank  v.  Napier,  G  Humph.  270. 


MODE  OF.  621 

amined  to  see  if  there  are  funds  to  meet  the  paper  payable 
at  the  bank;^  but  this  is  unnecessary,  any  competent  evi- 
dence being  avaihible  to  show  that  there  were  no  funds  there 
to  meet  it,  and  that  no  one  offered  payment.'  It  is  doubtful, 
at  least,  whether  the  mere  fact  that  the  bank  had  fun<ls  of 
the  promisor  in  its  possession  would  constitute  any  defense 
for  the  indorser,  as  the  direction  of  the  promisor  is  necessary 
to  give  the  right  to  appropriate  the  money  to  the  payment 
of  the  paper ;  but  it  is  conceived  that  if  the  bank  in  such 
case  has  become  the  owner  of  the  paper,  it  would  constitute 
a  defense  to  the  indorser.  Such  is  the  opinion  of  Pi'ofessor 
Parsons.^  Where  a  note  was  payable  at  the  "  Union  Bank 
at  Memphis,"  and  there  was  no  such  bank  there  but  a  "  Branch 
of  the  Union  Bank,"  it  was  held  sufficient  to  make  present- 
ment at  such  branch.'^  If,  upon  rejiaii-ing  to  the  bank  at 
which  the  paper  is  made  payable,  during  business  hours,  it  is 
found  closed,  without  any  one  there  to  answer,  the  j)rotest 
may  l)e  made  without  demand  or  farther  inquiry.^ 

§  058.  Conventional  demand  hy  notice  that  •hill  or  note  is 
held  in  hanh. — In  some  of  the  States  it  has  become  customary 
for  banks  of  a  particular  place,  which  are  the  holders  of  ne- 
gotiable paper,  to  issue  a  notice  to  the  promisor  a  few  days 
before  maturity,  informing  him  that  the  paper  is  in  l)ank, 
setting  forth  the  date  when  it  will  become  payable,  and  re- 
questing him  to  come  there  and  pay  it.  Such  notice  consti- 
tutes a  conventional  demand,  and  a  neglect  to  comply  with 
it  is  such  a  refusal  as  amounts  to  dishonor  of  the  paper. 
The  custom  prevails  where  the  paper  is  payable  at  the  l)ank 
giving  the  notice,*^  and  has  been  sustained  l)y  judicial  decis- 
ion, as  well  where  it  is  not  made  so  payable,  but  is  placed 

'  Saunderson  v.  Judge,  2  H.  Bl.  509 ;  Bunk  of  S.  C.  v.  Flagg,  1  Hill  (S.  C.)  177 ; 
Maurin  v.  Perat,  IG  La.  270. 

-  State  Bank  v.  Napier,  G  Iluinpli.  270;  Gillett  v.  Averill,  5  Den.  85. 

'  "Vol.  1,  N.  &  B.  437.  '  Worley  v.  Waldran,  3  Snccd,  548. 

^  Thompson  v.  Commercial  Bank,  3  Cold.  46;  Carter  v.  Union  Bank,  7  Humph. 
548. 

"  Lincoln  &  Kennebec  Bank  v.  Page,  U  Mass.  155 ;  Same  v.  Hemraatt,  l)  Mass. 
159;  Camden  v.  Doremus,  3  How.  515. 


522  PRESENTMENT   FOE  PAY]MENT. 

there  for  collection.^  In  Massachusetts,  this  custom  has  be- 
come so  general  and  universal  that  every  one  who  incurs  the 
liability  of  maker  and  indorser  is  presumed  to  liave  con- 
tracted in  reference  to  it,  and  knowledge  on  his  part  may  be 
presumed.^  Before  the  law  had  there  become  so  settled,  it 
was  held  tliat  proof  of  the  party's  being  conversant  with  the 
usage  was  requisite;^  but  where,  by  the  usage,  demand  was 
made  in  this  form  upon  the  maker,  it  was  inmiaterial  to  the 
indorser  to  prove  that  he  was  acquainted  with  it — it  being 
sufficient  that  he  received  due  notice  of  dishonor.*  Evidence 
of  the  usage  is  sufficient  in  proof  of  an  averment  of  present- 
ment to  the  maker.''  In  Maine,  the  custom  is  sanctioned  by 
judicial  decisions,^  but  it  has  been  held  with  adverse  expres- 
sions in  New  Hampshire  ;  '^  and  in  Maryland,  the  evidence  of 
its  existence  was  regarded  as  insufficient,  with  a  distinct  inti- 
mation from  the  court  that  it  would  not  be  respected  if 
proved.^  When  a  bill  or  note  is  payable  at  a  bank,  a  pre- 
sentment to  a  bank  officer  must  be  taken  to  have  been  at 
the  bank.^ 


'  Joues  V.  Fales,  4  Mass.  245 ;  Widgery  v.  Munroe,  6  Mass.  449 ;  Weld  v. 
Gorhatn,  10  Mass.  3GG;  Whitwell  v.  Johiisou,  17  Mass.  449. 

"  Grand  Bank  v.  Blanchard,  23  Pick.  505.  Shaw,  C.  J.,  said,  respecting  this 
customary  notice,  as  constituting  a  demand,  that  "  it  has  become  so  universal 
and  continued  so  long,  tliat  it  may  well  be  doubted  whether  it  ought  not  now  to 
be  treated  as  one  of  those  customs  of  merchants  of  which  the  law  will  take 
notice,  so  that  every  man  who  is  sufficiently  a  man  of  business  to  indorse  a  note 
may  be  presumed  to  be  acquainted  with  it,  and  assent  to  it,  at  least  until  the  con- 
trary is  expressly  shown.  It  is  to  be  recollected  that  the  mles  respecting  present- 
ment, demand  and  dishonor  of  bills  of  exchange  and  promissory  notes,  and  in- 
deed the  lex  mercdtoria,  generally  originated  in  the  custom  of  merchants,  which 
custom  was  a  matter  of  fact  to  be  proved  by  the  party  relying  on  it,  and  to  be 
determined  by  the  jury.  But  when  a  custom  has  been  definitely  settled  by 
judicial  decisions,  it  is  taken  notice  of  as  a  part  of  tlie  law  of  the  land,  and  need 
not  be  proved  as  a  fact  in  each  case." 

^  Weld  V.  Gorham,  10  Mass.  3G6;  so  held  also  in  Leavitt  v.  Simes,  3  N.  H.  14; 
Edwards  on  Bills,  509. 

*  Whitcwell  V.  Jolinson,  17  Mass.  449. 

"  North  Bank  v.  Abbot,  13  Mass.  4GG;  Boston  Bank  v.  Hodges,  9  Mass.  420; 
City  Bank  v.  Cutter,  3  Pick.  414. 

"Marine  Bank  v.  Smitli,  18  Me.  99;  Gallagher  v,  Roberts,  2  Fairf.  489;  1 
Parsons  N.  &  B.  370,  371. 

'  Moore  v.  Waitt,  13  N.  H.  415.        '  Farmers'  Bank  v.  Duvall,  7  Gill  &  J.  78. 

'  Barbaroux  v.  Waters,  3  Mete.  (Ky.).304. 


MODE   OF.  523 

§  G59.  In  respect  to  the  maher  of  a  note  or  tlie  acceptor  of 
a  hill  iu  terms  payable  at  a  particular  place,  tliis  custom  to 
inform  him  tbat  his  paper  is  there,  and  that  he  is  requested 
to  meet  it,  amounts  to  nothing  more  than  a  reminder  from 
creditor  to  debtor  that  it  is  hoped  he  will  comply  with  his 
agreement.  When  the  bill  or  note,  however,  is  payable 
generally,  the  acceptor  or  maker  can  only  discharge  his  con- 
tract by  seeking  the  payee  or  holder,  at  maturity,  and  paying 
the  amount ;  and  notification  that  his  paper  may  be  paid  at 
a  particular  place  is  information  where  his  agent  to  receive 
payment  may  be  conveniently  found.  But  it  is  difficult  to 
see  how  the  holder  can  restrict  the  acceptor  or  maker  to  pay- 
ment at  that  particular  place,  except  upon  the  ground  that 
the  bank  itself  is  to  be  regarded  as  in  law  the  holder,  and  it 
is  the  duty  of  the  principal  party  to  j)ay  such  holder  at  its 
only  locality — its  place  of  business. 

§  660.  In  respect  to  the  drawer  or  iiidorser^  the  holder's 
contract,  when  the  bill  or  note  is  payable  generally,  is,  that 
lie  will  present  the  instrument  to  the  acceptor  or  makei".  It 
is  the  holder's  duty,  in  order  to  hold  the  drawer  or  indorser, 
to  go  to  the  acceptor  or  maker  with  the  bill  or  note,  and 
demand  payment ;  and  it  is  stretching  the  principle  ^vhicll 
authorizes  proof  of  custom  in  certain  cases  very  far  to  permit 
the  holder  to  reverse  the  established  rule  of  law  in  I'espect 
to  drawer  or  indorser,  and  notify  the  acceptor  or  maker  to 
come  to  him,  at  a  place  designated  by  himself,  to  suit  his 
own  convenience.^ 

The  theoiy  upon  which  the  custom  is  regarded  as  con- 
trolling, is  that  the  holder  is  bound  to  use  due  diligence  to 
demand  payment — that  the  maker  or  acceptor  waives  any 
further  demand  than  at  the  place  designated  by  the  maker — 
and  that  the  drawer  or  indorser  consents  to  this  customary 
waiver  by  entering  into  the  contract  where  the  custom  ex- 
ists. Its  convenience,  as  a  commei-cial  usage — and  the  fact 
that  the  apprehension    of   dishonor  in  bank  will  probably 

'  Edwards  on  Bills,  510. 


524  PRESENTMENT  FOR  PAYMENT. 

operate  as  forcil)ly  to  constrain  prompt  payment  by  the 
maker  or  acceptor  as  a  demand  at  his  counting  room  or  resi- 
dence—liave  doubtless  gone  far  to  gain  it  countenance  from 
the  courts  which  have  sustained  it. 

§  661.  We  regard  those  decisions  more  in  consonance 
with  j)i'hiciple,  wdiicli  liave  not  admitted  this  relaxation. 
Wliere  the  instrument  is  in  terms  payable  at  a  bank  in  a 
particular  place,  or  it  has  been  agreed  by  the  draAver  or  in- 
dorsers  that  it  shall  be  presented  in  a  particular  place,  where 
a  custom  j)revails  as  to  the  mode  of  presentment,  an  entirely 
different  principle  applies.  By  consenting  to  presentment 
there,  the  drawer  or  indorser  consents  to  the  established 
customary  mode  which  prevails  there,  and  should  for  that 
reason  be  bound  by  it.^  It  is  carrying  the  doctrine  too  far 
to  hold  that  he  is  bound  by  such  custom  when  the  paper 
.has  been  merely  placed  in  a  bank  there  for  collection,  but 
it  is  not  payable  there  in  terms  or  by  agreement.^  And  the 
usage  cannot  be  applied  by  one  bank  alone,  but  must  be  a 
prevalent  custom  of  the  place ;  ^  otherwise  the  arbitrary  will 
of  an  individual  l)anker  or  banking  institution  would  prevail 
over  the  established  law  or  custom  of  a  whole  community. 

§  662.  Knowledge  by  the  drawer  or  indorser  of  the  cus- 
tom lias  been  regarded  as  essential  to  its  establishment  as 
against  him  in  some  cases.*  But  the  United  States  Supreme 
Court  say  that  parties  are  bound  by  an  established  usage  of 
a  bank  at  which  the  paper  is  payable  "  whether  they  have  "a 


'  Mills  V.  Bank  U.  S.  H  Wheat.  431;  Camclen  v.  Doremus,  8  How.  515;  Ed- 
wards on  Bills,  quoted  siqrra. 

''  Pcar.-on  v.  Bank  of  Metropolis,  1  Pet.  89  ;  Morse  on  Banking,  333.  337. 

'  Dorchester,  &c.  Bank  v.  Milton  Bank,  1  Cush.  177;  Morse  on  Banking,  372; 
Adams  v.  Otterback,  15  How.  (S.  C.)  539.  Question,  whether  demand  of  pay- 
ment could  be  postponed  to  fifth  day  of  grace  by  usage  of  two  years'  standing, 
changed  from  former  usage,  the  Court  said  :  "  To  constitute  a  u.^age,  it  must 
apply  to  a  place  rather  than  to  a  particular  bank.  It  must  be  a  rule  of  all  the 
banks  of  a  place,  or  it  cannot  consistently  be  called  a  usage.  If  every  bank 
could  establish  its  own  usage,  the  confusion  and  uncertainty  would  greatly  ex- 
ceed any  local  convenience  resulting  from  the  arrangement." 

*  Leavitt  v.  Simes,  3  N.  II.  14. 


MODE  or.  52.) 

personal  knowledge  of  it  or  not ; "  ^  and  as  tlie  custom  must 
be  gxmeral,  in  order  to  obtain  recognition  as  such,  we  cannot 
perceive  that  knowledge  of  it  enters  into  the  question  any 
more  tlian  knowledge  of  any  other  rule  of  law.  A  custom 
is  not  a  special  personal  contract,  but  a  general  and  control- 
ling rule.  "  The  parties  are  presumed  by  implication  to  be 
governed  by  the  usage  of  the  bank  at  whicli  they  have 
chosen  to  make  the  security  itself  negotiable."  ^ 

'  Mills  V.  Bank  U.  S.  11  Wheat.  431.     [This  decision  is  misquoted  in  Morse 
on  Banking,  p.  336.] 

»  jMills  V.  Bank  U.  S.  supra,  Story,  J. 


CHAPTER  XXL 

TRANSFER    OF    BILLS    AND    NOTES    BY    INDORSEMENT. 

§  063.  A  hill  or  note  payable  to  bearer,  or  indorsed  in 
blank,  may  l)e  transferred  like  cnrrency  by  mere  delivery; 
other  l)ills  and  notes,  by  indorsement  of  the  transferrers 
name  thereon,  and  delivery  to  the  individual  named,  unless 
they  are  not  expressed  to  be  payable  to  the  order  of  any  per- 
son, or  to  hearer,^  in  which  case,  unless  by  statute,  they  are 
not  negotiable  in  the  United  States  and  in  England ;  ^  but  it 
is  otherwise  in  Scotland.^  But  if  the  paper  be  payable  to  A. 
B,,  or  order,  and  A.  B.  indorse  it  to  C.  D.,  without  adding 
"  or  order,"  C.  D.  may,  nevertheless,  transfer  it  by  indorse- 
ment, and  it  retains  its  original  negotiable  character.* 

While  commercial  paper  payable  to  bearer,  or  indorsed 
in  blank,  may  be  transferred  by  delivery  merely,  yet  if  the 
payee  put  his  name  upon  it,  and  transfers  it,  he  is  liable  as 
an  indorser,  such  indorsement  being  valid  between  the  in- 
dorser  and  subsequent  indorsees ;  ^  and  the  holder  of  paper 
payable  to  bearer  and  indorsed,  may  sue  upon  it  as  bearer  or 
indorsee  at  his  election."  A  note  payable  to  A.  B.  or  bearer 
.  is  in  legal  effect  the  same  as  if  payable  simply  to  bearer,  and 

'  Wookey  v.  Poole,  4  B.  «&  A.  1 ;  Myers  v.  Friend,  1  Rand.  1 3 ;  Rees  v.  Cono- 
cochcague  Bank,  5  Rand.  326;  Johnson  v.  Stak.  Co.  24  111.  75;  Jones  v.  Nellis, 
41  111.  483. 

"  Byles  on  Bills  (Sharswood's  ed.)  [*l42-3],  258;  Arnold  v.  Sprague,  34  Vt. 
402  ;  Richards  v.  Daily,  34  Iowa,  428. 

»  Thomson  on  Bills  (Wilson's  ed.)  173. 

*  Muldrow  V.  Caldwell,  7  Mo.  563  ;  Lea  v.  Branch  Bank,  8  Porter  (Ala.)  119; 
Scull  V.  Edwards,  8  Eng.  24;  Potter  v.  Tyler,  2  Mete.  58;  Blackman  v.  Green, 
24  Vt.  17. 

^  Bates  V.  Butler,  46  Me.  387;  Hodge  v.  Steward,  1  Salk.  125;  Hill  v.  Lewi?, 
1  Salk.  132;  Burmester  v.  Hogarth,  11  M.  &W.91;  Brush  v.  Reeves,  3  Johns. 
439;  Gilbert  v.  Nantucket  Bank,  5  Mass.  97;  Eccles  v.  Ballard,  2  McCord,  388; 
Gwinnell  v.  Herbert,  5  Ad.  &  E.  436  (31  E.  C.  L.  R.) 

•  3  Kent  Com.  44 ;  Story  on  Notes,  §  132  ;  Bayley.  466. 


TRANSFER   OF   BILLS  A^D  NOTES   BY   INDORSEMENT.        527 

no  indorsement  is  necesscary  to  pass  the  legal  title;  but  if  in- 
dorsement of  a  note  payable  to  bearer  be  alleged,  it  must  be 
proved.^ 

§  66*4.  If  a  note  be  non-negotiable,  because  payable  to  a 
certain  person  only,  should  he  indorse  it,  it  will  be  l)inding 
upon  him;  and  his  liability  to  his  immediate  indorsee  will 
be  the  same  as  upon  the  indorsement  of  a  negotiable  note ; 
but  tlie  principle  is  not  extended  to  subsequent  indorsees.''' 
And  if  indorsed  by  the  payee  payable  "  to  order  of"  indorsee, 
it  will  be  negotiable  as  between  the  holder  and  indorsers, 
though  not  as  to  the  maker.^ 

When  the  instrument  is  made  payable  to  "order,"  the  in- 
dorsement of  the  payee  is  necessary  to  transfer  the  legal  title ;  * 
and  the  transferee,  without  indorsement,  takes  it  as  a  mere 
chose  in  action,  and  must  av^er  and  prove  the  consideration.^ 
And  he  takes  it  subject  to  all  equities  that  attached  to  it  in 
the  bands  of  his  transferrer.^  The  negotiability  of  a  note  is 
not  affected  by  the  fact  that  a  corporation  indorses  it  through 
its  seal.^ 

§  665.  Delivery  by  the  indorser  is  essential  to  completion 
of  his  contract;  and  delivery  implies  its  acceptance  by  the 
indorsee.  If  a  transferee  of  a  bill  or  note  by  indorsement 
send  it  back  to  his  indorser  as  worthless,  the  indorsement  is 
declined,  and  becomes  invalid ;  and  he  acquires  no  new  title 
by  merely  getting  possession,  without  a  new  ti-ansfer ;  but 

■  Wayman  v.  Bend.  1  Camp.  175;  Chitty  on  Bills  (12  Am.  od.)  227  [*198]. 
In  Illinois,  under  statute,  a  note  payable  to  A.  B.  or  bearer  must  be  indorsed  to 
pass  the  legal  title.  Garvin  v.  Wiswell,  8:3  111.  218;  Wilder  v.  De  Wolf,  21  111. 
191 ;  Roosa  v.  Crist,  17  111.  191  ;  Ililboru  v.  Artus,  3  Scammon,  dU. 

"  See  Story  on  Notes,  §§  128,  129,  130;  Story  on  Bills,  §§  119,  199,  202;  see 
Carrutli  v.  Walker,  8  Wis.  252;  Hackney  v.  Jones,  3  Humph.  012;  ante,  §  lOo. 

'  Carruth  v.  AValker,  8  Wis.  252. 

*  Hopkirk  v.  Page,  2  Brock.  20;  Ilestonc  v.  Williamson,  2  Bibb.  83;  Russell 
V.  Swan,  IG  Mass.  314;  Blakoly  v.  Grant,  G  Mass.  386. 

'•"  Van  Eman  v.  Stanchficld,  10  Minn.  255. 

•  Hadden  v.  Rodkey,  17  Kansas,  429,  Valentine,  J.:  "If  the  plaintiff  in  such 
a  case  should  desire  the  benefit  that  an  indorsement  would  give  him,  he  should 
plead  and  prove  an  indorsement." 

'  Rand  v.  Dovey,  83  Tenn.  St.  280. 


528      TRANSFER  OF  BILLS  AND  NOTES  BY  INDORSEMENT. 

there  need  not  be  a  new  indorsement,  because  the  former  in- 
dorsement is  capable  of  becoming  again  valid  by  ratification 
or  confirmation.^  An  oifer  to  indorse  for  another  must  be 
accepted  in  a  reasonable  time.^ 


SECTION  I. 

NATUEE    or    THE   CONTKACT,    AND    LIABILITIES   OF   INDOKSER. 

§  GCf).  As  to  the  meaning  of  the  term. — Indorsement,  in 
its  technical  sense,  is  applicable  only  to  negotiable  paper;' 
and  it  is  important  to  bear  this  in  mind,  as  the  effect  of  in- 
dorsing a  negotiable  instrument,  and  assigning  or  becoming 
the  surety  or  guarantor  of  one  non-negotiable  is  very  differ- 
ent. In  common  parlance,  the  word  is  indifferently  applied 
to  bonds,  bills  and  promissory  notes,  whether  negotiable 
or  otherwise,  and  confusion  of  ideas  will  only  be  avoided 
by  holding  in  view  its  definite  legal  signification. 

8  667.  Indorsino;  an  instrument,  in  its  literal  sense,  means 
writing  one's  name  on  the  back  thereof;  and,  in  its  technical 
sense,  it  means  writing  one's  name  thereon  with  intent  to  in- 
cur the  liability  of  a  party  who  warrants  payment  of  the  in- 
strument, provided  it  is  duly  presented  to  the  principal  at 
maturity,  not  paid  by  him,  and  such  fact  is  duly  notified  to 
the  indorser.  When  we  speak  of  a  negotiable  instrument 
being  indorsed  to  a  party,  the  idea  of  its  being  transferred 
and  delivered  to  him  is  included — the  term  indorsement  in- 
cluding delivery  to  the  indorsee;*  but  it  is  otherwise  as  to 

'  Cartvvright  v.  Williams,  2  Stark.  340. 

""  Claflin  V.  Briant,  58  Ga.  414. 

=  Orrick  v.  Colslow.  7  Grat.  195;  Bank  of  Marietta  v.  Plndall,  2  Rancl.  475. 

*  Freeman's  Bank  v.  Ruckman,  16  Grat.  129;  Bank  of  Marietta  v.  Pindall.  2 
Rand.  475  ;  Thomas  v.  Watkins,  16  Wis.  478;  Dann  v.  Norris,  24  Conn.  333; 
Adams  v.  Jones,  12  Ad.  &  El.  (40  E.  C.  L.  R.)  455 ;  Lloyd  v.  Howard,  20  L.  J. 
Q.  B.  1  (69  E.  C.  L.  R.) ;  14  Q.  B.  995;  Marston  v.  Allen,  8  M.  «&  W.  493;  Green 
V.  Steer,  1  Q.  B.  707  (41  E.  C.  L.  R.) ;  Hayes  v.  Caulfield,  5  Q.  B.  81  (48  E.  C. 
L.  R.) 


NATURE  OF  THE  CONTRACT.  529 

an  instrument  not  negotial)le.^  Neither  indorsement  nor  ac- 
ceptance are  complete  before  delivery.'^ 

Accordingly,  where  A.  specially  indorsed  certain  bills 
to  B.,  sealed  them  up  in  a  parcel,  and  left  them  in  charge 
with  his  own  servant  to  be  given  to  the  postman,  it  was  held 
that  the  special  indorsement  did  not  transfer  the  property 
in  the  bills  till  delivery,  and  that  delivery  to  the  servant 
was  not  sufficient,  though  it  would  have  been  otherwise  had 
the  delivery  been  made  to  the  postman.^  But  where  A.  & 
B,,  being  partners,  and  indebted  to  C,  A.,  who  acted  as  C.'s 
agent,  with  B.'s  concurrence,  indorsed  a  bill  in  the  name  of 
the  firm,  and  placed  it  among  the  securities  which  he  held 
for  C,  but  no  communication  of  the  fact  was  made  to  C.  per- 
sonally, it  was  held  a  good  indorsement  of  the  firm  to  €.■* 

§  GijS.  An  indorsement  cannot  he  partial. — A  bill  or  note 
cannot  be  indorsed  for  part  of  the  amount  due  the  holder,  as 

•  In  Bank  of  Marietta  v.  Pindall,  2  Rand.  475,  Cabell,  J.,  said:  "The  terra 
indorse,  when  applied  to  l^ills  of  exchange,  negotiable  by  the  custom  of  mer- 
chants, or  to  papers  made  negotiable  by  our  statutes,  may  ex  vi  termini  import  a 
legal  transfer  of  the  title.  But  as  to  bonds  and  notes  not  negotiable,  the  legal 
title  to  them  passes  by  assignment  only,  and  as  to  them  indorsement  is  not  equiv- 
alent to  assignment.  As  to  them  assignment  means  more  than  indorsement ;  it 
means  by  one  party,  with  intent  to  assign,  and  an  acceptance  of  that  assignment 
by  the  other  party.  The  notes  in  question  are  not  negotiable  according  to  our 
laws,  but  assignable  only.  Thoy  might  well  be  indorsed  in  Virginia  and  assigned 
in  Ohio.  The  pleas,  therefore,  that  they  were  indorsed  in  Virginia  tendered  im- 
material issues,  and  were  properly  demurred  to."  But  "  indorsed  and  delivered'' 
would  be  sufficient  allegation  of  assignment  as  to  uon  negotiable  paper.  Free- 
man's Bank  v.  Ruckman,  16  Grat.  129.  In  Commonwealth  v.  Powell,  11  Grat.  830, 
there  was  an  indictment  against  Powell  for  forging  the  name  of  a  party  before 
the  payee's  on  the  back  of  a  negotiable  note,  Lee,  J.,  said :  "  There  is  no  reason 
for  restricting  the  term  "  indorsement "  to  the  technical  sense  applied  to  it  in  the 
lex  mercatoria.  The  "primitive  and  popular  sense  of  something  written  on  the 
outside  or  back  of  a  paper  on  the  opposite  side  of  which  something  else  had 
been  written,  should  be  given  to  the  word  whenever  the  context  shows  it  to  be 
proper,  or  it  is  necessary  to  give  effect  to  the  pleading  or  other  instrument  in 
which  it  may  occur.  And  such  is  the  sense  in  which  it  should  be  understood  in 
this  indictment." 

=■  Rex  v.  Lambton,  5  Price,  528 ;  Lysaght  v.  Bryant,  9  C.  B.  4G  (67  E.  C.  L.  R.) 

'  Rex  V.  Lambton,  5  Price,  428;  Bayley  on  Bills,  137;  Byles  on  Bills  (Shars- 
wood's  ed.)  [*146],  265. 

*  Lysaght  v.  Bryant,  9  C.  B.  4G  (.07  E.  C.  L.  R.) 
Vol.  I.— 34 


630      TRANSFER  OF  BILLS   AND  NOTES  BY  INDORSEMENT. 

the  law  will  not  permit  one  cause  of  action  to  be  cut  up  into 
several,  and  sucli  an  indorsement  is  utterly  void  as  such/ but 
when  it  has  been  paid  in  part,  it  may  be  indorsed  as  to  the 
residue.^  And  an  indorsement  of  part  of  the  amount  due 
would  o^ive  the  intended  indorsee  a  lieu  on  the  instrument.^ 
If  the  indorsement  on  its  face  is  of  the  whole  instrument, 
Avithout  any  apparent  limitation,  so  that  the  holder  could  en- 
force it  against  the  parties  liable  thereon,  it  would  be  imma- 
terial that,  as  between  the  iiidorser  and  his  immediate  in- 
dorsee, a  part  of  the  amount  only  was  to  be  received  for  the 
latter's  benefit,  and  the  residue  as  trustee  for  his  indorser.'* 

Where  it  was  indorsed  upon  a  negotiable  note  by  the 
payee,  "  pay  one-half  of  the  within  note  to  S.  R,  and  the  other 
half  to  E.  B.,"  and  the  note  was  at  the  time  delivered  to  one 
of  the  indorsees  for  the  benefit  of  both,  it  was  held  that  a 
valid  title  was  vested  in  both,  although  the  other  did  not  ac- 
cept the  transfer  until  afterward,  and  that  it  was  proper  for 
them  as  joint  indorsees  to  bring  a  joint  action  against  the 
maker."'  And  where  distinct  shares  in  a  note  are  sold  to  dif- 
ferent persons,  they  are  co-owners,  and  one  co-owner  may 
maintain  trover  against  the  other  for  conversion.^ 

'  Lindsay  v.  Price,  33  Tex.  283;  Frank  v.  Kuigler,  36  Tex.  305;  Planters' 
Bank  v.  Evans,  35  Tex.  592.  fn  this  case,  on  a  note  lor  five  hundred  dollars, 
the  payee  indorsed  "Pay  to  L.  four  hundred  dollars  out  of  this  note."  Suit  be- 
ing brought  by  a  subsequent  indorsee  in  his  own  name,  alleging  that  he  was  the 
legal  and  equitable  owner,  but  exhibiting  the  note  and  indorsements,  as  part  of 
his  petition,  the  maker  and  defendant  demurred.  Held,  that  the  demurrer  was 
properly  sustained.  Hawkins  v.  Cardy,  1  Ld.  Raym.  160;  Bayley  on  Bills  (Am. 
ed.),  92;  Thomson  on  Bills  (Wilson's  ed.),  184;  Hughes  v.  Kiddell,  2  Bay,  324, 
in  which  case  it  was  held  that  where  two  indorsements  for  parts  of  the  amount 
were  made  they  were  invalid,  though  together  they  purported  to  transfer  the 
whole. 

»  Ibid.  '  Byles  on  Bills  (Sharswood's  ed.)  291. 

*  Reid  V.  Furnival,  1  C.  «&  M.  538;  5  C.  &  P.  499  (24  E.  C.  L.  R.) 

*  Flint  V.  Flint,  6  Allen  36,  Dewey,  J.,  saying:  "This  action  was  properly 
instituted  in  the  names  f;f  the  present  plaintiffs  the  indorsement  of  the  entire 
note  being  made  to  the  two  indorsees,  and  the  claim,  as  respects  the  maker,  not 
being  divisible  into  two  separate  causes  of  action.  The  delivery  to  one  of  the 
indorsees,  and  a  suit  instituted  and  carried  on  for  the  benefit  of  both,  with  their 
concurrence,  show  a  sufficient  acceptance  of"  the  transfer  to  them." 

*  Conover  v.  Earl,  26  Iowa,  167. 


NATURE  OF  THE  CONTRACT.  p31 

It  li<as  been  liekl  in  Indiana  tliat  an  assignment  of  a  lialf 
interest  in  a  note  by  one  of  the  joint  payeeg  passed  his  interest 
in  equity ;  and  under  the  peculiar  statute  of  Indiana,  that  the 
assignee  might  join  in  a  suit  with  the  other  joint  payee  against 
the  maker.^  Where  a  note  is  payable  to  "A.  and  B,"  an  in- 
dorsement by  one  as  "A.  and  B.,"  is  good  if  the  other  con- 
sents thereto.^     Joint  indorsements  are  hereafter  considered.* 

§  669.  Nature  of  the  contract  of  indorsement,  and  what 
liabilities  are  assumed  by  the  indorser. — The  indorsement  of  a 
bill  or  note  is  not  merely  a  transfer  thereof,  but  it  is  a  fi-esh 
and  substantive  contract,  embodying  all  the  terms  of  the  in- 
strument indorsed,  in  itself.  The  indorsement  of  a  bill  is 
equivalent  to  the  drawing  of  a  new  bill  by  the  drawer  upon 
the  drawee  (or  acceptor,  if  it  be  accepted)  in  favor  of  the  in- 
dorsee; and  the  indorsement  of  a  note  is  equivalent  to  the 
drawing  of  a  bill  upon  the  makei",  who  stands  in  the  relation 
of  acceptor,  as  it  were,  in  favor  of  the  indorsee.*  He  engages 
(1)  that  the  bill  or  note  will  be  accepted  or  paid,  as  the  case 
may  be,  according  to  its  purport ;  but  this  engagement  is  con- 
ditioned upon  due  presentment  or  demand,  and  notice:  he 
also  engages :  (2)  that  it  is  in  every  respect  genuine ;  (3) 
that  it  is  the  valid  instrument  it  purports  to  be ;  (4)  that  the 
ostensible  parties  are  competent ;  (5)  and  that  he  has  lawful 
title  to  it  and  the  right  to  indorse  it.  And  if  it  turns  out  that 
any  of  these  engagements  but  that  first  named  are  not  ful- 
filled, the  indorser  may  be  sued  for  recovery  of  the  original 
consideration  which  has  failed,^  or  be  held  liable  as  a  party ,^ 
without  proof  of  demand  and  notice.^ 

'  Groves  v.  Ruby,  24  Ind.  418.  '  Cooper  v.  Bailey,  52  Me.  230. 

»  See  §  701,  A. 

♦  Ingalls  V.  Lee,  9  Barb.  947;  Cundy  v.  Marriott.  1  B.  &  A.  696;  Billgerry  v. 
Brancb,  19  Grat.  418;  Evans  v.  Gee,  11  Pet.  80;  Hill  v.  Lewis,  1  Salk.  132;  Suse 
V.  Pompe,  98  E.  C.  L.  R.  538;  Edwards  on  Bills,  28D;  Chitty  (13th  Am.  ed.) 
[*82],  98. 

5  Chitty  on  Rills  [^Oa],  IIG. 

•Story  on  Bills,  §  108;  Edwards.  287;  Chitty  (13th  Am.  ed.)  [*243],  277; 
Lake  V.  Haynes,  1  Atk.  281  (1736);  Heylin  v.  Aiiamson,  2  Burr.  6(J9  (1758);  Bal- 
liugalls  v.  Gloster,  3  East,  483  (1820). 

'  Copp  V.  M'Dugall,  9  Mass.  1;  Chitty  (13th  Am.  ed.)  [*82],  69;  see  Chapter 
XXXllI,'sec.  I,  Vol.  2. 


53J      TRANSFER  OF   BILLS  AND   NOTES   BY   INDORSEMENT. 

§  670.  When  the  indorsement  is  "  without  recourse  "  the 
inclorser  specially  (Jeclines  to  assume  any  responsibility  as  a 
party  to  the  bill  or  note  ;  but  by  the  very  act  of  transferring 
it,  he  engages  that  it  is  what  it  purports  to  be — the  valid 
obligation  of  those  whose  names  are  upon  it.  He  is  like  a 
drawer  who  draws  without  recourse ;  but  who  is  neverthe- 
less liable  if  he  draws  upon  a  fictitious  party,  or  one  without 
funds.  And,  therefore,  the  holder  mav  recover  asrainst  the 
indorser  "without  recourse,"  (1)  if  any  of  the  prior  signatures 
were  not  genuine ;  ^  or  (2)  if  the  note  was  invalid  between 
the  original  parties,  because  of  the  want,  or  illegality  of,  the 
consideration  ;  ^  or  if  (3)  any  prior  party  was  incompetent,  or 
(4)  the  indorser  was  without  title.  In  a  Virginia  case  where 
a  party  agreed  to  have  a  bond  assigned  "  without  recourse"  to 
another,  those  words  were  held  not  to  exempt  the  contractor 
from  liability  when  it  afterward  appeared  that  it  had  been 
previously  paid,  Carr,  J.,  saying :  "  The  very  possession  of  the 
bond,  the  claiming  it  as  property,  as  something  binding  the 
obligors,  precluded  the  idea  that  it  was  at  that  moment  dis- 
charged or  satisfied;  for  then  it  was  no  bond:  it  bound 
nobody,  it  was  not  the  representative  of  money.  The 
bond,  too,  was  payable  at  a  future  date ;  who  could  have 
dreamed  that  it  was  already  mere  wax  and  paper — not  a  cent 
due  on  it?"^  In  another  case,  where  a  party  transferred  a 
negotiable  note,  after  maturity,  pending  suit,  and  "without 
recourse"  it  was  considered,  on  the  authority  of  the  case  just 
quoted,  that  it  ap23earing  that  the  indorser  was  already  dis- 
charged by  failure  in  respect  to  notice,  and  the  maker  prov- 
ing insolvent  the  transferrer  was  bound  for  the  amount  of  the 
note.  But  the  court  held  otherwise,  laying  some  stress  how- 
ever on  the  peculiar  circumstances  of  the  case.^ 

§  671.  In  the  first  flace^  as  to  acceptance  and payfneiit. — 
The   indorser   of   a    bill   contracts    to   pay  it   at  maturity, 

•  Dumont  v.  Williamson,  18  Ohio,  N.  S.  515. 

'  Blething  v.  Lovering,  58  Me.  437;  Ilannum  v.  Kicbardson,  48  Vt.  508.     See 
post,  §  700.      Contra,  Kayne  v.  Dillo,  27  La.  Ann.  622. 

*  Mays  V.  Callison,  G  Leigh.  230.         *  Ober  v.  Goodridge,  27  Grat.  878. 


NATURE  OF  TOE  CONTRACT.  533 

if,  on  presentment  for  acceptance,  it  is  not  accepted  ac- 
cording to  its  purport,  and  he  is  duly  notified  of  the 
dishonor,^  And  the  indorser  of  an  accepted  bill,  or  of 
a  note,  likewise  contracts  to  pay  it,  if  it  he  not  duly  paid  l)y 
the  acceptor  or  maker.^  It  matters  not  what  may  be  the 
cause  of  the  drawer's  or  maker's  refusal.  The  indorser  con- 
tracts to  pay  on  being  duly  notified  that  lie  refuses  to  pay. 
He  therefore  warrants  the  solvency  of  tlie  parties — or,  in 
short,  warrants  that  it  will  be  paid,  either  by  them  or  by 
himself  on  receiving  notice  of  their  failure. 

§  672.  In  the  second  place,  as  to  genuineness. — The  indorser 
contracts  that  the  bill  or  note  is  in  every  respect  genuine,  and 
neither  forged,  fictitious,  or  altered.  Undoubtedly,  and  by  uni- 
versal admission,  this  principle  applies  to  the  signatures  of  the 
drawer,  acceptor,  and  maker  of  the  bill  or  note,  who  are  the 
original  parties,  and  it  is  often  expressed  in  language  to  the 
effect  that  the  indorser  warrants  that  it  is  a  genuine  instru- 
ment.'^ This  rule,  however,  would  not  apply  where  the  holder 
procured  the  indorsement  of  a  forged  note  with  knowledge 
of  the  forgery,  and  represented  to  the  indorser  that  it  was 
genuine,  or  where  the  holder  has  received  the  paper  after 
maturity  and  without  consideration.'*  Whether  or  not  the 
indorser's  engagement  extends  to  the  genuineness  of  prior 
indorsements  is  not  so  well  settled.  Undoubtedly  the  in- 
dorser admits  their  genuineness,  as  he  is  estopped  to  deny  his 


'  Ballingalls  v.  Gloster,  3  East,  481 ;  4  Esp.  268.  Lord  EUenborough,  C.  J., 
said,  "There  is  no  distinguishing  the  case  of  an  indorser  from  tliat  of  tlie  draw- 
er." Smith  V.  Johnson,  27  L.  J.  Ex.  303;  3  II.  &  N.  222;  Chitty  on  Bills  [*24lj, 
576. 

'  Ogden  V.  Sanders,  12  Wheat.  313;  Story  on  Notes,  §  13.};  Chitty  on  Bills 
(13  Am.  ed.)[*241],  270. 

'  Edwards  on  Bills  188,  289;  Story  on  Bills  §  111;  Coggill  v.  American  Ex. 
Bank,  1  Coms.  113;  Murray  v.  Judah,  16  Cow.  484;  Mcintosh  v.  Haydon,  R  & 
M.  362;  Howe  v.  Merrill,  5  Cush.  83;  Bell  v.  Dagg,  60  N.  Y.  528;  Hannum  v. 
Richardson,  48  Vt.  508;  Condon  v.  Pcarce,  43  ^Id.  83;  Chapman  v.  Rose,  56  N. 
Y.  137;  Misher  V.  Carpenter,  20  N.  Y.  S.  C.  (13  Hun),  604. 

*  Turner  v.  Keller,  66  N.  Y.  66;  Misher  v.  Carpenter,  20  N.  Y.  S.  C.  (13  Hun), 
604. 


534       TRAlfSFER   OF   BILLS   AND   NOTES   BY   INDORSEMENT. 

title,  wliicli  would  otherwise  be  invalid/  and  notwithstanding- 
the  donl)ts  and  dissents  which  have  been  expressed,  it  is  clear 
upon  principle  that  the  indorser  warrants  the  instrument 
throughout.  If  there  be  any  forged  indorsement  the  indorser 
cannot  recover  against  any  party  prior  to  it,^  and  the  subse- 
quent indorser  has  transferred  a  thing  to  which  he  himself 
had  no  right  or  title.  He  shotild  plainly  be  regarded  as  rep- 
resenting by  the  act  of  ownership,  a  right  of  ownership,^  and 
be  held  bound  accordingly.  In  Bayley  on  Bills  it  is  said, 
"  an  indorsement  is  no  warranty  that  prior  indorsements  are 
genuine;"  but  the  case  cited  does  not  satisfactorily  sustain 
that  view,  and  the  authorities  greatly  preponderate  against  it.* 

§  673.  In  the  third  place  ^  as  to  validity. — The  indorser  en- 
gages that  the  bill  or  note  is  a  valid  and  subsisting  obligation, 
binding  all  prior  parties  according  to  their  ostensible  relations ; 
and  he  may  be  held  liable,  although  the  instrument  be  entirely 
null  and  void  as  between  prior  parties  themselves ;  and  also  as 
between  prior  parties  and  even  bona  fide  holders  without  no- 
tice.^ In  an  early  English  case,  where  the  suit  was  by  the  in- 
dorsee against  the  maker  of  a  note  void  for  gaming,  Lee,  C. 
J.,  said:  "The  plaintiff  is  not  without  remedy,  for  he  may 
sue  Church  (the  indorser)  upon  his  indorsement."  ^ 

§  674.  In  another  English  ease,  in  an  action  against  the 
drawer  of  a  bill,  it  was  held  no  defense  that  it  was  drawn  and 

'  Ogden  V.  Sanders,  12  Wheat.  313;  Chitty,  on  Bills  [*242],  277;  Story  on 
Bills,  §§  110,  111. 

'  Chitty  on  Bills  [*2G0,  261],  297. 

'  State  Bank  v.  Fearing,  15  Pick.  533;  Harris  v.  Bradley,  7  Yerg.  310;  Oliver 
V.  Andry,  7  La.  496  ;  Bruce  v.  Bruce,  1  Marsh.  165,  s.  c.  5  Taunt.  485 ;  Reding- 
ton  V.  Wood,  Cal.  Law  Times,  January,  1873,  p.  12;  1  Parsons  N.  &  B.  25 ; 
2  Parsons  N.  &  B.  588;  Story  on  Bills,  §  111;  Story  on  Notes,  §§  135,  380; 
Dalrymple  v.  Hillenbrand,  2  Hun,  488  (9  N.  Y.  S.  C.  R),  affirmed,  60  N.  Y.  5; 
White  V.  Continental  Nat.  Bank,  84  N.  Y.  320. 

*  Bayley,  ch.  5,  p.  170  (5th  ed.  1833),  citing  East  India  Co.  v.  Tritton,  3  B.  & 
C.  280. 

'  Chitty  on  Bills  (13th  Am.  ed.)  [*82,  90,  95],  98,  111,  116;  Roscoe  on  Bills, 
123;  Bayley  on  Bills,  ch.  12,  p.  369;  Byles  (Sharswood's  ed.)  [*135],  250;  John- 
son on  Bills,  32;  Thomson  on  Bills,  82;  1  Parsons  N.&  B.  218;  Edwards  on  Bills, 
289,  350;  Story  on  Notes,  §  193;  Story  on  Bills,  §  190. 

'  Bowyer  v.  Bampton,  2  Strange,  1155  (1741). 


NATURE  OF  Tim  CONTRACT.  535 

accepted  for  a  gaming  debt,  it  having  been  indorsed  over  by 
the  drawer  for  a  valuable  consideration  to  a  third  person,  by 
whom  the  suit  was  brought;^  and,  in  Pennsylvania,  that  the 
indorsee  of  a  note  given  on  such  a  consideration  may  sue 
the  indorser.^  And,  in  Virginia,  in  an  action  against  the 
maker  and  four  indorsers  of  a  note,  it  was  held  that  the 
holder  could  recover  against  the  fourth  indorser,  of  whom  he 
was  the  indorsee  for  value,  although  it  was  indorsed  for  ac- 
commodation of  the  maker  by  the  first  three  indorsers,  and 
had  been  purchased  by  the  fourth  at  a  usurious  rate  of  in- 
terest.^ 

Upon  these  principles  it  has  been  decided  in  Georgia, 
where  the  Supreme  Court  has  held  valid  the  article  of  the 
State  constitution  which  provides  that  "  no  court  of  this 
State  shall  try  oi-  give  judgment,  or  enforce  any  debt  the  con- 
sideration of  whicli  was  a  slave ;  "  that  the  courts  should 
enforce,  payment  by  the  indorser  of  a  note  given  for  a 
slave.  Brown,  C.  J.,  saying:  "The  payee  of  a  promissory 
note  given  for  a  slave,  who,  for  a  valuable  consideration, 
which  was  in  no  way  connected  with  the  slave,  indorsed  and 

'  Edwards  v.  Dick,  4  Barn.  &  Aid.  213  (6  E.  C.  L.  R.) 

^  Unger  v.  Boas,  1  Harris,  Gul  (1850). 

'  Moffett  V.  Bickel,  21  Grat.  283,  Moncure,  J.,  saying:  "  If  there  were  any  doubt 
upon  this  question,  I  think  it  would  be  removed  by  the  case  referred  to  by  the 
learned  counsel  of  the  plaintiff  in  error  of  Edwards  v.  Dick,  decided  by  the  Court 
of  King's  Bench  in  1823,  and  reported  in  4  Barn.  &  Aid.  212;  6  Eng.  C.  L.  R.  405. 
Abbott,  G.  J.,  and  Bayley,  Ilolroyd,  and  Best,  JJ.,  composed  the  court,  and  were 
unanimous.  Such  a  decision  of  such  a  court  is  entitled  to  our  highest  respect.  But 
the  reasons  assigned  by  the  learned  jndges  command  more  of  our  respect  in 
weighing  its  authority  than  does  their  high  judicial  character.  *  *  That,  it  is 
true,  was  a  case  in  which  the  question  arose  as  to  the  statute  of  gaming;  while 
here  the  question  arises  in  regard  to  the  statute  of  usury.  But  tlie  statute  of 
gaming  is  very  broad  and  sweeping  in  its  temis,  just  as  much  so  as  the  statute  of 
usury.  And,  indeed,  Abbott,  C.  J.,  in  his  opinion,  places  the  case  upon  the  same 
ground  as  that  of  usury,  and  says:  'There  is  no  case  upon  the  statute  of  usury 
where  a  drawer,  having  parted  with  a  bill  for  a  good  consideration,  can  after- 
ward set  up  as  a  defense  an  antecedent  usurious  contract  between  himself  and  the 
acceptor.  For,  if  so,  a  court  of  justice  would  enable  him  to  commit  a  gross 
fraud  upon  an  innocent  party.'" 

To  same  effect,  see  Morford  v.  Davis,  28  N.  Y.  484;  Brown  v.  Wilcox,  7 
Iowa,  414;  Frank  v.  Longstreet,  44  Ga.  185;  Burrill  v.  Smith,  7  Pick.  291. 


530      TRANSFER  OF   BILLS  A^D   NOTES  BY  INDORSEMENT. 

delivered  the  note  to  the  plalntiif,  is  liable.  The  indorse- 
ment is  a  new  contract,  and  the  court  has  jurisdiction  to  en- 
force the  judgment  against  him  on  that  contract."  ^ 

In  such  cases  the  indorsee  may  not  only  sue  the  indorser 
upon  the  paper  itself,  but  also  upon  a  count  for  money  had 
and  received.^  But  if  the  holder  have  any  privity  in  the 
illegal  consideration,  he  cannot  hold  the  indorser.^  It  seems 
that  where  a  corporation  is  prohibited  from  availing  itself  of 
the  defense  of  usury,  an  indorser  or  other  surety  upon  its 
pa|)er,  cannot  avoid  liability  thereon,  upon  the  ground  of 
usury.*^ 

§  675.  la  the  fourth  place^  as  to  coiv])etency^  of  original 
parties. — The  indorser  contracts  that  the  original  parties 
to  the  bill  or  note  were  competent  to  bind  themselves, 
whether  as  drawer,  acceptor,  or  maker ;  for  otherwise, 
although  ostensible,  they  would  not  be  real  parties  to 
it.  Therefore,  if  the  drawer,  acceptor,  or  maker  be  an 
infant,  lunatic,  or  married  woman,  the  indorser's  contract  is 
broken,^  and  he  may  be  sued  for  recovery  of  the  original 
consideration  which  has  failed,  or  upon  the  instrument  itself, 
without  proof  of  demand  and  notice.*^  So,  if  the  instrument 
purported  to  be  signed  by  procuration,  he  engages  that  there 
is  competent  authority  in  the  agent.'^  Thus,  in  Massachusetts, 
where  the  note  was  executed  by  the  agent,  who,  as  also  the 

'  Graham  v.  Maguire,  39  Ga.  531.  To  same  effect,  see  Succession  of  Weil, 
24  La.  Ann.  193. 

Mngalls  V.  Lee,  0  Barb.  947;  Edwards  on  Bills,  289;  Cundy  v.  Marriott,  1 
B.  &  A.  690  (1831). 

'  Ackland  v.  Pearce,  2  Camp.  599;  Edwards  v.  Dick,  4  B.  »fe  Aid.  213. 

*  National  Bank  of  Pittsburg  v.  Wheeler,  60  N.  Y.  612. 

'  Haly  V.  Lane,  3  Atk,  181.  The  Lord  ChanceUlor  said  :  "  Though  a  note 
given  by  a  wife  to  her  husband  is  void,  yot  if  it  is  endorsed  over  by  the  husband, 
as  between  him  and  the  indorsee,  it  is  certainly  good."  To  same  effect,  sec  Rob- 
ertson V.  Allen,  59  Tenn.  333;  Archer  v.  Shea,  31  N.  Y.  S.  C.  (14  Hun),  493. 

In  Erwin  v.  Downs,  15  N.  Y.  575,  a  note  was  made  by  two  married  women, 
and  indorsed  by  the  defendant  for  their  accommodation.  He  was  held  bound  to 
a  hona  fide  indorsee,  although  the  latter  knew  that  the  makers  were  married 
women  when  he  took  it.     Prescott  Bank  v.  Caverly,  7  Gray,  217. 

«  See  ante,  §  669. 

'  Edwards  on  Bills,  389;  Story  on  Bills,  §  110. 


NATURE  OF  THE  CONTRACT.  537 

payee,  was  ignorant  that  his  principal  was  dead,  and  the 
latter  indorsed  it,  he  was  held,  Parker,  C.  J.,  saying:  ^  "The 
indorser  always  warrants  the  existence  and  legality  of  the 
contract  which  he  undertakes  to  assig;n.  The  indorsee  takes 
it  on  the  credit  chiefly  of  the  indorser.  Thus,  if  a  note,  void 
between  promisor  and  payee,  on  account  of  usury  or  other 
illegal  consideration,  is  indorsed  hona  Jide  for  valuable  con- 
sideration, the  indorser  must  make  it  good.  So,  if  the  in- 
dorsement is  of  a  note  made  by  a  minor  or  of  a  feme  covert, 
and  even  if  the  name  of  the  promisor  is  forged,  the  indorser 
is  held  upon  his  contract  to  pay  the  indorsee." 

§  676.  Whether  or  not  this  engagement  extends  to  all 
antecedent  parties  is  questioned.  It  is  thought  by  some 
that  prior  indorsements  are  warranted  to  be  by  competent 
parties,  as  well  as  to  be  genuine ;  ^  while  others  entertain 
the  contrary  view.'^  The  considerations  which  conduce  to 
the  opinion  that  he  warrants  genuineness  of  prior  indorse- 
ments, apply  also  to  their  competency,  and  lead  us  to  the 
same  conclusion  that  it  is  warranted.  In  New  York  the 
doctrine  of  the  text  has  been  established  by  recent  decisions. 
There  it  has  been  held  that  one  who  indorses  a  note  pur- 
porting to  be  executed  by  a  copartnership,  impliedly  war- 
rants that  it  was  made  by  the  fiim,  and  cannot  in  a  suit 
against  him  dispute  it.* 

§  677.  Ill  the  fifth  place,  as  to  title. — The  indorser  con- 

'  Burrill  V.  Smith,  7  Pick.  291. 

'  1  Parsons  N.  &  B.  25;  Story  on  Bills,  §  110;  Story  on  Notes,  §  380,  and 
note;  see  also  Harris  v.  Bradley,  7  Yerg.  310. 

'  Chitty  on  Bills  (1.^  Am.  ed.)  [*248],  277.  But  the  only  authorites  cited  are 
East  India  Co.  v.  Tritton,  3  Barn.  &  C,  and  dissenting  opinion  of  Chambre,  J., 
in  Smith  v.  Mercer,  6  Taunt.  83.  The  latter  citation  is  no  authority;  and  the 
former  was  decided  on  the  ground  that  the  party  accepted  the  bill  with  knowl- 
edge of  the  circumstances  respecting  the  agent's  authority.  See  Story  on  Bills, 
§  110,  note  1;  2  Parsons  N.  &  B.  588  (where  Chitty's  view  is  criticised);  Bayley 
(5th  ed.),  ch.  5,  p.  170. 

*  Dalrymple  v.  Hillenbrand,  2  Hun,  488  (9  N.  Y.  S.  C.  R.),  affirmed  in  62 
N,  Y.  5 ;  Turner  v.  Keller,  6G  N.  Y".  66,  but  held  in  this  case  not  to  apply  where 
the  holder  had  procured  a  subsequent  ind(nsement  with  knowledge  of  the  ante- 
cedent forgcrv. 


538       TRANSFER   OF   BILLS   AND   NOTES   BY   INDORSEMENT. 

tracts  that  he  has  a  lawful  title  to  the  bill  or  note,  and  a 
right  to  transfer  it.'  If  he  has  stolen  or  found  the  instru- 
ment, or  otherwise  acquired  possession  without  title,  and  it 
be  payable  to  bearer  or  indorsed  in  blank,  he  might,  before 
its, maturity,  invest  a  bona  fide  indorsee  without  notice,  with 
a  perfect  title,  although  not  himself  possessing  it;  and  even 
after  maturity,  the  hona  fide  indorsee  might  get  from  him 
some  superior  rights  to  his  own.  But  the  indorsee  might  be 
involved  in  controversy,  or  be  ])laced  in  the  distasteful  atti- 
tude of  compelling  payment  by  those  who  did  not  owe;  and 
the  indorser  should  not  be  protected  while  he  brings  mis- 
chief upon  others.  A  forged  instrument  carries  no  title  to 
the  indorsee ;  and  where  the  thief  or  finder  of  negotiable 
paper  payable  to  order  which  has  been  indorsed,  and  put  iu 
circulation  by  the  payee,  erases  the  indorsement,  and,  sub- 
sequently, personating  the  payee,  forges  his  signature,  and 
transfers  the  paj^er  to  a  bona  fide  purchaser  for  value,  no 
title  passes  as  against  the  true  owner.^ 

§  678.  An  indorsement  falls  under  the  general  rule  that 
the  obligations  of  a  personal  contract  are  to  be  determined 
by  the  law  of  the  place  of  its  execution,  and  therefore  an 
indorser  may  become  responsible  for  a  much  higher  rate  of 
damages  and  of  interest,  upon  the  dishonor  of  a  note,  than 
he  can  recover  from  the  drawer;*'  and  the  jurisdiction  of  the 
Federal  Courts  of  the  United  States  attaches  upon  an  in- 
dorsement as  a  distinct  contract,  independently  of  the  resi- 
dence of  the  original  and  remote  parties  to  the  instrument.* 

The  indorsement  or  assignment  of  a  bill  or  note  being 
an  independent  contract,  the  circumstances  which  w^ould  in- 
validate any  other  contract  apply  to  it  with  like  effect.  Thus, 
a  war  betw^een  tlie  countries  of  which  the  indorsee  and  in- 


'Ibid;  Redington  v.  Wood,  Cal.  Law  Times,  Jan'y  1873,  p.  12;  Edwards 
on  Bills,  289;  Story  on  Bills,  §  111;  Stoiy  on  Notes, '§§  135,   380. 

"  Colson  V.  Arnot,  57  N.  Y,  253;  Graves  v.  Ameiicau  Exchange  Bank,  17 
N.  Y.  205. 

'  Slocum  V.  Pomcroy,  0  Crancb,  221 ;  Powers  v.  Lynch,  3  Mass.  77 ;  see  fo&t. 
Chapter  XXVII,  Sec.  VIII. 

*  Coffee  V.  Planters'  Bank,  13  How.  183. 


NATURE  OF  TUE  CONTRACT.  539 

dorser  are  citizens,  rendering  tliein  alien  enemies,  any  com- 
mercial transaction  between  them,  such  as  drawing  a  })ill 
upon,  or  making  or  indorsing  or  assigning  a  note  to  the 
other,  is  void.^ 

In  a  Virginia  case,  it  appeared  that  checks  were  drawn 
by  a  bank  in  Kichmond,  Va.,  upon  a  bank  in  New  Orleans, 
and  were  indorsed  in  Petersburg,  Va.,  in  February,  1863, 
w^hile  the  late  war  between  the  United  States  and  Con- 
federate States  was  in  progress,  to  a  resident  of  Vicksburg, 
Miss.  Petersburg:,  Pichmoud  and  Vicksburs;  were  then  in 
the  Confederate  lines,  whilst  New  Orleans  was  in  the  perma- 
nent possession  of  the  Federal  forces.  It  was  held  that  the  in- 
dorsement was  illegal  and  void,  and  that  the  indorsee  could 
not  recover  ag-ainst  the  indorser,  in  an  action  brouo-ht  after 
the  war.^ 

§  679.  There  must  be  a  consideration  for  an  indorsement 
as  between  the  immediate  parties,  and  while  it  is  prima  facie 
evidence  in  itself  of  a  consideration,  the  presumption  as 
between  immediate  parties  may  be  rebutted.^  Where  the 
indorser  makes  the  indorsement  after  the  instrument  is  de- 
livered, it  would  be  void  for  want  of  consideration.*  By  the 
general  law  merchant  the  indorser  of  a  negotiable  instru- 
ment is  bound  instantly,  and  may  be  sued  after  maturity, 
upon  demand  and  notice.  But  by  the  statutes  of  some  of 
the  States  the  maker  must  be  first  sued,  and  his  property 
first  subjected.*^ 

'  Billgerry  v.  Branch,  19  Grat.  417,  437  ;  Qriswold  v.  Waddington,  16  Johns. 
438;  Willison  v.  Pattison,  7  Taunt.  439  (2  E.  C.  L.  1?.),  e.  c.  1  J.  B.  Moore,  133; 
McCaughy  v.  Berg,  4  Ileisk.  G95;  see  ai\te,  §  218. 

"  Billgerry  v.  Branch,  19  Grat.  417,  437.  '  See  ante,  §  174. 

'  Collier  v.  Mahan,  21  Ind.  110. 

*  As  in  Colorado — Watson  v.  Kalin,  1  Col.  335.  Illinois— Mason  \.  Burton» 
54  111.  349;  Booth  v.  Storrs,  Id.  472.    Mississippi — Harrison  v.  Pike,  48  .Miss.  46. 


540      TRANSFER  OF  BILLS  AND   NOTES   BY  INDORSEMENT. 


SECTION  II. 

BY    WHOM    AND   TO    WHOM     INDOKSEMENT     OR     ASSIGNMENT    MAY   BE 

MADE. 

§  680.  Ill  the  first  ijlace^  as  to  iclio  may  indorse  or  trans- 
fer negotiahle paper. — Any  person  legally  competent  to  enter 
into  a  contract  may  be  the  indorser,  or  transferrer  by  delivery 
of  negotiable  pa2:)er.^  If  payable  to  the  order  of  the  payee,  he 
or  his  legal  representative  must  be  the  transferrer.  In  case 
of  the  bankruptcy  of  the  payee  of  a  bill  or  note,  all  his  rights 
become  vested  in  the  assignee,  who  may  transfer  it  in  their 
own  name ; '^  and  the  bankrupt  cannot;^  and  in  the  case  of 
the  death  of  the  payee  the  like  right  devolves  upon  his  ex- 
ecutors or  administrators.'*  But  if  payable  to  several  persons 
"  as  executors,"  all  must  concur.^  In  Louisiana  where  suit 
was  brought  against  the  executors  of  Mary  C.  Moore  and 
John  Moore,  who  were  in  their  lifetime  tutrix  and  cotutor  of 
D.  Magill,  to  recover  judgment  on  two  drafts  which  said  tu- 
trix and  cotutor  drew  payable  to  their  own  order,  it  was  held 
that  they  were  not  personally  bound  by  their  indorsement, 
although  they  omitted  therein  to  state  their  fiduciary  capac- 
ity.« 

§  G81.  In  the  case  of  the  marriage  of  a  woman  who  is 

'  2  Pars.  N.  &  B.  3:  Story  on  Bills,  §  195. 

'  Chitty,  227;  Story  on  Notes,  §  123;  ex  parte  Brown,  1  Glyn  &  J.  407. 

'  Ashurst  V.  Bank  of  Australia,  37  Eng.  L.  &  Eq.  R.  149. 

*  Watkins  v.  Maule,  2  Jac.  &  Walk.  237;  Rawlinson  v.  Stone,  3  Wils.  1 ;  Rand 
V.  Ilubard,  4  Mete.  252;  Malbon  v.  Southard,  36  Me.  147;  Dwight  v.  Newell,  15 
111.  333. 

"  Jolinson  V.  Mangum,  65  N.  C.  146. 

°  Lapeyre  v.  Weeks,  28  La.  665.  The  Court  said:  "We  do  not  regard  Mary 
C.  Moore  and  John  Moore  as  indorsers  of  the  drafts.  In  indorsing  the  drafts 
they  omitted  adding  their  capacity  as  tutrix  and  cotutor.  In  their  fiduciary 
capacity  tlie  drafts  were  not  indorsed  and  completed  by  tlie  drawers,  unless  wo 
regard  the  signatures  of  Mary  C.  Moore  and  John  Moore  as  made  in  that  capac- 
ity. Bills  drawn  by  a  fiduciary  to  his  own  order  are  not  completed  unless  in- 
dorsed in  the  same  capacity  as  drawn.  We  regard  these  drafts  as  completed, 
and  must  therefore  consider  that  Mary  C.  Moore  and  John  Moore  indorsed  them 
in  the  same  capacity  in  which  they  drew  them." 


BY   AND   TO   WHO:\r   INDORSED.  541 

payee  or  indorsee  of  a  bill  or  note,  the  property  thereof  vests 
in  her  husband,  and  he  alone  can  indorse  or  transfer  it ;  and 
in  like  manner,  if  the  paper  be  made  payable  to  lier  after 
marriafre,  her  husband  alone  can  indorse  or  transfer  it/  But 
this  principle  is  subject  to  the  limitation  that  the  wife  may, 
with  the  consent  of  the  husband,  indorse  a  bill  or  note  made 
payable  to  her,  and  pass  a  good  title  to  the  indorsee.^ 

The  law  being  based  upon  the  distinction  that  coverture 
of  the  wife  creates  a  disability  on  her  part  to  enter  into  a 
contract  which  the  assent  of  the  husband  may  remove.'^  The 
indorsement  of  the  wife,  under  such  circumstances,  is  equiv- 
alent to  that  of  her  husband.  Her  act  becomes  in  law  his 
act,  and  the  indorsee  must  claim  through  the  husband  by  a 
title  derived  from  him.*  If  a  woman  who  is  the  payee  of  a 
note  payable  to  her  order  assigned  it  by  delivery  and  after- 
ward married  the  maker,  her  indorsement  after  marriage 
transfers  the  legal  title.^ 

§  682.  An  infant  is  not  bound  upon  his  indorsement  of 
a  bill  or  note,  being  incapable  of  making  a  contract ;  but  he 
may,  by  his  indorsement  (which  is  voidable — not  absolutely 
void),  transfer  the  paper  to  any  subsequent  holder,  against 
all  the  parties  thereto,  except  himself*' 

'  See  ante,  %  254 ;  Mason  v.  Morgan,  2  Ad.  «&  El.  30  (29  E.  C.  L.  R.) ;  Chitty 
26;  Story  on  Notes,  §  124;  Barlow  v.  Bishop,  1  East,  433;  Conner  v.  Martin,  1 
Stra.  516;  Miles  v.  Williams,  10  Mod.  243;  Savage  v.  King,  5  Shep.  301;  Miller 
V.  Delamater,  12  Wend.  433. 

=  See  ante,  §§  252,  253. 

'  Chitty  on  Bills,  21,  200;  Stevens  v.  Beals,  10  Cush.  291 ;  Miller  v.  Delamater. 
12  Wend.  433;  Hancock  Bank  v.  Joy,  41  Me.  568;  Reakert  v.  Sanford,  5  W^atts 
&  S.  104;  Leeds  v.  Vail,  15  Penn.  St.  185;  Fredd  v.  Eves,  4  Ilarr.  (Del.)  385; 
Cotes  v.  Davis,  1  Camp.  485 ;  Prestwick  v.  Marshall,  7  Bing.  565 ;  4  Car.  &  P. 
594;  Prince  v.  Brunatte,  7  Bing.  N.  C.  435  ;  2  Bright,  Husb.  and  Wife,  42;  Lin- 
dus  V.  Bradwell,  5  Com.  B.  583 ;  Lord  v.  Hall,  8  Com.  B.  627 ;  see  ante,  §§  252, 253. 

■*  Stevens  v.  Beals,  10  Cush.  291 ;  and  cases  in  note  ante ;  see  also  ante,  %%  252, 
253. 

'  Guptill  v.  Home,  03  Me.  405.  Appleton,  C.  J. :  "As  the  wife  would 
have  been  compelled  by  a  court  of  .equity  to  indorse,  her  voluntary  act  is  as 
effectual  to  transfer  to  the  indorsee  the  right  to  sue  as  if  it  had  been  the  result  of 
legal  compulsion." 

°  Story  on  Bills.  §  190;  Story  on  Notes,  §  134;  Bayley  on  Bills,  44;  Chitty, 
21;  2  Parsons  N.  &  B.  3;  Nightingale  v.  Withington,  15  Mass.  272;  Taylor  v. 


542      TRANSFER  OF   BILLS  AND   NOTES  BY   INDORSEMENT. 

§  683.  Mlien  a  hill  o?'  note  is  payable  or  indorsed  to  a  co- 
partnership^ any  Diember  of  the  firm  may  transfer  it  during 
the  continuance  of  the  firm,  and  indorse  it  in  the  firm  name;^ 
and  upon  tlic  death  of  a  member  of  the  firm,  the  survivor 
may  indorse  it  is  his  own  name.^  But  the  indorsement  by  a 
partner  to  his  copartner,  or  to  another  person,  of  a  bill  or 
note  payable  to  the  firm,  in  his  individual  name,  will  not  pass 
the  title  to  the  paper,  nor  enable  the  indorsee  to  bring  a  suit 
on  it  in  his  own  name.^  It  has  been  held,  however,  that  such 
an  indorsement  would  pass  the  equitable  title.* 

If  there  be  a  dissolution  of  the  copartnership  (otherwise 
than  by  the  death  of  a  partner),  the  survivor  cannot  indorse  in 
the  firm  name  a  l)ill  or  note  payable  to  the  firm  ;  ^  even  though 
the  surviving  partner  had  power  to  settle  the  partnership  af- 
fairs; ^  but  the  contrary  had  been  held  if  the  dissolution  were 
unknown  to  the  indorsee,^  and  the  rule  does  not  apply  where 
the-bill  or  note  of  the  firm  was  made  payable  to  the  partner 
who,  after  dissolution,  indorsed  it.^ 

§  684.  If  several  persons^  not  partners^  are  payees  or  in- 
dorsees of  a  bill  or  note,  it  should  be  indorsed  by  all  of  them." 
Either  one  of  the  joint  payees  may  authorize  the  other  to 
indorse  for  him,  and  an  assignment  of  this  interest  in  the 

Croker,  4  Esp.  187;  Jeune  v.  W^ard,  2  Stark.  326;  Grey  v.  Cooper,  3  Doug.  65; 
see  ante^  §§  227  et  seq. 

'  Story  on  Notes,  §  125;  Baylcy  on  Bills,  53;  Barrett  v.  Russell,  45  Vt.  43. 

"  Jones  V.  Tbornc,  14  Martin,  4G3. 

'  Estabrook  v.  Smith,  6  Gray,  570 ;  Robb  v.  Bailey,  13  La.  Ann.  446  ;  Fletcher 
T.  Dana,  4  Blackf.  377 ;  Desha  v.  Stewart,  6  Ala.  852 ;  Moore  v.  Denslow,  14 
Conn.  235;  Absolem  v.  Marks,  11  Q.  B.  19;  Russell  v.  Swan,  16  Mass.  314; 
Hooker  v.  Gallagher,  6  Fla.  351. 

*  Aial)ania  Co.  v.  Brainard,  35  Ala.  476. 

'  Sanford  v.  Mickles,  4  Johns.  224;  see  ante,  §  370. 

'Abel  V.  Sutton,  3  Esp.   108;  Uumphries  v.   Chastain,  5   Ga.   166;  Foltz  v. 
Pouree,  2  Desaus.  Eq.  40;  Parker  v.  Macomber,  18  Pick.  505  ;  see  ante,  §  372. 
'  Cony  V.  Wheelock,  33  Me.  366  ;  Lewis  v.  Reilly,  1  Q.  B.  349;  see  ante,  §  373. 

*  Scnip'e  V.  Seaver,  11  Cush.  314. 

»  Brown  v.  Dickinson,  27  Grat.  693;  Smith  v.  Whiting,  9  Mass.  334;  Snced 
V.  Mitchell,  1  Haywood,  289;  Carvick  v.  Vickery,  2  Doug.  653.  See  Sayre  v. 
Frick,  7  Watts  ^  S.  383;  Culver  v.  Leavy,  19  La.  Ann.  202,  and  post  §§  701  a. 
704. 


BY  AND  TO   WHOM   INDORSED.  543 

paper  from  one  to  the  other  carries  with  it  such  authority.^ 
But  there  is  no  presumption  of  law  that  one  may  indorse  for 
the  other.^ 

§  685.  A  note  payaUe  to  an  executor  may  he  transferred 
for  a  debt  of  the  estate.^ — If  the  instrument  be  payable  to  two 
or  more  persons  as  executors  or  admiuisti-ators,  all  must  in- 
dorse ;  *  but  it  seems  that  in  other  cases  one  of  tlie  personal 
representatives  might  indorse.^  An  executor  or  administrator 
will  be  personally  bound  by  his  indorsement,  although  he 
add  " executor "  or  "administrator"  to  his  name,  unless  he 
expressly  specify  that  recourse  is  to  be  had  only  against  the 
estate  of  the  deceased.^  A  negotiable  note  transferred  by  the 
payee,  by  delivery  only,  may  be  indorsed  by  his  personal 
representative  with  the  same  effect  as  if  done  by  the  payee 
in  his  lifetime.''' 

When  a  bill  or  note  is  payable  at  a  bank,  an  indorsement 
by  "A.  B.,  Pres't,"  binds  the  bank.^  And  so  an  indorsement 
by  "A.  B.,  Cashier."  ^  If  payable  to  A.  or  order  for  the  use 
of  B.,  it  can  be  indorsed  by  A.  only,  as  the  legal  interest  is 
in  him,  not  in  B.^" 

§  686.  Li  the  second  place,  as  to  ivlioni  transfer  may  he 
made. — The  transfer  of  a  bill  or  note  may  be  made,  of  course, 
to  any  party  who  may  legally  contract  with  the  transferrer.  It 
may  also  be  made  to  an  infant,  or  to  a  married  woman  ;  but  in 
the  latter  case  the  interest  will  vest  in  her  husband,  who  may 
treat  it  as  payable  to  himself,  or  to  himself  and  wife.^^   In  the 

'  Russell  v.  Swan,  16  Mass.  314;  Goddard  v.  Lyman,  14  Pick.  268. 

^  2  Parsons  N.  &  B.  5.  '  Moses  v.  Clark,  46  Ala.  226. 

■*  Smitfi  V.  Whiting,  9  Mass.  334. 

»  Wheeler  v.  Wheeler,  9  Cow.  34.     See  2  Pars.  N.  &  B.  6. 

"See  Beals  v.  See,  10  Barr,  56;  Seaver  v.  Phelps,  11  Pick.  304;  Serle  r. 
Waterworth,  4  M.  &  W.  487. 

'  Molbin  V.  Southard,  36  Me.  149;  Hersey  v.  Elliott,  67  Me.  527.  See  Wat- 
kins  V.  Maule,  2  Jacob  &  Walker,  148. 

«  Aiken  v.  Marine  Bank.  16  Wis.  679;  see  Leavitt  v.  Connecticut  Peat  Co.  6 
Blatch.  139,  and  ante,  §  394. 

'  See  ante,  §§  392,  417.  "  Evans  v.  Cramlington,  2  Show.  509;  1  Show.  4. 

"  Story  on  Notes,  §  126;  Richards  v.  Richards,  2  Barn.  &  Ad.  477;  Burrough 
V  Moss,  10  Barn.  &  Cres.  558;  Philliskirk  v.  Pluckwell,  2  M.  &  Stlw.  393. 


544      TUASSFER  OF  BILLS  AND  NOTES  BY   INDORSEMENT. 

latter  case,  should  she  survive  bini,  she  may  sue  in  her  owq 
name.  It  may  also  be  made  to  a  trustee,  or  personal  represen- 
tative, in  which  case  it  will  operate  as  a  transfer  to  them  per- 
sonallv,  although  the  trust  may  attach  to  the  proceeds  in  their 
hands.^  The  transfer  cannot  be  made  by  the  husband  to  his 
wife,'-  except  to  act  as  his  agent  and  convey  title  to  another.*^ 

If  the  transfer  be  to  an  executor  or  trustee,  it  will  oper- 
ate as  a  transfer  to  him  personally,  although  the  trust  may 
attach  to  the  proceeds  in  his  hands/  If  a  principal  make  an 
indorsement  in  blank  to  his  agent,  the  latter  may  fill  it  up  to 
himself  individually,  and  it  will  be  regarded  as  between 
him  and  all  other  parties,  except  his  principal,  as  his  own  ; 
or  he  may  fill  it  for  his  principal,  and  act  in  his  name.^  The 
indorsee  must,  of  course,  be  living  at  the  time  of  the  indorse- 
ment ;  and  if  he  be  dead,  and  the  indorsement  be  with  in- 
tention to  invest  his  personal  representative  with  the  legal 
property  in  tke  instrument,  it  is  null  and  void.^ 

A  promissory  note  payable  to  "  J.  C,  Sh'ff  "  (sheriff),  and 
indorsed  "  J.  C,  Sh'ff,"  does  not  of  itself  impart  notice  to 
the  indorsee  that  the  money  was  payable  to  J.  C.  in  his 
official  capacity  as  sheriff,  or  as  trustee  for  other  parties/  So 
a  note  to  A.  B.,  receiver,  indorsed  by  him  "  as  receiver,"  is 
prima  facie  his  individually,  and  he  may  sue  upon  it  in  his 
own  name/ 

§  687.  If  a  bill  or  note  be  made  payable  to  a  party  as 
"  cashier,"  it  will  be  regarded  prima  facie  as  payable  to  his 
bank ;  and  if  so  indorsed,  as  indorsed  by  his  bank.^     In  cases 


'  Ibid.  "^  Gay  v.  Kingsley,  11  Allen,  345. 

^  Slavvson  v.  Loring,  5  Allen,  340;  see  ante^  §  241. 

"  Richards  v.  Ricliards,  2  Barn.  &  Ad.  447. 

"  Clark  V.  Pigot,  1  Salk.  126;  Story  on  Bills,  §  207. 

°  Valentine  v.  llollomau,  63  N.  C.  475. 

'  Fletcher  v.  Schaumberg,  41  Mo.  501.  '  Davis  v.  Peck,  54  Barb.  425. 

•  Bank  of  the  State  v.  Muskingum  Branch  Bank,  29  N.  Y.  (2  Tiffany)  619; 
Collins  V.  Johnson,  16  Ga.  458;  Bank  of  Manchester  v.  Slasen,  13  Vt.  384; 
Folger  V.  Chase,  18  Pick.  63;  Fleckner  v.  Bank  U.  S.  8  Wheat.  360;  Minor  v. 
Mechanics'  Bunk,  1  Pet.  40;  Wild  v.  Passamaquoddy  Bank,  3  Mason,  505;  see 
ante,  §  417, 


FORM   AND   VARIETIES   OF   INDORSEMENT.  545 

of  indorsement  to  a  cashier  of  a  bank  as  cashier,  for  example, 
"  to  A.  B.,  Cashier,"  the  bank  may  sue  on  it,  or  the  cashier 
may  do  so  for  the  use  of  the  bank,  or  in  his  own  name.^ 
And  if  the  indorsement  be  to  the  treasurer  of  the  United 
States,  in  his  official  capacity,  it  will  be  regarded  as  to  the 
United  States  in  point  of  fact,  and  they  may  sue  upon  it  in 
their  name.^  And  the  same  principle  apj)lies  to  other  gov- 
ernmental officers.^ 

SECTION  III. 

FOEM   AND   VARIETIES    OF   INDOKSESIENT. 

§  688.  Firstly.  As  to  the  form  of  the  indorsement. — ^The 
indorsement  is  generally  made  by  writing  the  transferrer's 
name  on  back  of  the  paper,  but  it  may  be  written — although 
unusual  and  irregular — on  any  other  portion  of  it,  even  on  the 
face  and  under  the  maker's  name/  The  full  name  should  be 
written,  but  the  initials  will  suffice,^  as  will  also  any  mark 
instead  of  the  name,  made  to  represent  it.^ 

Writing  on  the  paper,  "  pay  the  contents  to  A.,"  is  a  trans- 
fer, so  far  as  it  authorizes  payment  to  be  made  to  A.,  but  it 
does  not  render  the  writer  liable  as  an  indorser."^ 

It  has  been  held  that  the  figures  "  1,  2,  8,"  written  in  pen- 
cil, was  sufficient,  connected  with  evidence  tending  to  show 
that  the  party  who  placed  them  on  the  2:)aper  intended  to 

'  McHenry  v.  Ridgcly,  3  Scam.  309 ;  Porter  v.  Neckervis,  4  Rand.  359 ;  Fair- 
field V.  Adams,  16  Pick.  381 ;  see  ante,  §  417,  and  2>ost,  Chapter  XXXVII,  Sec. 
II,  Vol.  2. 

"  Dugan  T.  U.  S.  3  Wheat.  173.  »  See  ante,  §  433. 

*  Gibson  v.  Powell,  6  How.  (Miss.)  60;  Quin  v.  Sterne,  26  Ga,  223;  Herring 
V.  Woodhull,  29  111.  92  ;  Partridge  v.  Davis,  20  Vt.  449 ;  Rex  v.  Begg,  3  P.  Wms. 
419;  1  Stra.  18;  Thomson  on  Bills,  181. 

"  Merchants'  Bank  v.  Spicer,  6  Wend.  443 ;  Palmer  v.  Stephens,  1  Deuio,  471  ; 
Bank  v.  Flanders,  6  K  H.  239;  Rogers  v.  Colt,  6  Hill,  322;  Williamson  v.  John- 
son, 1  Barn.  &  C.  140 ;  Corgan  v.  Frew,  39  111.  31. 

•  George  v.  Surrey,  1  M.  &  M.  516  ;  Baker  v.  Denning,  8  Ad.  &  El.  94;  Addy 
V.  Gris,  8  Ves.  504;  Flint  v.  Flint,  6  Allen,  34;  Brown  v.  Butchers',  &c.  Bank, 
6  Hill,  443. 

'  Vincent  t.  Horlock,  1  Camp.  442. 

Vol.  I.— 35 


54G      TRANSFER  OF  BILLS  AND  NOTES  BY  INDORSEMENT. 

hind  himself  as  an  iiidorserJ  This  decision  is  questioned  by 
Prof.  Parsons  (vol.  2  N.  cfe  B.  17);  but  ^vitll  the  utmost  re- 
spect for  that  eminent  jurist,  it  seems  to  us  sound,  on  the 
ground  tliat  it  was  intended  as  a  mark  to  represent  the  in- 
dorser's  name.'-  And  it  is  well  settled  that  any  mart  which 
is  shown  to  have  been  intended  as  the  maker's  name,  is  as 
valid  to  bind  him  as  the  name  itself  "  A  very  small  matter," 
says  Cunningham,  in  his  Law  of  Exchange,  p.  2G,  "will 
amount  to  an  acceptance ; "  and  he  gives  as  an  example  the 
mere  memorandum  of  the  date  of  presentment.  The  same 
may  be  said  of  an  indorsement.  It  is  the  intention  which 
gives  significance  to  the  mark. 

A  written  agreement  to  pay  a  note  "  as  if  by  me  in- 
dorsed," written  on  it,  is  considered  an  indorsement,  in  the 
legal  sense.^  It  is  settled  that  the  wanting  may  be  done  in 
any  legible  way,  by  pen  or  pencil.^ 

§  G89.  The  indorser  may  write  his  own  name,  or  he  may 
authorize  any  one  to  write  it  for  him.  If  the  name  be  in 
the  handwriting  of  the  paper,  but  the  indorser  receives 
notice,  is  sued,  suffers  default  and  makes  no  defense  or  denial 
until  after  the  maker  absconds,  he  cannot  deny  his  signature; 
or  if  he  does,  proof  that  he  had  assumed  other  paper  simi- 
larly indorsed  would  be  conclusive  against  him.^ 

The  indorsement  must,  as  a  general  rule,  be  somewhere 
on  the  paper  itself,  or  attached  thereto,  and  unless  it  is,  the 
party  cannot  be  held  liable  as  an  indorser,^  but  a  promise 
made  on  a  sufficient  consideration  will  sustain  an  action  upon 
its  l^reach.'^ 

When  a  note  is  transferred  with  guaranty,  the  transfer 
may  be  good,  though  the  guaranty  be  void  under  the  statute 
of  frauds.^ 


'  Brown  v.  Butchers'  Bank,  6  Hill,  443. 
^  Kc'dfield  &  Bigelow's  Leading  Cases,  110,  111. 
"  Pinnes  v.  Ely,  4  McLean,  173. 

*  Geary  v.  Physic,  5  Ham.  &  C.  234;  Brown  v.  Butchers'  Bank,  G  Hill,  443; 
Closson  V.  Stearns,  4  Vt.  11. 

'  Weed  V.  Carpenter,  10  Wend.  403.  '  Fenn  v.  Harrison.  3  T.  R.  757. 

■  Moxon  V,  Pulling,  4  Camp.  51.  "  Crosby  v.  Roub,  16  Wis,  616. 


FORM   AND   VAUIEJIES   OF   INDORSEMENT.  547 

§  090.  It  is  not  necessary,  however,  that  the  indorsement 
sliould  be  upon  the  original  bill  or  note,  in  order  to  constitute 
such,  in  the  full  sense  of  the  term.  It  sometimes  happens, 
that  ])y  rapid  circuhition  from  hand  to  hand,  the  back  of  the 
paper  is  completely  covered  by  indorsements ;  and  in  such 
cases  the  holder  may  tack  or  paste  on  a  piece  of  paper  suffi- 
cient to  bear  his  own  and  subsequent  indorsements,  and 
thereon  the  indorsements  may  be  made.  Such  addition  to 
the  original  instrument  is  called  an  allonge^  and  it  becomes, 
for  the  purposes  above  named,  incorporated  as  a  part  of  it.^ 

§  691.  SeconcUij.  As  to  the  varieties  of  indorsement. — There 
are  various  liabilities  which  may  be  engrafted  on  a  negotiable 
instrument,  evidenced  by  the  terms  of  the  indorsement 
thereon.  An  indorsement  may  be  (1)  in  full  or  (2)  in 
blank ;  it  may  be  (3)  absolute  or  (4)  conditional ;  it  may  be 
(5)  restrictive ;  it  may  be  (6)  without  recourse  on  the  in- 
dorser ;  and  there  may  be  (7)  joint  indorsements  of  the  in- 
strument, (8)  successive  indorsements,  and  also  (9)  irregular 
indorsements. 

§  692.  (1)  In  the  first  place  ^  an  indorsement  in  full  is  one 
which  mentions  the  name  of  the  pei'son  in  whose  favor  it  is 
made ;  and  to  whom,  or  to  whose  order,  the  sum  is  to  be 
paid.  For  instance  :  "  Pay  to  B.,  or  oi'der,"  signed  A.,  is  an 
indorsement  in  full  by  A.,  the  payee  or  holder  of  the  paper, 
to  B.  An  indorsement  in  full  prevents  the  bill  or  note  from 
being  indorsed  by  any  one  but  the  indorsee.^  And  none  but 
the  special  indorsee  or  his  representative  can  sue  upon  it.*^ 
Where  the  payee  wrote  on  the  back  of  a  note  which  he 
transferred,  "  I  this  day  sold  to  Catherine  M.  Adams  the 
within  note,"  it  was  held  an  indorsement  to  the  purchaser, 
Peters,  J.,  saying :   "  We  think  that  the  defendant  thereby 

'  Crosby  V.  Roub,  16  Wis.  622,  626  (1863);  Folger  v.  Chase,  18  Pick.  63; 
French  v.  Turner,  15  Ind.  59;  Story  on  Notes,  §§  131,  151,  172;  Story  on  Bills, 
§§  204,  218;  Byles  on  Bills  [*145],  263;  Etlwanls  on  Bills,  267. 

'  Mead  v.  Young,  4  T.  II.  28. 

'  See  Vol.  If.  §1181.  Lawrence  v.  Fussell,  77  Penn.  St.  460;  Reamer  v. 
Bell,  79  Id.  292. 


548      TRANSFER  OF  BILLS  AND  NOTES  BY  INDORSEMENT. 

assumed  all  the  liabilities  of  an  ordinary  indorsement  of  the 
note.  No  word  in  the  writing  indorsed  u])on  the  note  nega- 
tives or  qualifies  sucli  an  idea.  *  ^'  The  only  restriction 
is  that  the  indorsement  is  made  special  to  Catherine  M. 
Adams."  ^ 

§  693.  (2)  In  the  second  place^  an  indorsement  in  hlanh  is 
one  which  does  not  mention  the  name  of  the  indorsee,  and 
consists,  generally,  simply  of  the  name  of  tlie  indorser  written 
on  the  back  of  the  instrument.  When  the  bill  or  note  is  in- 
dorsed in  blank,  it  is,  as  has  been  said,  transferable  by  mere 
delivery  to  the  transferee ;  but  one  indorsed  in  full  must  be 
indorsed  again  by  the  indorsee,  in  order  to  render  it  transfer- 
able to  every  intent — for  he  wlio  indorses  to  a  particular 
person,  declares  his  intention  not  to  be  made  lial)le  except 
by  that  person's  indorsement  over.  As  to  an  indorsement  in 
blank,  it  was  said  by  Lord  Mansfield,  in  Peacock  v.  Rhodes, 
2  Doug.  633 :  "  I  see  no  difference  between  a  note  indorsed 
in  blank  and  one  payable  to  bearer.  They  both  go  by  de- 
livery, and  possession  proves  j^roperty  in  both  cases."  ^ 

§  694.  The  receiver  of  a  negotiable  instrument  indorsed 
in  blank,  or  any  hona  fide  holder  of  it,  may  write  over  it  an 
indorsement  in  full  to  himself,  or  to  another,  or  any  contract 
consistent  with  the  character  of  an  indorsement;^  but  he 
could  not  enlarge  the  liability  of  the  indorser  in  blank  by 
writing  over  it  a  waiver  of  any  of  his  rights,  such  as  demand 
and  notice.*  The  indorsement  may  be  before  or  after  the 
instrument  itself  is  completed ;  and  while  it  is  yet  in  blank ; 
and  the  indorser  will  be  bound  according  to  its  terms  when 


'  Adams  v.  Blethcn,  6G  Mc.  19  (1876). 

"  See  Palmer  v.  Nassau  Bank,  78  111.  380;  Gaar  v.  LouisTille  B.  Co.  11  Bush. 
(Ky.)  180;  Carter  v.  Sprague,  51  Cal.  239. 

"See  ante,  §§  142  tt  seq. ;  Evans  v.  Gee,  II  Pet.  80 ;  Rees  v,  Conoclieague 
Bank,  5  Raud.  329;  Hance  v.  Miller,  31  111.  636;  Hunter  v.  Hempstead,  1  Mo.  67; 
Rikerv.  Cosby,  3  Pcnn.  911;  Central  Bank  v.  Davis,  19  Pick.  370;  Tenney  v. 
Prince,  4  Pick.  385;  Condon  v.  Pearce,  43  Md.  83. 

*  2  Parsons  N.  &  B.  20  ;  Edwards  on  Bills,  273;  Central  Bank  v.  Davis,  19 
Pick.  376. 


FORM   AND   VARIETIES   OF   INDORSEMENT.  549 

filled  up,  the  indorsement  of  a  hlank  paper  being  considered 
"a  letter  of  credit  for  an  indefinite  sum."  ^ 

Where  there  are  several  indorsements  in  1)1  ank,  the 
holder  may  fill  up  the  first  one  to  himself,  or  he  may 
deduce  his  title  through  all  of  them.^  He  may  also  strike 
out  any  number  of  several  indorsements.  Thus,  if  there 
were  six,  he  might  strike  out  the  fourth,  fifth  and  sixth,  and 
sue  the  others;^  l)ut  if  he  strikes  out  any  intermediate  one 
he  releases  all  who  indorsed  subsequently,  as  he  deprives 
them  of  their  recourse  against  him.'*  But  where  there  is  a 
special  indorsement  to  a  particular  person,  it  has  been  held 
that  the  holder  cannot  strike  it  out  and  insert  his  own  name ; 
for  being  payable  to  the  order  of  the  special  indorsee,  the  law 
cannot  presume  that  it  has  come  rightfully  into  the  hands 
of  the  holder  until  there  is  a  special  indorsement  to  him,  or 
an  indorsement  in  blank.  To  hold  otherwise  would  defeat 
the  very  object  of  the  special  indorsement,  which  is  to  notify 
the  world  that  it  can  only  be  transferred  to  a  stranger  by 
the  actual  indorsement  of  the  special  indorsee,  and  especially 
is  it  notice  to  the  maker  not  to  pay  to  any  one  but  the 
special  indorsee.  And  if  he  pays  it  to  a  stranger  when  it  is 
without  indorsement  by  the  special  indorsee  he  acts  at  his 
own  risk.^  And  if  the  special  indorsee  or  his  assignee  strike 
out  his  name  in  the  special  indorsement  and  insert  his  own, 
it  is  a  material  alteration  of  the  special  indorser's  contract, 
and  no  recovery  can  be  had  against  him.® 

It  has  been  held,  that  if  a  holder  through  several  indorse- 
ments fills  up  an  early  blank  indorsement  payable  to  him- 
self, without  striking  out  the  subsequent  indorsements,  he 

'  Violett  V.  Patton,  5  Crunch,  142;  Lord  Mansfield,  in  Russell  v.  LangstafFe, 
2  Doug.  514.     See  ante,  §  143. 

-Ritchie  V.  Moore,  5  Munf.  388;  Craig  v.  BroAvn,  Pet.  C.  C.  R.  171;  Ells- 
worth V.  Erewer,  11  Pick.  31G;  Cole  v.  Gushing,  8  Pick.  48  ;  Emerson  v.  Cutis, 
12  Mass.  7,  8. 

'  Ritchie  v.  Moore,  5  Munf.  388. 

*  Curry  v.  Bank  of  Mobile,  8  Port.  (Ala.)  360. 

*  Porter  v.  Cushman,  19  111.  572;  see  ante,  Chapter  XX,  Sec.  I. 
'  Grimes  v.  Piersol,  25  Ind.  246. 


550      TRANSFER  OF   BILLS  AND   NOTES  BY   INDORSEMENT. 

does  not  discliarge  such  subsequent  iudorsers ;  but  that  he 
may,  after  suing  unsuccessfully  those  prior  to  the  one  filled 
up  to  himself,  sue  the  subsequent  indorsers.^ 

§  695.  In  a  Virginia  case,^  Green.  J.,  said,  in  delivering 
the  opinion  of  the  Court :  "  A  blank  indorsement  does  not 
jo^r  56  transfer  a  title;*  but  is  an  authority  to  the  holder, 
either  to  hold  it  as  the  agent  of  the  indorser,  or  to  claim  it 
as  his  own  by  assignment,  at  bis  election,  without  any  further 
act  to  be  done  by  the  assignor.  The  blank  indorsement  is 
conclusive  proof  of  the  assent  of  the  indorser  to  transfer  the 
note  to  the  holder,  if  he  elects  to  take  it  as  a  transfer.  The 
assent  and  election  of  the  holder  to  treat  the  indorsement  as 
a  transfer,  is  proved  as  well  by  suing  upon  it  in  his  own 
name  as  by  writing  over  it  an  assignment  to  himself,  and  it 
is  the  assent  of  both  parties  to  the  transfer  which  perfects 
it,  and  not  the  form  in  which  that  assent  is  evidenced." 

§  696.  If  a  bill  or  note  be  once  indorsed  in  blank,  though 
afterward  indorsed  in  full,  it  will  still,  as  against  the 
drawer,  acceptor,  maker,  payee,  the  blank  indorser  and  all 
indorsers  before  him  be  payable  to  bearer,  thougli  as  against 
the  special  indorser  himself,  title  must  be  made  through  his 
indorsee.* 

The  holder  under  a  blank  indorsement  cannot  fill  it  up 
so  as  to  make  the  note  payable  in  part  to  one  person  and  in 
part  to  another.  The  indorser's  contract  is  single  and  entire 
to  pay  the  note  to  the  party,  or  to  that  person  named  by 
him  ;  and  it  is  no  part  of  his  contract  that  the  sum  shall  be 
broken  into  fragments,  and  he  ol)]iged  to  pay  in  fractions  to 
different  persons.^ 

§  697.  (3  Sl  4)  1)1  the  third  and  fourth,  as  to  absolute  aud 
conditional  indorsements. — An  absolute  indorsement  is  one  by 

'  2  Parsons  N.  &  B.  19  ;  Cole  v.  Gushing,  8  Pick.  48.     See  2  Parsons  N.  &  B. 
19,  note,  and  the  observations  of  the  author  on  the  case  cited. 
^  Rees  V.  Conocochcague  Bank,  5  Rand.  329. 
=  See  Clark  v.  Pigot,  1  Salk.  120  ;  Lucas  v.  Ilaynes,  Id.  130. 
*  Smith  V.  Clarke,  Peake,  225 ;  Walker  v.  McDonald,  2  Exch.  527. 
'  Erwin  v.  Lynn,  IG  Ohio,  N.  S.  547. 


FORM  AND  VARIETIES  OF   INDORSEMENT.  551 

which  the  indorser  Liucls  himself  to  pay,  upon  no  other  con- 
dition than  the  failure  of  prior  parties  to  do  so,  and  of  due 
notice  to  him  of  such  failure  (protest  preceding  it  when  neces- 
sary, as  in  the  case  of  a  foreign  bill).  A  conditional  indorse- 
ment is  one  by  which  the  indorser  annexes  some  other  condi- 
tion to  his  liability.  Sometimes  the  condition  is  precedent,  and 
sometimes  subsequent,  'i  hus,  "Pay  to  A.  B.,  or  order,  if  he 
ariiives  at  twenty-one  years  of  age,"  or,  "  if  he  is  living  when 
it  becomes  due,"  is  an  indorsement  upon  a  condition  pre- 
cedent. "  Pay  A.  B.,  or  order,  unless,  before  payment,  I  give 
you  notice  to  the  contrary,"  is  upon  a  condition  subsequent. 
The  condition  attached  to  the  indorsement  in  no  manner 
affects  the  negotiability  of  the  paper.^ 

Where  a  bill  was  indorsed,  payable  to  the  indorsee  or 
transferee  on  a  certain  condition,  and  was  afterward  ac- 
cepted and  passed  through  several  hands,  and  was  finally 
paid  by  the  acceptor  before  the  condition  was  satisfied,  it 
was  held  that  the  acceptor  was  liable  to  pay  the  bill  again  to 
the  payee.2  But  it  seems  that  a  bill  cannot  be  indorsed  with 
a  condition  that  in  a  certain  event  the  indorsee  shall  not 
retain  the  power  of  indorsing  it  to  another.^ 

"  The  drawer  is  bound  to  take  notice  of  the  condition 
annexed  to  an  indorsement,  for  when  a  person  accepts  a  bill 
after  a  conditional  indorsement,  and  pays  it  to  an  indorsee  of 
this  conditional  indorsee  while  the  condition  of  the  first  in- 
dorsement is  unfuMlled,  he  is  liable  in  second  payment  to 
the  first  indorser,  l)eing  bound  to  look  at  the  conditional 
indorsement  as  a  limitation  ex  facie  of  the  bill,  in  the  title  of 
the  party  claiming  payment."  * 

§  698.  (5)  In  the  fifth  lylace,  as  to  restrictive  indorsements. 
— An  indorsement  may  be  worded  so  as  to  restrict  the  farther 
negotiability  of  the  instrument,  and  it  is  then  called  a  restric- 

'  Stoiy  on  Notes.  §  149;  Story  on  Bills,  §  217. 

»  Robertson  v.  Kensington,  4  Taunt.  30;  Savage  v.  Aldren,  2  Stark.  23'2  (3 
E.  C.  L.  R.) 

'  Soares  v.  Clyn,  14  L.  J.  Q.  B.  313;  8  Q.  B.  34  (35  E.  C.  L.  R.) 
*  Thomson  on  Bills,  233. 


552       TRANSFEK  OF  BILLS  AND  NOTES  BY  INDORSEMENT. 

tive  indorsement.  Thus,  "  Pay  the  contents  to  J.  S.,  only," 
or  "  to  J.  S,,  for  my  use,"  or  "  to  order,  for  my  use,"  are  re- 
strictive indorsements,  and  put  an  end  to  the  paper's  trans- 
feraljility.^  But  "  pay  J.  S.,  or  order,  value  in  account  with 
H.  C,  D.,"  would  not  be  restrictive.^  Where  a  bill  was  in- 
dorsed "  pay  A.  B.,  or  order,  for  the  account  of  C.  D.,"  A.  B, 
pledged  it  with  the  defendant,  who  advanced  money  upon  it 
to  A.  B.  personally,  it  was  held  that  the  form  of  the  indorse- 
ment was  in  itself  notice  to  the  defendant  that  A.  B.  had  no 
authority  to  raise  money  on  the  bill  for  his  own  benefit,  and 
that  C.  D.  could  recover  against  him  in  an  action  of  trovei*.^ 
So  where  a  bill  was  indorsed,  "pay  J.  C.  or  order  on 
account  of  B.  G.  &,  S.,"  it  w^as  held,  that  it  operates  as 
notice  that  J.  C.  held  it  in  trust  for  B.  G,  &,  S.,  and  that 
neither  he  nor  his  indorsees  had  any  property  in  it.^  So 
where  a  bill  was  indorsed  by  A.  "  pay  B.  or  his  order  for 
my  use,"  and  B.  discounted  it  with  his  bankers,  who  received 
payment  of  the  acceptors,  it  was  held,  in  an  action  for  money 
had  and  received,  that  the  bankers  were  bound  to  refund 
the  amount  to  A.^  So  "  credit  my  account  (signed),  James 
B.  Scott,  cashier,"  is  a  restrictive  indorsement,  and  prevents 
further  negotiation  of  the  bill.*'  The  words  "  for  collection," 
which  are  frequently  inserted  on  paper  put  in  bank  to  l)e 
collected,  makes  the  indorsement  restrictive,  and  the  indorser 
is  competent  to  prove  that  he  is  not  the  owner  of  it,  and  did 
not  mean  to  give  title  to  it,  or  its  proceeds  when  collected.'' 

'  Power  V.  Finnie,  4  Call,  411;  Brown  v.  Jackson,  1  Wash.  C.  C.  R,  512; 
Ancher  v.  Bank  of  England,  Doug.  615  ;  Robertson  v.  Kensington,  4  Taunt.  30; 
Sigourney  v.  Lloyd,  8  B.  «&  C.  G22;  Snee  v.  Prescott,  1  Atk.  247.  The  following 
case  arose  in  Texas.  L.  &  M.  made  a  note  payable  "  to  B.  S.  &  Co.  for  the  use 
of  E.  &  M.  S."  At  the  time  the  note  was  made  B.  S.  &  Co.  indorsed  it  in  blank 
and  delivered  it  to  the  usees,  E.  &  M.  S.,  who,  alleging  the  insolvency  of  L.  & 
M.,  sued  B.  S.  &  Co.  as  original  obligors.  The  consideration  of  the  note  was 
money  used  by  the  usees.  B.  S.  &  Co.  were  held  liable  as  original  promisors  or 
sureties.     Harrison  v.  Sheirburn,  36  Tex.  73. 

'  Buckley  v.  Jackson,  L.  R.  3  Exch.  135. 

'  Treuttel  v.  Barandon,  8  Taunt.  100.  *  Blaine  v.  Bourne,  11  R.  L 

»  Sigourney  v.  Lloyd,  8  B.  «&  C.  622  (15  E.  C.  L.  R.) ;  5  Bing.  525 ;  3  Y.  &  J. 
330.  •  Lee  v.  Chilicothe  Branch  Bank,  1  Bond.  387. 

'  Sweeney  v.  Easter,  1  Wall.  166. 


FORM  AKD  VARIETIES  OF  INDORSEMENT.  553 

Sucli  an  indorsement  merely  makes  the  indorsee  agent  for 
the  indorser  to  collect  the  note,  but  it  has  been  held  does  not 
invest  him  with  such  title  as  to  make  him  a  proper  party 
plaintiff  in  a  suit.^ 

The  negotiability  of  an  instrument  having  been  restricted, 
it  may  be  revived  by  a  subsecpient  indorsement.^ 

If  the  paper  be  originally  negotiable,  an  indorsement,  in 
order  to  be  restrictive,  must  be  made  so  by  express  words, 
and  if  it  simply  direct  payment  to  a  certain  person  by  name, 
without  adding  the  words,  "or  order,"  it  will  not  be  con- 
sidered a  restrictive  indorsement  and  payable  to  him  only." 

§  099.  An  indorsement  "  for  my  use,"  or  "  for  collection  " 
— not  being  an  actual  transfer  of  the  amount — may  be  re- 
called at  pleasure.*  All  the  presumptions  are  against  restric- 
tions to  negotiable  paper,  and  unless  clearly  restrictive  the 
indorsements  will  be  held  otherwise.^  An  indorsement  "  for 
collection  "  made  by  the  payee  is  canceled  by  his  subsequent 
indorsement  to  another  indorsee  for  value.^ 

It  is  clear  that  a  parol  agreement  on  the  indorsement  of  a 
promissory  note  to  the  effect  that  the  transfer  should  be 
without  recourse  upon  the  indorser,  cannot  be  interposed  as 
a  defense  against  a  subsequent  bona  fide  holder  without 
notice.  Nor  would  the  case  be  varied  by  the  fact  that  it 
w^as  transferred  to  such  holder  by  mere  delivery,  and  that  he 
declared  on  the  prior  indorsement  as  though  made  to  him- 
self.^ 

§  700.  (6)  In  the  sixth 2)lace^  as  to  qualified  indorsements, 
or  indorsements  xuitliout  recourse. — An  indorsement  qualified 
by  the  words  "without  recourse,"  '^ sans  recours^^  or  "  at  the 
indorsee's  own  risk,"  renders  the  indorser  a  mere  assignor  of 
the  title  to  the  instrument,  and  relieves  him  of  all  responsi- 

'  Rock  Co.  Nat.  Bank  v.  Hollister,  21  Minn.  385. 

'■'  Holmes  V.  Hooper,  1  Bay,  100. 

'  Leavitt  v.  Putnam,  3  Corns.   494 ;    Story  on  Notes,  §  142 ;    Story  on  Bills, 

§§  19,  oG. 

*  Thomson  on  Bills  (Wilson's  ed.)  184;  Marius,  72. 

'  Potts  V.  Read,  G  Esp.  57  ;  Treuttel  v.  Barandon,  8  Taunt.  100. 

•  Atkins  V.  Cobb,  56  Ga.  86. 

'  Skinner  V.  Church,  36  Iowa,  91;  seeju^'a',  §  7l9. 


554       TRANSFER  OF  BILLS  AND  NOTES  BY  INDORSEMENT. 

bility  for  its  payment/  though  not  from  certain  liabilities 
which  have  been  ab*eady  enumerated.^  But  such  an  indorse- 
ment does  not  tlirow  any  suspicion  upon  the  character  of  the 
paper.  As  said  in  Virginia,^  Gi'eeu,  J. :  "  An  indorsement 
without  recourse  is  not  out  of  the  due  course  of  trade.  The 
security  continues  negotiable,  notwithstanding  such  an  in- 
dorsement. Nor  does  such  an  indorsement  indicate,  in  any 
case,  that  the  parties  to  it  are  conscious  of  any  defect  in  the 
security,  or  that  the  indorsee  does  not  take  it  on  the  credit 
of  the  other  party  or  parties  to  the  note.  On  the  contrary, 
he  takes  it  solely  on  their  credit,  and  the  indorser  only  shows 
thereby,  that  he  is  unwilling  to  make  himself  responsible  for 
the  payment." 

"I  transfer  all  my  right  and  title  to  the  within  note,  to  be 
enjoyed  in  the  same  manner  as  may  have  been  by  me,"  has 
been  held  in  effect  an  indorsement  without  recourse.*  The 
words  "  without  recourse,"  written  under  the  signature  of  one 
not  the  payee,  upon  the  back  of  a  note,  are  regarded  as  sur- 
plus and  ineffectual.^  In  New  York  where  the  firm  of  Bran- 
der  &  Hubbard  discontinued  business  save  the  adjustment 
and  liquidation  of  its  affairs,  and  was  succeeded  by  a  new  firm 
of  same  name  wherein  Hubbard  was  a  partner,  and  the  latter 
indorsed  a  note  on  account  of  the  old  firm  as  follows :  "  Bran- 
der  &  Hubbard,  old  fii'm  in  liquidation,"  it  was  insisted  that 
tbe  form  of  the  indorsement  showed  that  it  was  made  merely 
for  the  purpose  of  ti'ansferring  title,  and  precluded  the  idea 
of  any  assumption  of  liability  upon  the  indorsement.  But  it 
was  held  otherwise,  Grover,  J.,  saying:  "To  relieve  one  who 

'  Welch  V.  Lindo,  Crancli,  S.  C.  159;  Chitty  on  Bills  [*235],  268;  Byles  on 
Bills  [*147J,  206;  Wilson  v.  Codman's  Ex.  3  Cranch,  192;  Rice  v.  Stearns,  3  Mass. 
225;  Upham  v.  Prince,  12  Id.  13;  Richardson  v.  Lincoln,  5  Mete.  201;  Mott  v. 
Hicks,  1  Cow.  512;  Craft  v.  Fleming,  50  Penn.  St.  (10  Wright),  140;  Lawrence 
V.  Dobyn,  30  Mo.  190;  Fitchburg  Bank  v.  Greenwood,  2  Allen,  434;  Cady  v. 
Shepard,  12  Wis.  039;  Davenport  v.  Schram,  9  Wis.  119;  Lyon  t.  Ewing,  17 
Wis.  61 ;  Borden  v.  Clark,  20  Mich.  410. 

'  See  ante,  §  670. 

'  Lomax  v.  Picot,  2  Rand.  260;  see  also  Stevenson  v.  O'Ncil,  71  111.  314. 

*  Ilalicy  V.  Falconer,  32  Ala.  536. 

•  Ciiilds  V.  Wyman,  44  Me.  433;  Lowell  v.  Gage,  38  Me,  35. 


FORM  AND  VARIETIES  OF   INDORSEMENT.  Oi>5 

indorses  paper  from  llal)ility  as  such,  he  must  insert  in  the 
contract  itself  words  clearly  expressing  sucli  an  intention."  ^ 

§  701.  In  Iowa,  where  a  promissory  note  was  indorsed  by 
a  subsequent  holder,  as  follows :  "  I,  the  undersigned,  do 
agree  that  I  will  not  sell  or  dispose  of  a  note  given  by  E.  K. 
P."  (the  maker  of  the  note  in  question),  it  was  held,  that  such 
indorsement  did  not  destroy  the  negotiability  of  the  note, 
nor  render  it,  in  the  hands  of  a  holder  subsequently  acquiring 
it,  subject  to  defenses  existing  against  it,  of  which  he  had  no 
notice,  and  Cole,  J.,  said :  "  The  agreement  not  to  sell  or  dis- 
pose of  the  note  was  then  an  independent  agreement,  upon 
breach  of  which,  if  made  for  a  consideration,  the  obligor 
might  be  liable ;  but  it  could  not  have  the  effect  to  destroy 
th"e  negotial)ility  of  the  note."  ^ 

In  Texas,  this  case  occurred  :  The  executor  of  a  decedent, 
acting  in  his  fiduciary  capacity,  bought  out  the  interest  of 
the  widow  in  the  decedent's  estate,  and,  in  part  payment  for 
it,  indorsed  to  her  certain  overdue  notes  executed  by  third 
parties  to  the  decedent  in  his  lifetime.  The  indorsement  was 
in  blank,  and  was  signed  "  W.  W.,  executor  of  D.  W.,"  and 
it  was  made  in  pursuance  of  a  written  contract  between  the 
parties,  which  showed  that  the  widow  entirely  released  her 
husl)and's  estate,  and  did  not  stipulate  for  any  indorsement 
of  the  notes,  or  for  recourse  on  any  one  besides  the  mtd-:ers 
of  them.  Held^  that,  under  the  circumstances,  neither  the 
executor  individually,  nor  the  estate  he  represented  was 
liable  on  the  indorsement,  which  must  be  regarded  as  noth- 
ing more  than  a  mere  transfer  of  the  right  of  action  on  the 
notes.*^ 

§  701  a.  In  the  seventli ]^lace^  as  to  joint  indorsements. — If 
a  bill  or  note  be  made  payable  to  several  persons  not  part- 
ners, the  transfer  can  only  be  made  by  a  joint  indorsement 
of  all  of  them  ;  ^  and  as  Chitty  says,  "  If  a  bill  has  been  traus- 


'  Fassin  v.  Hubbard,  55  N.  Y.  470  (1874). 

"  Leland  v.  Parriott,  35  Iowa,  4.54,  '  Wade  v.  Wade,  3G  Tex.  529. 

♦  See  aiite,  §  684,  poi^t,  §  "04;  also  §  GG8;  Story  on  Bills,  §  197.     Edwards  on 
Bills.  354. 


55G       TRANSFER  OF  BILLS  AND  NOTES  BY   INDORSEMENT. 

ferred  to  several  persons  not  in  partnership,  the  rio;ht  to 
transfer  is  in  all  collectively,  and  not  in  any  one  individu- 
ally." ^  Where,  however,  one  of  two  or  more  joint  payees,  or 
transferrees  undertake  to  transfer  the  instrument,  the  extent 
of  the  transfer  will  depend  upon  the  nature  of  his  interest. 
Such  interest  w^hatever  it  is  passes  to  his  indorsee  or  assignee; 
but  nothing  beyond  that,  as  against  his  co-party,  unless  in- 
deed there  be  some  other  element  in  the  transaction  in  the 
nature  of  fraud,  agency,  or  other  circumstance,  modifying  the 
rights  of  the  parties.^  No  action  could  be  maintained  on  the 
indorsement  of  one  of  the  joint  parties,^  the  interest  passing 
thereby  being  equitable  merely. 

§  702.  Forms  of  indorsements. — The  following  are  sam- 
ples of  the  different  modes  or  forms  of  indorsements : 

1   Incloi'sement  in  full  by  payee  to  a  copartnership. 
''  Pay  Charles  Davis  d'  Co.,  or  order. 

"  Abraham  ColesJ^ 

2.  Absolute  indorsement  in  blank  by  indorsee  : 
"  Charles  Davis  dc  Co.'' 

3.  Indorsement  upon  a  condition  precedent : 

"  Pay   to  Edward  Francis,  or  order,  provided  he  arrives  at  twenty-one 
years  of  age. 

"  Abraham   Coles.'" 

4.  Indorsement  upon  a  condition  subsequent : 

"  Pay  George  Henry,  or  order,  unless  before  maturity  1  notify  you  to  the 
contrary. 


5.  Indorsement  by  an  agent : 

"  Per  procuration  Edward  Francis. 

or,— 

"  As  agent  for  Edward  Francis. 

6.  Restrictive  indorsement  : 

•'  Pay  to  Kenneth  Lampkin  only. 

or,— 

''  Pay  to  Kenneth  Lampkin  for  my  use. 


"  Edward  Francis.'' 


"  Isaac  Jacobs." 


"  Isaac  Jacobs' 


"  Isaac  Jacobs. 


"  Isaac  Jacobs." 


•■  Chitty  on  Bills  (13th  Am.  ed.)  [*20l],  233. 
''  Brown  v.  Dickinson,  27  Grat.  693,  Staples  J. 
'  Caverick  v.  Vickery,  2  Doug.  Go2. 


FORM  AND  VARIETIES  OF   INDORSEMENT.  557 

7.  Restrictive  indorsement  for  collection: 

"  Pay  to  Central  City  National  Bank  for  collection. 

"  Kenneth  Lampkin.'''' 

8.  Indorsement  without  recourse  :  * 
"  Moses  Newcomb, 

without  recourse.^'' 

or. — 

"  Moses  Newcomb,  with  intent  to  transfer  title  only,  and  not  to  incur  lia- 
bility as  indorserP 

9.  Indorsement  in  full,  with  direction  au  besoin  : 
"  Pay  to  Richard  Steele,  or  order. 

"  Oliver  Perry." 
"  Au  besoin, 
"No.  100  Wall  St.'' 

10.  Indorsement  waiving  protest : 

^'Return  without  protest,"  or,  "  waiving  protest" 

"  Thomas  Urquhart." 

§  703.  (8)  I?}  the  ei(/htA place,  as  to  successive  indorsements. 
— When  several  persons  indorse  a  bill  or  negotiable  note  in 
succession,  the  legal  effect  is  to  subject  them  as  to  each  other 
in  the  order  they  indorse.  The  indorsement  imports  a  several 
and  successive,  and  not  a  joint  obligation,  whether  the  in- 
dorsements be  made  for  accommodation  or  for  value  received, 
unless  there  be  an  agreement  aliunde  different  from  that 
evidenced  by  the  indorsements.  The  indorsers  for  accommo- 
dation may  make  an  agreement  to  be  jointly  and  equally, 
bound,  but  whoever  asserts  such  an  agreement  must  prove  it. 
In  cases,  therefore,  in  which  no  such  agreement  is  proved, 
the  indorsers  are  not  bound  to  contribution  amongst  them- 
selves, but  each  and  all  are  liable  to  those  who  succeed  them. 

This  doctrine  rests  upon  very  clear  and  satisfactory  prin- 
ciples. Each  indorser  places  his  name  upon  the  instrument, 
whether  for  accommodation  or  otherwise,  knowing  that  he 
renders  himself  conditionally  liable  to  every  subsequent  and 
successive  indorsee;  and  that  he  has  his  recourse  against 
every  antecedent  party,  for  the  whole  amount  which  he  may 
be  obliged  to  pay.  With  such  knowledge  of  his  liabilities 
and  his  remedies  he  voluntarily  assumes  his  relation  to  the 
instrument  with  others  who  assume  a  different  relation,  ac- 


558      TRANSFER  OF   BILLS  AND  NOTES  BY  INDORSEMENT. 

com})anIed  by  increased  or  diminished  risk  of  loss.  And 
contribution  does  not  arise  between  sucli  successive  indorsers 
by  operation  of  law,  but  only  when  established  by  special 
agreement.^  AVhere  tliere  are  two  accommodation  indorsers 
of  a  note,  and  the  maker  provides  the  second  indorser  with 
the  means  to  make  payment,  a  trust  is  created  in  favor  of  the 
first  indorser  as  well  as  the  holder  to  have  the  fund  so  ap- 
plied, and  the  fii'st  indorser  may  sue  to  enforce  it.^ 

§  704.  The  indorser  is  not  necessarily  bound  according 
to  the  actual  date  of  indorsation,  but  according  to  the  con- 
tract ;  and  if  it  appear  tliat  the  instrument  was  indorsed  by 
one  party  with  the  agreement  that  another  should  become 
prior  indorser,  tlie  latter  will  be  held  responsible  first  in 
point  of  contract  though  second  in  point  of  time.'"^ 

Where  a  note  is  indorsed  by  payee  and  by  a  third  party, 
the  legal  inference  is  that  the  payee  is«  prior  indorser,  but  it 
may  be  proved  otherwise  by  parol  evidence.^  And  if  there 
be  any  mistake  by  which  one  indorser  signs  before  another, 
the  true  intention  of  the  parties  may,  as  between  themselves, 
be  shown  by  parol  evidence,  and  corrected  in  equity ;  ^  or  in 

'  Hogue  V.  Davis,  8  Grat.  4;  Bank  U.  S.  v.  Beiine,  1  Grat.  265;  Farmers' 
'Bank  v.  Vanmeter,  4  Rand.  553;  Chalmers  v.  McMurdo,  5  Munf.  552;  McCurty  v. 
Roots,  21  How.  432;  Rey  v.  Simpson,  22  Id.  350;  McDonald  v.  Magrudcr,  3  Pet. 
470;  Glapp  v.  Rice,  13  Gray,  403;  Gore  v.  Wilson,  40  Ind.  200;  Ross  v.  Espy,  66 
Penn.  St.  481 ;  Shaw  v.  Knox,  98  Mass.  214 ;  Smith  v.  Merrill,  54  Me.  48 ;  Syme 
V.  Brown,  19  La.  Ann.  147  ;  McCune  v.  Belt,  45  Mo.  174;  Moody  v.  Findley,  43 
Ala.  167;  Woodward  v.  Severance,  7  Allen,  310  ;  Kirkner  v.  Conklin,  40  Conn. 
81  ;  Easterly  v.  Barber,  66  N.  Y.  433  ;  Coolidge  v,  Wiggin,  62  Maine,  508.  In 
Givens  v.  Merchants'  Nat.  Bank,  85  111,  443,  where  after  the  payee's  name  in- 
dorsed in  the  note,  there  were  the  names  of  two  other  parties  indorsed  in  blank, 
the  Court  said  that  this,  "instead  of  raising  the  presumption  that  the  undertak- 
ing was  joint,  authorizes  the  presumption  that  it  was  not  joint,  but  that  of  suc- 
cessive indorsers." 

=  Price  V.  Trusdell,  28  N.  G.  (Eq.)  20. 

'  Chalmers  v.  McMurdo,  5  Munf.  252;  Black  v.  Kirk,  07  Penn.  St.  380. 

*  Slagle  V.  Rust,  4  Grat.  274;  Caddy  v.  Sheppard,  12  Wis.  03!). 

'  Cabal  V.  Frierson,  3  Humph.  411;  Brockway  v.  Comparree,  11  Humph.  355. 
A  third  indorser  having  indorsed  a  note  on  the  faith  of  the  solvency  of  a  prior 
indorser,  and  on  a  renewal  of  the  note  the  order  of  the  indorsements  having 
been  changed  without  the  consent  of  this  third  indorser,  who  for  the  convcMiience 
of  renewing  the  note,  left  his  blank  indorsement  with  the  makers;  a  court  of 


FORMS  AND   VARIETIES  OF   INDORSEMENT.  559 

a  suit  against  the  indorser  wlio  appears  as  prior,  lie  may 
show  tliat  he  signed  above  tlie  second  indorser  unintention- 
ally, and  if  he  has  paid  part  of  the  amount  to  the  holder,  he 
may  recover  it  back  from  the  indorser,  apparently  second, 
but  really  prior.^ 

The  parties  will  not  be  regarded  as  successive  indorsers 
where  they  are  joint  payees  of  a  note,  and  themselves  in- 
dorse it.  In  such  a  case  it  matters  not  which  signs  first,  the 
note  being  payable  only  to  their  joint  order,  and  transferable 
only  by  their  joint  act,  they  will  be  considered  joint  in- 
dorsers.^ 

§  705.  (9)  In  the  ninth place^  as  to  irregular  indorsements. 
— There  are  some  cases  of  irregular  indorsements  that  call  for 
attention.  Tbus,  suppose  a  bill  be  indorsed  specially  to  A., 
and  then,  before  A.'s  indorsement,  there  appears  the  indorse- 
ment of  B.  In  such  a  case,  Alderson,  B.,  said :  "  The  indorse- 
ment only  operates  as  against  the  party  making  it,  and  then 
as  a  fresh  drawing.'"  ^  Upon  such  an  indorsement  of  a  note, 
the  party  cannot  be  sued  as  a  maker.  Littledale,  J.,  said,  in 
such  a  case:  "It  may  be  correct  to  say,  that  an  indorsement 
of  a  bill  is  in  the  nature  of  a  new  drawing.  But  supposing 
the  indorser  of  a  bill  to  be  strictly  in  the  situation  of  a 
drawer,  it  does  not  follow  that  the  indorser  of  a  note  is  a 
maker."  It  was  held,  therefore,  that  the  party  must  be  sued 
as  an  indorser ;  but  that  a  prior  party  could  not  be  sued  at 
all,  as  a  link  in  the  chain  of  title  was  lacking.* 

§  706.  In  the  United  States  Supreme  Court  it  has  been 
held  that  where  a  promissory  note  was  payable  to  the  order 
of  several  persons,  the  name  of  one  of  whom  was  inserted  by 
mistake^  or  inadvertently  left  on  when  the  note  was  indorsed 

equity  will  relieve  him  as  against  the  indorser  who  should  have  preceded  him. 
So  held  in  Single  v.  Rust,  4  Grat.  274;  Slagle  v.  Bank  of  Valley,  Id. 

'  Slack  V.  Kirk,  C7  Penu.  St.  380. 

'  Lane  v.  Stacy,  8  Allen,  41.  See  Culver  v.  Leovy,  19  La.  An.  202,  and  ante, 
§§  70,  684. 

'  Penny  v.  Inues,  1  Cromp.  Mces.  &  Ros.  430,  s.  c.  5  Tyr.  107;  sec  Birchanl 
V.  Bartlett,  14  Mass.  279. 

*  Gwinnell  v.  Herbert,  5  Ad.  &  El.  430  (31  E.  C.  L.  R.) 


5G0      TRANSFER  OF   BILLS  AND  NOTES  BY   INDORSEMENT. 

and  delivered  by  the  real  payees,  one  of  whom  was  also  the 
maker  of  the  note,  the  indorsee  had  a  right  to  recover  upon 
the  note,  although  the  names  of  all  the  payees  were  not  upon 
the  indorsement,  and  had  a  right  also  to  prove  the  facts  by 
evidence.^  In  Michigan,  where  G.  made  a  note  payable  to 
the  order  of  J.,  and  wliile  it  was  unindorsed  by  G.  procured 
M.  to  indorse  it,  agreeing  to  procure  the  indorsement  of  G. 
the  payee  before  negotiating  it ;  and  then  transferred  it  to 
the  plaintiff  without  procuring  J.'s  indorsement,  it  was  held 
that  M.  was  not  bound  as  indorser.^ 


SECTION  IV. 

WHETHER   OR   NOT   THE   PARTY   IS    INDORSER,    MAKER   OR    GUARANTOR- 

§  707.  There  is  no  doubt  that,  if  a  note  be  made  payable 
to  the  order  of  the  payee,  and  is  indorsed  by  him,  that  his 
liability  will  be  that  of  an  indorser,  and  not  that  of  a 
maker.*^  If  subsequent  to  his  name,  there  appears  the  name 
of  another  person  indorsed  upon  it,  such  person  cannot  be  re- 
garded in  any  other  light  than  as  an  indorser,  and  no  parol 
evidence  will  be  admissible,  as  against  a  bona  fide  holder 
without  notice,*to  show  that  he  intended  to  bind  himself  in 
a  different  character.  This  view  of  the  law  rests  upon  the 
fact  that  there  is  no  ambiguity  in  the  position  of  his  name, 
and  none  in  his  relation  to  subsequent  parties  to  the  instru- 
ment. Upon  its  face,  the  instrument  evidences  that  he  in- 
tended to  bind  himself  as  an  indorser,  for  it  purports  to  have 
been  regularly  transferred  to  him,  by  the  payee's  indorse- 

•  Pease  v,  D wight,  6  How.  190. 

-  Gibson  v.  Millor,  29  Mich.  355  (1874),  Graves,  C.  J.:  "In  receiving  it  as  it 
then  was,  and  without  indorsement  by  the  payee,  he  (the  holder)  accepted  paper 
which  he  was  bound  to  know  would  be  open  in  his  hands,  when  thus  irregularly 
taken,  to  any  defense  of  the  nature  of  that  made  here,  which  Miller  might  make 
to  it."  See  also  Morton  v.  Preston,  18  Mich.  60;  Lancaster  Nat.  Bank  v.  Taylor, 
100  Mass.  18;  Whistler  v.  Forstcr,  IS  C.  B.  (K  S.)  248;  1  American  Rep's  71. 

'  J'inley  v.  Green,  85  111.  535,  Breese,  J.:  "He  being  the  payee  of  the  note 
could  not  at  the  same  time  be  the  maker,  and  be  bound  by  a  promise  to  pay 
himself." 


WHETHER  PARTY  IS  INDORSER,  MAKER  OR  GUARANTOR.    5G1 

ment,  aiul  by  liim  transferred,  by  liis  own  indorsement,  to 
the  indorsee.  And  unless  he  has  indicated  an  intention  to 
become  liable  as  a  surety  or  guarantor,  by  some  expression 
to  that  effect,  he  will  very  clearly  be  bound  as  an  indorser, 
and  be  entitled  to  require  demand  and  notice  as  a  condition 
precedent  to  his  deteiminate  liability.^  And,  in  like  manner, 
if  the  note  be  payable  to  bearer  either  in  terms  or  becomes  so 
in  effect  by  being  made  payable  to  the  maker's  order,  and 
then  being  indorsed  by  him,  in  either  case  the  party  who 
places  his  name  on  the  back  of  it  will  be  deemed  an  indorser 
only.^  Such  a  case  as  this,  as  said  by  Bigelow,  J.,  in  Massa- 
chusetts,'^ in  a  case  where  the  note  was  payable  to  and  in- 
dorsed by  the  maker,  "  does  not  fall  within  that  anomalous 
class  of  cases  where  a  third  person,  neither  maker  nor  payee, 
puts  his  name  on  the  back  of  a  note  before  its  indorsement 
by  the  payee,  but  is  the  ordinary  case  of  an  indorsement  of  a 
note  payable  to  bearer,  the  effect  of  which  cannot  be  varied 
or  controlled  by  parol  proof."  And  so,  if  he  indorses  before 
the  payee,  but  the  payee  afterward  indorse  over  his  name, 
the  third  party  is  then  deemed  liable  as  an  indorser,  and  his 
liability  as  such  cannot  be  altered  by  parol  evidence.'* 

§  708.  In  New  York,  where  P.  made  a  liote  payable  to 
S.  or  bearer,  with  a  view  of  borrowing  money  from  him,  and 
before  delivery  it  was  indorsed  thus :  "  J.  I.  H.,  backer, 
Schoharie,"  it  was  held  that  J.  I.  H.  seemed  "  to  have  added 
the  word  '  backer'  for  the  purpose  of  declaring  still  more  ex- 
plicitly that  he  was  not  to  be  regarded  as  an  indorser."  ^ 
And  it  has  been  also  held,  in  the  same  State,  that  the  addi- 
tion of  the  words  "  surety  "  or  "  security,"  by  the  indorsers  of 
a  note,  to  their  names,  does  not  divest  them  of  their  character 
as  indorsers.     The  only  effect  is  to  give  them  the  privilege  of 

'  Roberts  v.  Masters,  40  Ind.  463;  Vore  v.  Hurst,  13  Ind.  551 ;  Dale  v.  Moffitt, 
22  Ind.  114;  Clapp  v.  Rice,  13  Gray,  403;  Moies  v.  Bird,  11  Mass.  436;  Howe  v. 
Morrill,  5  Cush.  80;  Rickey  v.  Dameron,  48  Mo.  Gl. 

^  Camden  v.  M'Koy,  3  Scam.  437.  '  Bigelow  v.  Colton,  13  Gray,  309. 

*  Clapp  V.  Rice,  13  Gray,  403;  Redfield  &  Bigelow's  Leading  Cases,  131. 

»  Seabury  v.  Hungerford,  2  Hill,  80  (1841),  Bronson,  J. 
Vol.  I.— 3G 


5G2       TRANSFER   OF   BILLS   AND   NOTES   BY    INDORSEMENT. 

sureties,  In  addition  to  their  riglits  as  indorsers.  As  indorsers 
they  couUl  not  be  made  liable  without  demand  and  notice  ; 
as  sureties  they  were  entitled  to  all  the  privileges  of  that 
character."  ^ 

§  709.  JJlietJier  or  7wt  one  not  'payee  writing  his  name 
on  ha cJc  of  paper  before  h>in  is  an  indorser. — When  a  note 
is  made  payable  to  the  order  of  the  payee,  and  the  name  of 
another  appears  indorsed  in  blank  upon  it,  and  was  then  in- 
dorsed before  the  note  was  delivered  to,  or  indorsed  by  the 
payee,  a  very  different  question,  and  one  upon  which  the 
authorities  are  very  much  at  issue,  arises.  In  such  cases  such 
person  does  not  appear  upon  the  face  of  the  paper  to  have 
held,  and  to  have  transfen-ed  the  title,  but  rather  to  have 
placed  his  name  upon  its  back  to  add  strength  and  credit  to 
it,  and  thus  render  it  more  easy  of  circulation  ;  and  the  in- 
quii-y  is  presented  whether  he  intended  to  bind  himself  for 
its  payment  as  a  joint  maker  or  surety,  as  a  guarantor,  or 
only  as  an  indorser,  whose  liability  can  only  be  fixed  by  due 
demand  and  notice. 

If  the  note  be  not  negotiable,  it  is  plain  that  such  party 
cannot  be  regarded  as  an  indorser,  for  the  simple  reason  that 
there  is  no  such  thing  as  an  ''  indorsement,"  in  its  strict  and 
proj)er  commercial  sense,  of  any  other  than  negotiable  paper.^ 

v:J  710.  When  the  note  is  negotiable  the  question  is  by  no 
means  capable  of  such  easy  and  satisfactory  solution,  l>ut 
whatever  diversities  of  interpretation  may  be  found  in  the 
authorities  on  the  subject,  they  very  generally  concur,  though 
not  v/itli  entire  unanimity,  that,  as  between  the  immediate 
paities,  the  interpretation  ought  to  be  in  every  case  suc-h  as 
will  carry  their  intention  into  eli\:!ct,  and  that  their  intention 
may  be  made  out  by  parol  proof  of  the  facts  and  circum- 

'  Bradford  v.  Corey.  5  Barb.  4G1  (1849).  To  same  effect,  see  Kamm  v.  Hol- 
land. 2  Oregon,  59  (1863);  see  on  this  subject  Chapter  XLI,  on  Principal  and 
Bui'ety.  Vol.  2. 

"  \V:it8on  V.  Hurt  0  Grat.  G44;  Hull  v.  Newcomb.  7  111  41G;  Griswold  v. 
Slocup.1,  10  Barb.  402;  Orrick  v.  Colston,  7  Grat.  189;  Commonwealth  v.  Powell, 
11  Grat.  826;  Compirree  v.  Brockway,  11  Humph.  358;  Fear  v.  Dunlap,  1 
Greene  (Iowa),  334;  Goimin  v.  Ketcluim,  33  Wis  427. 


WHETHER  PARTY  IS  INDORSER,  MAKER  OR  GUARANTOR.    ofJS 

stances  which  took  place  at  the  time  of  the  transaction.*  If 
the  person  who  places  his  name  on  the  back  of  the  note 
before  the  payee  intended  at  the  time  to  be  bound  to  the 
payee  only  as  a  guarantor  of  the  maker,  he  shall  not  he 
deemed  to  be  a  joint  promisor,  or  an  absolute  promisor  to  the 
payee.'^  If  he  intended  to  bind  himself  as  a  surety  or  joint 
maker  of  the  note,  he  will  not  be  permitted  to  claim  after- 
wai'd  that  he  was  only  a  guarantor.^  And  if  he  intended  to 
be  bound  only  as  an  indorser,  the  better  opinion  is  that  this 
also  may  be  shown  as  between  him  and  the  payee."* 

§  711.  The  ground  upon  which  parol  proof  of  intention 
and  agreement  in  such  cases  is  admitted  is,  that  the  position 
of  the  name  upon  the  paper  is  one  of  ambiguity  in  itself — 
that  it  is  not  a  complete  contract,  as  is  the  case  of  an  indorse- 
ment by  the  payee,  which  imports  a  distinct  and  certain  lia- 
bility; but  rather  evidence  of  authority  to  write  over  it  the 
contract  that  was  entered  into ;  and  that  parol  proof  merely 
discloses  and  brins^s  to  lisrht  the  terms  of  the  unwritten  con- 
tract  that  was  made  between  the  parties. 

§  712.  Whether  or  not  there  is  the  same  liberty  in  the 
use  of  parol  proof  when  the  note  has  been  passed  to  a  bona 
fide  holder  for  value,  and  without  notice,  is  a  question  upon 

>  Good  V.  Martin,  95  U.  S.  (5  Otto)  95  (1877) ;  Sylvester  v.  Downer,  20  Vt. 
355.(1848);  Quin  v.  Sterne,  26  Ga.  224  (1858)  ;  Chaddock  v.  Van  Ness.  3)  N.  J. 
Law,  571.  i/eW,  that  such  a  signature  impDrts  no  implied  or  commercial  con- 
tract whatever,  but  it  may  be  shown  by  parol  what  was  intended.  Jennings  v. 
Thomas,  13  Smedes  &  M.  Gl7;  C  >mparree  v.  Brockway,  11  Humph.  358;  Ives  v, 
Bosley,  35  Md.  202;  Nurre  v.  Chiitenden,  56  Ind.  465;  Iscr  v.  Cohen,  57  Tenn. 
421. 

"  Oamden  v.  McKoy,  3  Scam.  437  ("1842);  Seymour  v.  Farrell,  51  Mo.  95. 

'  Rev  V.  Simpson,  22  How.  341 ;  Walz  v.  S\\y\z\  37  Md.  404. 

In  Scotland,  if  one  not  payee  indorse  a  bill  in  his  own  name,  he  is  liable  as  a 
new  acceptor;  and  it  such  a  person  indorse  a  note,  he  is  liable  as  a  joint  m.iker. 
Thomson  on  Bills  (Wilson's  ed.)  174. 

*  Mammon  v.  Hartman,  51  Mo.  169.  Wagner,  J.  :  "  When  a  party  writes  his 
name  on  the  back  of  a  note,  ot  which  he  is  ne  tlier  payee  nor  indorsee,  in  the  ab- 
sence of  extrinsic  evidence,  he  is  to  i^e  treated  as  the  maker  thereof.  Hut  parol 
evidence  is  admissible  to  show  that  he  did  not  sign  as  maker,  but  as  indarser. 
Lewis  V.  Harvey,  18  Mo.  474;  Western  Boatmi-n's  Benevolent  Ass'n  v.  Wolll",  45 
Mo.  104;  Kuntz  v.  Tempel,  48  Mo.  71. 


5C4       TRANSFER   OF   BILLS   AND   NOTES   BY   INDORSEMENT. 

wLicli  the  authorities  are  by  no  means  so  uniform.  Some  of 
them  confine  parol  proof  to  cases  in  which  the  note  is  still 
in  the  hands  of  the  original  party  to  whom  it  was  first 
(leli,vereil  as  a  valid  instrument;^  but  others  declare  that  it 
is  equally  competent  in  a  suit  by  a  hona  fide  holder,  on  the 
ground  that  a  contract  is  ambiguous;  and  that  whenever 
a  written  contract  is  presented  for  construction,  and  its  terms 
are  ambiguous  or  indefinite,  it  is  always  allowable  to  weigh 
its  language  in  connection  with  the  surrounding  circum- 
stances, in  order  to  reach  the  true  intention  of  the  parties.^ 
In  a  recent  case  before  the  U.  S.  Supreme  Court,  where  the 
question  arose  between  a  hona  fide  indorsee  and  the  original 
})arty  so  signing  his  name,  the  Court,  while  recognizing 
"  irreconcilable  conflict "  of  the  authorities,  said  :  "  But  there 
is  one  principle  upon  the  subject  almost  universally  admitted 
by  them  all,  and  that  is,  that  the  interpretation  of  the  con- 
tract ought  in  every  case  to  be  such  as  w^ill  carry  into  efiect 
the  intention  of  the  parties,  and  in  most  cases  it  is  admitted 
that  proof  of  the  facts  and  circumstances  which  took  place 
at  the  time  of  the  transaction  are  admissible  to  aid  in  the 
interpretation  of  the  language  employed."  ^ 

§  713.  When  nothing  appears  but  the  instrument  itself, 
bearing  a  third  person's  name  before  the  payee's,  in  a  suit  by 
an  indorsee  of  the  payee,  the  question  next  arises,  what  is  to 
be  presumed  to  have  been  the  contract  and  liability  of  such 
person  ?  It  will  be  presumed,  in  the  first  place,  from  the 
fact  that  the  name  is  before  that  of  the  payee  in  order,  that 
it  was  placed  there  before  his  in  point  of  time,  and  was 
placed  upon  the  note  in  its  inception  with  a  view  to  strength- 
ening its  credit  with  the  payee,  and  inducing  him  to  take  it  ;* 


'Houston  V.  Brunei-,  39  Ind.  383;  Whitehouse  v.  Hansen,  42  N.  H.  18; 
Schneider  v.  Schiffman,  20  Mo.  571. 

="  Gre3nough  v.  Smead,  3  Ohio  St.  415.     See  Rey  v.  Simpson,  22  How.  841. 

^  Good  V.  Martin,  95  U.  S.  (5  Otto)  95  (1877.)  See  Cavazos  v.  Trcvino,  C 
Wall.  773 ;  Denton  v.  Peters,  5  Q.  B.  475. 

'  Union  Bank  v.  Willis,  8  Mete.  504  (1844);  Western  Boatmen's,  &c.  Ass'n  v. 
Wolff,  45  Mo.  104  (1869). 


M'HETIIER  TARTY  IS  INDORSER,  MAKER  OR  GUARANTOR.   505 

and  for  the  I'eason,  heretofore  stated,  that  such  third  person 
never  was  the  legal  holder  of  the  paper,  it  is  lield  l)y  a 
number  of  authorities  that  he  cannot  be  deemed  an  indorser, 
and  must  be  regarded  pfima  facie  as  a  joint  maker.^   ^  By 

'  Sylvester  v.  Downer,  20  Vt.  355  (1848);  Union  Bank  v.  Willis,  8  Mete.  504 
<1844);  Draper  v.  Weld,  13  Gray,  580;  Hawkes  v.  Phillips,  7  Gray,  284.  In  Na- 
tional Peml)crton  Bank,  v.  Longee,  108  Mass.  371,  the  note  ran  "we,  A.  &  B.,  as 
l)rincipal,  and  C.  «fc  P.  as  surety,  promise  to  pay  to  the  order  of  ourselves,  &c." 
It  was  signed  on  the  face  by  A.  &  B.  only,  and  was  indorsed  by  A.,  B.,  C.  &  D. 
Held,  that  D.'s  liability  was  that  of  surety  and  joint  promisor.  Perkins  v. 
Barstow,  9  R.  I.  507;  Baker  v.  Robinson,  6,i  K  C.  191;  Robinson  v.  Bartlett,  11 
Minn.  410;  Massey  v.  Turner,  2  Hous.  (Del.)  79;  Weatherwax  v.  Paine,  3  Mich. 
555;  Childs  v.  Wyman,  44  Me.  433;  Martin  v.  Boyd,  11  K  H.  885;  Carpenter  v. 
Oaks.  10  Rich.  (S.  C.)  17  ;  Peckham  v.  Gilman,7  Minn.  449;  McComb  v.  Thomp- 
son, 2  Id.  139;  Schley  V.  Merrit,  37  Md.  352;  Norris  v.  Despard,  18  Md.  491; 
Walz  V.  Alback,  37  Md.  404;  Ives  v.  Bosley,  35  Md.  262;  Houghton  v.  Ely,  26 
Wis.  181.  In  Commonwealth  v.  Powell,  11  Grat.  828,  Lee,  J.,  said  :  "  If  a  third 
party  put  his  name  in  blank  upon  the  back  of  a  negotiable  promissory  note  made 
payable  to  another  party,  and  to  which  he  is  a  stranger,  while  the  same  remains 
in  the  hands  of  the  maker  he  will  be  presumed,  in  the  absence  of  controlling 
proof  to  the  contrary,  to  have  intended  to  give  the  note  credit  and  currency; 
and  if  the  indorsement  was  at  the  time  of  the  making  of  the  note,  he  may  be 
treated  by  the  payee  as  an  original  promisor,  or  joint  maker  of  the  note.  If  the 
indorsement  were  after  the  date  of  the  note,  however  long,  the  payee  may  treat 
him  as  a  guarantor,  and  may  write  over  the  signature  a  guaranty  consistent  with 
the  nature  of  the  case.  And  the  fair  and  reasonable  if  not  necessary  inference 
from  cases  which  have  occurred  in  this  court  will  bring  us  to  the  same  result." 
See  Douglas  v.  Scott,  8  Leigh,  43;  Watson  v.  Hurt,  6  Grat.  6>i3;  Onick  v. 
Colston,  7  Grat.  189;  Woodward  v.  Foster,  18  Grat.  213;  Mammtm  v.  Hartman, 
51  Mo.  168;  Rotschild  v.  Grive,  31  Mich.  150  (1875);  McGee  v.  Connor,  1  Utah, 
92;  Woodman  v.  Bootliy,  66  Me.  389  (1876);  Gilpin  v.  Marley,  4  Houston,  284  ; 
Schneider  v.  Schiffman,  20  Mo.  571.  In  this  case  the  note  was  payable  to  P. 
Burg  or  order,  and  by  him  indorsed  to  plaintiff.  Schiffman's  name  appeared  on 
the  back  before  Burg's.  The  Court  s:;id :  "Negotiable  paper,  it  is  said,  carries 
its  own  history  upon  its  face,  so  that  nothing  can  be  alleged  against  it,  while  it 
continues  in  circulation  undishonored,  as  against  an  innocent  purchaser,  other 
than  what  is  there  apparent.  This  defendant  has  placed  his  name  upon  the  note 
in  such  position  as,  under  our  law,  to  impose  upon  himself  the  obligations  of  a 
maker,  and  he  is  irrevocably  bound  as  such  to  all  who  take  the  note  for  value 
and  without  notice,  upon  the  faith  of  what  they  find  upon  it,  although  it  is 
otherwise  with  reference  to  those  who  are  bound  by  the  real  transaction  between 
the  parties.  It  is  no  answer  to  this  to  say  that  it  was  the  duty  of  the  holder, 
when  he  saw  the  position  of  the  defendant's  name  upon  the  note,  to  have  in- 
quired into  the  matter,  and  satisfied  himself  before  he  took  it  whether  the  party 
was  to  be  considered  cbargeable  as  maker,  or  only  as  indorser.  The  policy  of 
the  law  in  reference  to  negotiable  paper  requires  that  it  shall  tell  its  own  story, 


5GG      TRANSFER  OF   BILLS   AND   NOTES   BY   INDORSEMENT. 

others  it  is  held  that  lie  \^  'prima  facie  a  surety  or  guarantor, 
using-  those  terms  as  the  equivalent  of  joint  raaker.^  Others 
consider  that  he  is  prima  facie  only  secondarily  lial)le  as  a 
guarantor;^  while  very  many  regard  him  as  assuming  the 
liability  of  a  second   indorser.^     The  lule  in  New  York  has 

and  have  effect  in  the  hands  of  innocent  holders  for  value  according  to  v?hat  ap- 
pears upon  it."  Semple  v.  Turner,  65  Mo.  690.  See  also  Seymour  v.  Parrel!,  51 
Mo.  95  ;  Good  v.  Martin,  2  Col.  T.  218,  approved  by  U.  S.  Supreme  Courts  in 
Good  V.  Martin,  P5  U.  S.  (5  Otto)  90  (18T7);  Cohn  v.  Dutten,  60  Mo.  297;  Martin 
V.  Cole,  3  Col.  139;  Best  v.  Hopple,  3  Col.  139. 

'  Cook  V.  Soutlnvick,  9  Tex.  615;  Carr  v.  Rowland,  14  Tex.  275;  McGuire 
V.  Bosworth,  1  La.  Ann.  248;  Killian  v.  As^hley,  24  Ark.  512;  Chandler  v.  West- 
fall,  30  Tex.  477. 

'  Camden  v.  McCoy,  3  Scam.  (111.)  437,  Douglas,  .J.  [Tn  California  he  is 
deemed  a  guarantor,  but  a  guarantor  is  entitled  to  prompt  notice.  Ford  v.  Hen- 
derson, 34  Cal.  673;  Geiger  v.  Clark,  13  Id.  579;  Riggs  v.  Waldo,  2  Id.  485.] 
Ciishnian  v.  Dement,  4  Scam.  497;  Carroll  v.  Weld,  13  111.  482;  Klein  v.  Currier, 
14  111.  237;  Webster  v.  Cobb,  17  111.  459;  White  v.  Weaver,  41  111.  409;  Lincoln 
V.  Hinsey,  51  111.  437:  Clark  v.  Merriam,  25  Conn.  576;  Dietrich  v.  Mitchell,  43 
111.  40;  Parkhurst  v.  Vail,  73  111.  343;  Glickauf  v.  Kaufman,  73  HI.  378;  Boyn- 
ton  V.  Pierce,  79  111.  145,  where  it  was  held  that  an  indorsement  in  blank  before 
the  payee  is  authority  to  the  holder  to  fill  up  the  blank  with  a  guaranty.  Stowell 
v.  Raymond,  S3  III.  120;  Fuller  v.  Scott,  8  Kansas,  32;  Van  Doren  v.  Tjader, 
1  Nev.  380;  Robinson  v.  Abell,  17  Ohio  St.  36;  Seymour  v.  Mickey,  15  Ohio  St- 
515. 

'Filbert  v.  Finkbeimer,  68  Penn.  St.  247  (1871),  Sharswood,  J. :  *•  Nobody 
ever  doubted  that  when  a  man  puts  his  name  on  the  back  of  negotiable  paper  be- 
fore the  payee  has  indorsed  it,  he  means  to  pledge,  in  some  shape,  his  responsi- 
bility for  the  payment  of  it;  Kyner  v.  Shower,  1  Har.  446.  This  court  finally 
settled,  that  in  the  absence  of  legal  evidence  of  any  different  contract,  he  assumes 
the  position  of  a  second  indorser;  and  that,  to  render  his  engagement  binding  as 
to  any  holder  of  the  note,  the  implied  condition  that  the  payee  shall  indorse  be- 
fore him  must  be  complied  with,  so  as  to  give  him  recourse  against  such  payee. 
Shafer  v.  The  Farmers'  and  Mechanics'  Bank,  9  P.  F.  Smith,  144.  Prior  to  Janu- 
ary 1st,  1850,  when  the  act  of  April  20th,  1855,  Pamph.  L.  308,  went  into  effect, 
it  could  have  been  shown  by  parol  evidence  that  the  intention  of  the  irregular 
indorser  was  to  guarantee  the  payment  of  the  note  to  the  payee.  Leech  v.  Hill, 
4  Watts,  448;  Taylor  v.  McCune,  1  Jones,  460.  The  act  of  1855,  by  providing 
that  no  action  shall  be  brought  '  whereby  to  charge  the  defendant  upon  any 
special  promise  to  answer  for  the  debt  or  default  of  another,  unless  the  agreement 
upon  which  such  action  shall  be  brought,  or  some  momorandum  or  note  thereof, 
shall  be  in  writing,  and  signed  by  the  party  to  be  charged  therewith,  or  some 
other  person  by  him  authorized,'  made  parol  evidence  of  such  a  guaranty  unlaw- 
ful. Jack  V.  Morrison,  12  Wright,  113.  But  sureh',  under  the  statute,  a  memo- 
randum in  writing  signed  by  the  party  is  admissible,  to  show  that  the  agreement 
upon  which  the  indorsement  was  made  was  a  guaranty  that  the  note  should  be 


WUETUER  PARTY  IS  INDORS'^R,  MAKER  OR  GUARANTOR.    5G7 

heen  thus  recently  stated  by  Clmrcb,  C.  J. :  "In  this  State  it 
has  been  repeatedly  held,  and  is  too  strongly  settled  by  au- 

paid  to  the  payee;  and  not  that  the  payee  should  stand  between  the  indorser  and 
ultimate  responsibility."     Fear  v.  Dunlap.  1  Greene  (Iowa),  335. 

In  New  York,  the  earlier  cases  of  Herrick  v.  Carman,  12  Johns,  159;  Camp- 
bell V.  Butler,  14  Johns.  349,  and  others  maintained  a  different  doctrine,  but  now 
in  that  State  such  a  party  is  regarded  as  an  indorser ;  and  in  Cottrell  v.  Conklin, 
4  Duer.  45,  Campbell,  J.,  said  that  they  "stood  upon  no  ground  of  principle,  and 
must  now  be  regarded  as  corrected  and  exploded."  To  the  same  effect,  sse  Spies 
V.  Gilmore,  1  Com.  :]31  ;  Ellis  v.  Brown,  6  Barb.  282;  Waterbury  v.  Sinclair,  20 
Barb.  455;  Phelps  v.  Vischer,  50  N.  Y.  G9;  Etlwards  on  Bills,  274. 

In  Hall  V.  Newcomb,  7  Hill,  41 G,  it  appeared  that  Peter  Farmer  made  a 
promissory  note  to  Samuel  Hall,  the  plaintiff,  payable  to  his  order,  on  demand, 
with  interest,  on  the  back  of  which  note  the  defendant  indorsed  his  name  in 
blank,  at  the  request  of  Farmer,  to  enable  him  to  get  the  money.  It  was  held 
that  he  was  to  be  regarded  as  an  indorser.  The  Court  said:  "The  question  for 
our  consideration  is,  whether  a  persou  who  puts  his  name  in  blank  upon  the  back 
of  a  negotiable  note,  which  is  drawn  in  a  form  that  he  may  be  charged  as  in- 
dorser in  the  usual  mode,  if  a  demand  is  made  and  notice  given  of  non-payment, 
can  be  charged  as  a  general  surety,  without  such  demand  and  notice,  by  parol 
evidence  morely. 

'•The  courts  have  gone  far  enough  in  repealing  the  statute  to  prevent  frauds 
and  perjuries,  by  introducing  parol  evidence  to  charge  a  mere  surety  for  the 
principal  debtor,  by  showing  that  his  written  agreement  means  something  else 
than  what,  upofl  its  face,  it  purports  to  mean.  And  I  fully  concur  in  the  opinion 
expressed  by  Mr.  Justice  Bronson,  in  Seabury  v.  Hungerford,  2  Hill,  80,  that 
where  a  man  writes  his  name  in  blank  upon  the  back  of  a  negotiable  promissory 
note,  he  only  agrees  that  he  will  pay  the  note  to  the  holder,  on  receiving  due  no- 
tice that  the  maker,  upon  demand  made  at  the  proper  time,  has  neglected  to  pay 
it.  Mere  proof  that  he  indorsed  the  paper,  to  enable  the  maker  to  raise  money 
on  it,  does  not  change  the  nature  of  his  legal  liability  as  indorser,  where  the  note 
is  in  the  hands  of  a  lona  Jide  holder  for  a  good  consideration.  Such  was  the 
whole  eflect  of  the  parol  proof  in  this  case.  And  for  the  courts  to  allow  proof  by 
parol  to  charge  a  mere  surety,  beyond  the  legal  effect  of  his  written  blank  in- 
dorsement on  such  paper,  would  bring  them  in  direct  conflict  with  the  provisions 
of  the  statute  of  frauds."     2  Rev.  Sts.  145,  §  2,  sub.  2. 

"  Here  there  wa?  no  difliculty  in  charging  Newcomb  as  indorser  of  the  note 
in  favor  of  Hall,  from  whom  it  appears  the  maker  intended  to  get  the  §250, 
to  enable  him  to  take  up  a  former  note.  It  does  not  appear  in  this  case 
whether  the  former  note  had  been  protested,  so  as  to  charge  Newcomb  as  in- 
dorser or  not,  or  who  was  the  holder  of  that  note.  All  that  appeisrs  is.  that 
Newcomb  knew  that  Hall  would  lend  Farmer  the  $250,  to  enable  him  to  take  it 
up,  and  that  Newcomb  indorsed  this  note  for  Farmer  as  a  mere  accommodation 
indorser,  when  the  name  of  Hall,  to  whose  order  the  note  was  made  payable,  was 
not  indorsed  thereon.  Where  a  note  is  made  payable  to  an  individual  or  his 
order,  and  is  indorst'd  by  him  in  blank,  and  in  that  situation  is  p'-esented  to  an- 
other person  for  his  accommodation  indorsement,  who  indorses  it  accordingly, 


5G8      TRANSFER   OF   BILLS   AND   NOTES   BY   INDORSEMENT. 

thority  to  be  disturbed,  that  a  person  making  such  an  indorse- 
ment is  presumed  to  have  intended  to  become  liable  as  second 
indorser,  and  that  on  the  face  of  the  paper  without  explana- 
tion he  is  to  be  regarded  as  second  indorser,  and  of  course 
not  liable  upon  the  note  to  the  payee,  who  is  supposed  to  be 
the  first  indorser.  As  the  paper  itself  furnishes  oxAj  jjvima 
facie  evidence  of  this  intention,  it  is  competent  to  rebut  the 
presumption  by  parol  proof  that  the  indorsement  was  made 
to  give  the  maker  credit  with  the  payee.  Such  among  others 
was  the  case  of  Moore  v.  Cross,  19  N.  Y.  227,  where  the  in- 
dorsement was  made  to  enable  the  maker  to  purchase  coal  of 
.the  payee ;  and  it  was  held  that  the  person  making  it  was 
liable  as  first  indorser,  and  that  the  payee  could  maintain  an 
action  against  him  upon  the  note,  or  if  the  payee  transferred 
it,  he  might  indorse  it  without  recourse."  ^ 

the  legal  effect  of  his  indorsement  is  to  make  him  liable  in  the  character  of 
second  indorser  merely;  and  he  can,  in  no  event,  be  made  legally  liable  to  the 
first  indorser.  And  if  the  maker,  or  the  first  indorser,  or  any  other  person  into 
whose  hands  the  note  might  subsequently  come,  should,  witiiout  the  consent  of 
the  second  indorser,  fill  up  the  first  indorsement  specially,  without  recourse,  to 
such  first  indorser,  so  as  to  deprive  the  second  indorser  of  his  remedy  over,  in 
case  he  should  be  compelled  to  pay  the  note,  it  would  be  a  gross  fraud  upon 
him,  if  not  a  forgery.  But  when  such  a  note  is  presented  to  the  accommodation 
indorser,  and  is  indorsed  by  him  without  having  been  previously  indorsed  by 
the  person  to  whose  order  the  same  is  made  payable,  the  latter  may,  at  the  time 
he  puts  his  indorsement  upon  it,  indorse  it  specially,  without  recourse,  to  liim- 
self,  so  as  to  leave  the  second  indorser  liable  to  any  person  into  whose  hands  it 
may  subsequently  come  for  a  good  consideration,  and  without  any  remedy  over 
against  the  first  indorser.  Or,  if  the  object  of  the  second  indorser  was  to  enable 
the  drawer,  as  in  this  case,  to  obtain  money  from  the  payee  of  the  note,  upon  the 
credit  of  such  accommodation  indorser,  he  may  indorse  it  in  the  same  way,  with- 
out recourse,  and  by  such  indorsement  may  either  make  it  payable  to  the  second 
indorser  or  to  the  bearer.  And  such  original  payee  may  then,  as  the  legal 
holder  and  owner  of  the  note,  recover  thereon  against  such  second  indorser, 
upon  a  declaration  stating  such  special  indorsement  by  him,  and  subsequent  in- 
dorsement of  the  note  to  him  by  the  second  indorser.  Or  he  may  recover  on 
tlie  common  money  counts,  under  the  statute',"  by  serving  a  copy  of  the  note 
and  of  the  indorsements  so  made  thereon,  with  his  declaration.  But  as  the 
second  indorser,  if  he  has  not  waived  notice  of  the  demand  of,  and  non-payment 
by,  the  maker,  c-uinot  be  made  liable  upon  his  indorsement,  without  proof  of 
such  demand  and  notice,  the  plaintiflF,  at  the  trial,  must  prove  the  same,  or 
he  cannot  recover."  See  Woodrufl'  v.  Leonard,  1  Hun,  633  (8  N.  Y.  S.  C.  R.) 
69;  Brinkloy  v.  Boyd,  9  Heisk.  149. 

'  Coulter  V.   Richmond,   59  N.  Y.  479  (1874);  Phelps  v.  Vischer,  50  N.  Y.  Tl 


WHETHER  PARTY  IS  INDORSER,  MAKER  OR  GUARANTOR.   509 

§  714.  It  would  seem  to  lis  that  such  a  party  ought  to 
be  regarded  as  a  iirst  indorser.  If  he  intended  to  be  a 
second  indorser,  lie  shouhl  liave  retrained  IVom  putting  his 
name  on  the  note  until  it  was  first  indorsed  by  the  payee. 
By  placing  it  first  he  enables  the  payee  to  place  his  own 
afterward  ;  and  iwima  fade  the  facts  would  seem  to  in- 
dicate such  intention.  There  is  nothing  in  the  objection  that 
there  is  no  title  in  him  to  indorse  away.  Prior  parties  could 
not  be  sued  without  the  payee's  indorsement ;  but  he  being 
an  indorser  can  be  sued  by  any  one  deriving  title  under  him. 
In  tact,  his  position  seems  to  render  his  liability  strictly 
aualofjous  to  that  of  the  drawer  of  a  bill  upon  the  maker  in 
favor  of  the  payee  ;  and  so  to  regard  him  simplifies,  as  it 
seems  to  us,  a  question  which,  unless  such  analogy  be  fol- 
lowed, is  exceedingly  complicated  and  difficult.^  The  Su- 
preme Court  of  the  United  States  has  recently  held  that 
such  party  is  presumably  bound  as  a  joint  maker.^ 

§  715.  What  parol  evidence  determines  the  liability  of 
the  person  signing  before  the  payee  is  also  a  matter  upon 
which  opinion  is  diverse.  Many  authorities  take  the  ground 
that  when  it  appears  that  the  note  was  intended  for  the 
payee,  or  that  the  name  was  placed  upon  the  back  of  the 
note  before  its  delivery  to  the  payee,  that  circumstance  fixes 
the  liability  contracted  as  that  of  joint  maker,^  and  excludes 

(1872).  See  Paine  v.  Noelke,  53  Howard  Pr.  R.  273.  In  Nurre  v.  Chittenden, 
56  Ind.  46.1,  it  is  said:  "By  placing  his  name  upon  the  back  of  the  note,  Nurr^ 
became  liable  as  indorser,  and  nothing  more."  See  al::0  Bronson  v.  Alexander, 
43  Ind.  244;  Roberts  v.  Masters.  4  Ind.  460. 

'  See  Penny  V.  Innes.  1  Cromp.  M.  &  R.  489;  Gwiunell  v.  Herbert,  5  Ad. 
&E1.  430  (31  E.  C.  L.  R.) 

'  Good  V.  Martin,  95  U.  S.  (5  Otto)  92  (1877.) 

'  Good  V.  Martin,  95  U.  8.  (5  Otto)  94  (1877);  Way  v.  Biittcrworth,  108  Mass. 
512  (1871).  Ames,  J.,  said:  "  It-"  A.  F.  Butterworth  signed  his  name  upon  the 
back  of  the  noce  at  the  time  -when  it  was  made,  or  at  any  time  before  it  was 
delivered  as  a  valid  and  binding  contract  to  Manuel,  he  must  be  considered 
as  an  original  promisor,  and  parol  evidence  would  not  be  admissible  to  show 
that  such  was  not  his  real  contract.  Union  Bank  v.  Willis,  8  Mete.  504;  Brown 
T.  Butler,  99  Mass.  179.  In  favor  of  a  'bona  fide  holder,  it  is  presumed  that  the 
promise  of  such  an  indorser  was  made  at  the  same  time  with  the  note.     This, 


570       TRANSFER   OF   BILLS   AND   NOTES   BY   INDORSEMENT. 

further  inquiry.  But  this  does  not  seem  to  us  sufficient.^ 
Others  regard  that  circumstance  as  only  determining  that  he 
cannot  be  held  regarded  as  an  indorser,  because  he  could  not 
have  had  title  to  the  note  as  indorsee,  and  as  leaving  it  open 
for  further  inquiry  whether  he  intended  to  be  a  joint  maker 
or  a  guarantor.^  In  some  cases  it  is  held  that  he  will  be 
presumed  to  have  signed  for  the  payee's  accommodation.^ 
In  Kentucky  it  has  been  held  that  proof  of  intention  is  con- 
fined to  the  question  whether  the  party  designed  to  be  guar- 
antor or  indorser.* 

Others  consider  that  if  the  note  was  not  intended  for  the 
payee,  that  then  such  party  shall  be  regarded  as  an  indorser.^ 

If  the  name  were  signed  subsequent  to  the  making  of 
the  note,  and  as  an  independent  transaction,  the  signer,  it  has 
been  held,  is  a  guarantor.''     And  this  is  the  settled  doctrine 

however,  is  not  a  conclusive  presumption.  This  defendant  would  have  a 
right  to  show  that  the  fact  was  otherwise,  and  that  his  contract  was  not  made 
until  after  the  note  had  taken  effect  as  a  binding  contract;  and  if  he  should 
Bucceed  in  proving  it  to  be  so,  he  might  either  not  be  chargeable  at  all,  or 
chargeable  as  surety  or  guarantor,  according  to  the  facts  proved.  Wright  v. 
Morse,  9  Gray,  337.  If  he  placed  his  name  in  blank  upon  the  back  of  the 
note  after  it  was  given,  he  could  not  be  held  as  an  original  promisor.  Me- 
corney  v.  Stanley,  8  Cush.  85 ;  Courtney  v.  Doyle,  10  Allen,  122.  Upon  the  re- 
port, we  cannot  say  that  there  was  no  evidence  to  rebut  the  presumption  tiiat  his 
name  was  placed  there  as  a  part  of  the  original  transaction.  It  was  wholly  a 
question  of  fact,  to  be  decided  by  the  jury.  It  was  therefore  a  mistake  on  the 
part  of  the  court  to  rule  that,  as  a  matter  of  law,  the  defendant  was  liable  as 
a  joint  promisor,  and  that  the  plaintiff  was  entitled  to  a  verdict  on  that  ground 
against  this  defendant.  Rey  v.  Simson,  23  How.  341.  Under  the  declaration, 
there  is  no  occasion  to  consider  whether  he  could  be  held  lial)le  as  a  guarantor." 
Essex  Co.  V.  Edmunds,  12  Gray,  273;  Bigelow  v.  Colton,  13  Gray,  309;  Pearson 
v.  Stoddard,  9  Gray,  199;  Lake  v.  Stetson,  13  Gray,  310  ;  Good  v.  Martin,  1  Col. 
1G5;  Chaddock  v.  Van  Ness,  35  K  J.  L.  R.  518. 

'  Price  V.  Lavender,  38  Ala.  390;  Hall  v.  Newcomb,  7  Hill  416;  Schneider 
v.  Schiffman,  20  Mo.  571 ;  Irish  v.  Cutter,  31  Me.  536. 

'■'  Greenough  v.  Smead,  3  Ohio  St.  415  (1854). 

'  Barto  V.  Schenck,  4  Casey,  447;  SchoUeubcrger  v.  Nehf,  4  Casey,  189. 

*  Kellogg  v.  Dunn,  2  Mete.  (Ky.)  215. 
'  Greenough  v.  Smead,  3  Ohio  St.  415. 

•  Good  V.  Martin,  95  U.  S.  (5  Otto)  95  (1877);  Benthall  v.  Judkins,  13  Mete. 
265;  Irish  v.  Cutter,  31  Me.  536.  In  Rey  v.  Simpson,  22  How.  241,  the  U.  S. 
Supreme  Court  said:  "When  a  promissory  note,  made  payable  to  a  particular 
person  or  order,  as  in  this  case,  is  first  indorsed  by  a  third  person,  such  third 


WHETHER  PARTY  IS  INDORSER,  MAKER  OR  GUARANTOR.    571 

of  the  U.  S.  Supreme  Court;  but  with  the  qualification  that 
if  the  note  were  intended  for  discount,  and  he  put  his  name 
on  the  l)aclv  of  it  with  the  understanding  of  ail  the  parties 
that  his  indorsement  would  be  inoperative  until  it  was  in- 
dorsed by  the  payee,  he  wouhl  then  be  liable  only  as  a 
second  indorser  in  the  commei'cial  sense,  and  as  such  would 
clearly  be  entitled  to  the  privileges  which  belong  to  such  in- 
dorsers. 

§  710.  AVheu  the  note  is  sued,  upon  by  the  payee  it  is 
held  that  the  idea  of  the  party  before  him  being  bound  as  an 
indorser  is  excluded.^  But  this  doctrine  does  not  seem  to  us 
correct.  The  indorsement,  it  is  true,  is  an  irregular  one;  but 
it  is  quite  similar  to  a  bill  drawn  by  the  indorser  on  the 
maker,  and  to  follow  that  analogy  in  all  regards  seems  to  us 
the  simplest  and  most  reasonable  solution  of  the  question. 
And  there  are  a  number  of  cases  which  regard  such  a  party's 
liability  Vi^  i^rima  facie  that  of  an  indorser.^  Where  a  note 
is  payable  to  the  maker's  own  order,  it  can  have  no  validity 
until  it  is  indorsed  by  him ;  and  in  such  a  case  the  party 
sio-ninof  his  name  on  the  note  while  it  is  unindorsed  by  the 

person  is  held  to  be  an  original  promisor,  guarantor  or  indorsor,  according  to 
the  nature  of  the  transaction,  and  the  understanding  of  the  parties  at  the  time 
the  transaction  took  place. 

"  I.  If  he  put  his  name  at  the  back  of  the  note  at  the  time  it  was  made,  as 
surety  for  the  maker  and  for  his  accommodation,  to  give  him  credit  with  the 
pa3-ee,  or  if  he  participated  in  the  consideration  for  which  the  note  was  given, 
he  must  be  considered  as  a  joint  maker  of  the  note. 

'•  II.  On  the  other  hand,  if  his  indorsement  was  subsequent  to  the  making  of 
the  note,  and  he  put  his  name  there  at  the  request  of  the  maker,  pursuant  to  a 
contract  with  the  payee  for  further  indulgence  or  forbearance,  he  can  only  be 
held  as  a  guarantor. 

"  III.  But  if  the  note  was  intended  for  discount,  and  he  put  his  name  on  the 
back  of  it  with  the  understanding  of  all  the  parties  that  his  indorsement  would 
be  inoperative  until  it  was  indorsed  by  the  payee,  he  would  then  be  liable  only 
as  a  second  indorser  in  the  commercial  sense,  and  as  such  would  be  clearly  en- 
titled to  the  privileges  which  belong  to  such  indorsers." 

'  Quin  V.  Sterne,  2G  Ga  223;  Brinkley  v.  Boyd,  9  Ileisk.  140. 

=■  Price  V.  Lavender,  S8  Ala.  390  (1882);  Wells  v.  Jackson,  G  Blackf.  43;  Vore 
V.  Hurst,  13  Ind.  554;    Sill  v.  Leslie,  16  Ind.  236;  Dale  v.  Mofiitt,  22  Ind.  114 
Roberts  v.  Masters,  40    Ind.  462;    Comparree  v.   Brockway,  11    Humph.  358 
Clouston  V.  Barbiere,  4  Snced,   338;    Jennings  v.  Thomas,  13  Smedes  &  M.  617 
Kamm  v.  Holland,  2  Oreg.  59. 


672      TRANSFER  OF   BILLS  AND   NOTES   BY   INDORSEMENT. 

payee  is  presumed  to  contemplate  that  the  payee  is  to  sigu 
before  him,  and  that  when  the  note  takes  effect  he  will,  he 
himself  will  appear  as  second  indorser.  All  persons  taking 
such  a  note  are  apprised  of  the  apparent  obligations  of  the 
parties,  and  if  they  rely  on  any  othei*,  they  must  ascertain 
and  prove  them.^ 

If  any  person  whose  name  is  upon  a  negotiable  instru- 
ment describes  himself  as  surety,  guarantor  or  indorser,  he 
will  thus  notify  all  persons  who  may  come  into  possession  of 
it,  of  the  character  in  which  he  binds  himself,  and  as  it  is  a 
written  contract,  no  parol  evidence  will  be  permitted  to 
qualify  or  vary  it.^ 

If  a  note  in  the  maker's  hands  payable  to  his  own  order 
be  indorsed  for  his  accommodation,  and  he  substitute  the 
indorser's  name  as  payee,  it  is  a  material  alteration.^ 

SECTION  V. 

HOW    FAK    Px\ROL    EVIDENCE    IS   APPLICABLE   TO   ASCEKTAINED 
INDORSEMENTS. 

§  717.  It  is  a  general  principle  of  law  that  parol  evidence 
is  inadmissible  to  contradict  or  vary  the  terms  of  a  valid 
written  contract,^  but  while  it  is  conceded  on  all  sides  to  be 
applicable  to  all  contracts  written  out  in  full,  it  has  been  con- 
sidered by  some  authorities  not  to  extend  to  those  which  are 
raised  from  implication  by  operation  of  law — such  as  indorse- 
ments in  blank.''     And  this  latter  view  has  been  adopted  by 

'  Kayser  v.  Hull,  85  111.  513;  Blatchford  v.  Milliken,  35  111.  434. 

^  Tinker  v.  McCauloy,  3  Mich.  188,  overruling  Iliggins  v.  Watson,  1  Mich. 
428;  Whitehouse  v.  Hanson,  42  N.  H.  9. 

'  Stoddard  v.  Penniman,  108  Mass.  36G. 

*  Grcenleaf  on  Evidence,  §§  277,  281,  282. 

'  Ross  V.  Espy,  GO  Penn.  St.  487,  Agnew,  J. :  "  The  contract  of  indorsement 
is  one  implied  by  law  for  the  blank  indorsement,  and  can  be  qualified  by  express 
proof  of  a  ditlerent  agreement  between  the  parties,  and  is  not  subject  to  the  rule 
which  excludes  proof  to  alter  or  vary  the  terms  of  an  express  agreement."  Sus- 
quehanna Bank  v.  Evans,  4  Wash.  C.  C.  480;  Johnson  v.  Martinus,  4  Halst.  144 
(but  see  Chaddock  v.  Van  Ness,  35  N.  J.  L.  R.  521 ;  Davis  v.  Morgan,  64  N.  C. 
8S1 ;  2  Parsons  N.  &  B.  519. 


now   FAR   PAROL   EVIDENCE   APPLICABLE.  57.5 

Byles,  in  his  treatise  on  l>ills,  upon  tlie  authority  of  an 
English  case,  which  does  not  fully  bear  out  his  interpreta- 
tion of  it.^  It  is  true  that  there  are  some  ambicfuous 
positions  in  whicli  parties'  names  appear  on  the  back  of 
negotiable  instruments,  which  justify  the  introduction  of 
parol  evidence  to  ascertain  whether  or  not  they  are  indorsers. 
But  when  it  appears  from  an  inspection  of  the  paper  that 
the  party  is  an  indorser,  there  seems  to  us  no  just  ground  for 
the  distinction  taken  between  the  implied  contract  arising 
from  his  mere  name  thereon  written,  and  contracts  written 
out  in  extenso.  The  indorsement  seldom  consists  of  any- 
thino^  more  than  the  indorser's  sisrnature ;  but  if  the  ao^ree- 
ment  imported  by  that  signature  were  written  over  it  in  full, 
the  undertaking  of  the  indorser  would  not  be  more  clearly 
defined  than  it  is  by  the  signature  itself  Its  presence  and 
position  upon  the  instrument  are  as  plain  a  manifestation  of 
the  intention  of  the  party  as  if  it  were  set  forth  in  express 
words,  and  parol  evidence  should  not  be  admitted  to  vary  or 
contradict  it. 

§  718.  For,  in  fact,  though,  there  be  nothing  but  the  in- 
dorser's signature,  the  indorser's  contract  is  as  fully  expressed 
as  that  of  the  drawer  of  a  bill  payable  to  bearer.  He  is  a 
new  drawer  on  the  drawee,  if  it  be  a  bill ;  a  drawer  on  the 
maker  if  it  be  a  note ;  and  the  instrument  itself,  with  his 

'  Pike  V.  Street,  1  Mood.  &  Malk.  226  (22  E.  C.  L.  R.)  In  Byles  on  Bills 
(Sharswood's  ed.)  [*147J,  207,  it  is  said:  "Tlie  contract  between  indorser  and 
indorsee  does  not  consist  exclusively  of  the  writing  popularly  called  an  indorse- 
ment. The  contract  consists  partly  of  the  written  indorsement,  partly  of  the 
delivery  of  the  bill  to  the  indorsee,  and  may  also  consist  partly  of  the  mutual 
understanding  and  intention  with  which  (he  delivery  was  made  by  the  indorser, 
and  received  by  the  indorsee.  That  intention  may  be  collected  from  the  words 
of  the  parties  to  the  contract,  either  spoken  or  written,  from  the  usage  of  the 
place,  or  of  the  trade  from  the  course  of  dealing  between  the  parties  or  from 
their  relative  situation."  Kidson  v.  Dilworth,  5  Price,  564;  Castrique  v.  Bat- 
tigieg.  10  Moore,  P.  C.  C.  94.  See  Bruce  v.  Wright,  3  Hun,  548  (10  N.  Y.  S.  C. 
R.),  where  it  is  held  that  an  agreement  of  an  indorsee  not  to  sue  his  indorser  is 
admissible  in  evidence,  and  is  a  good  defense,  and  that  the  contract  between 
indorser  and  indorsee  consists  partly  in  the  written  indorsement,  partly  in  the 
delivery  of  the  paper  to  the  indorsee,  and  partly  of  the  actual  understanding  and 
intention  with  which  delivery  was  made. 


571      TRANSFER  OF   BILLS  AND  NOTES  BY  INDORSEMENT. 

name  sio"ned  as  indorser,  constitutes  Lis  written  contract, 
from  which  he  can  only  be  absolved  by  failure  of  demand  or 
notice^  or  other  delinquency  of  the  holder.  The  following 
C^eneral  view  may,  therefore,  be  stated,  to  wit :  that  in  an 
action  by  immediate  indorsee  against  an  indorser,  no  evidence 
is  admissible  that  would  not  be  admissible  in  a  suit  by  a  party 
in  privity  with  the  drawer  against  him.  We  have  never 
seen  this  rule' laid  down  in  these  words,  and  the  cases  ex- 
hibit a  painful  contrariety  of  opinion.  But  it  goes  tow^ard 
reconciling  many  which  have  been  deemed  at  variance,  and 
embodies  the  true  principle,  as  we  conceive,  of  the  subject. 
Many  cases  speak  of  an  indorsement  in  blank  as  only  an 
implied  contract.  This  misconception  often  gives  rise  to 
error.  It  is  ex})ressed  in  the  body  of  the  instrument,  and  in 
the  case  of  a  bill  the  only  difference  between  drawer  and  in- 
dorser, as  a  general  rule,  is  that  the  drawer  is  an  originating 
drawer,  signing  usually  on  the  face,  and  the  indorser,  a  trans- 
ferring drawer,  signing  on  the  back. 

§  719.  Accordingly,  the  indorser  cannot  show  by  parol 
evidence  against  his  indorsee  that  it  was  agreed  that  he 
should  not  be  liable,  and  that  his  indorsement  was  "  without 
recourst^ "  on  him.^  If  so  intended,  it  should  be  so  expressed, 
and  a  drawer  might  as  well  offer  evidence  that  the  holder 
ao-reed  to  look  only  to  the  drawee.  Nor  could  he  show  that 
his  liability,  according  to  agreement,  was  to  be  that  ot  a  gua- 


'  Brown  v.  Spofford,  95  U.  S.  (.■)  Otto),  483  (1877);  Eaton  v.  Dennis,  42  Wis. 
56;  Eaton  v  McMiihon.  42  Wis.  487  (disapproving  obiter  dictum  in  Merdock  t. 
Aradt,  I  Pin.  70);  DoolitUe  v.  Ferry,  20  Kan.;  Dale  v.  Gear,  38  Conn.  15  (1872), 
8.  c.  39  Conn.  89;  Law  Reg.  Jan.  1873,  p.  14  (Vol.  12,  new  series,  No.  1),  explain- 
inir  and  limiting  Downer  v.  Clieeselirough,  30  Conn.  39;  Woodward  v.  Foster,  18 
Gi^at.  20-);  Lee  v.  Pile,  37  Ind.  107;  Campbell  v.  Robins,  29  Ind.  271  (1868); 
Wilson  V.  Black,  0  Blackf.  509;  Odam  v.  Beard,  1  Ibid.  191;  Crocker  v.  Qet- 
chell,  23  Me.  392;  Barry  v.  Morse,  3  N.  H.  132;  Bank  of  Albion  v.  Smith.  27 
Barb.  489;  Fuller  v.  McDonald,  8  Greenl.  213;  Iloare  v.  Graham,  3  Camp.  57; 
Bank  U.  S.  v.  Dunn,  6  \\i.  51,  McLean,  J.  in  Brown  v.  Spofford,  95  U.  S.  (5 
Otto).  481  (lb77),  the  U.  S.  Supreme  Court  said  per  Clifford,  J.  Contra,  Menden- 
hall  V.  Da\i3,  72  N.  C.  ITjO.  In  Skinner  v.  Cliurch,  ;5G  Iowa,  91,  held  such  evi- 
dence is  admissible  between  immediate  parties,  but  not  others.     See  ante,  §  699. 


UOW   FAR  PAROL   EVIDENCE   APPLICABLE.  575 

rantor/  or  a  surety,^  or  a  niaker,'^  or  that  his  signatiu'c  was 
written  untler  that  of  the  payee,  merely  in  order  to  identity 
him;*  nor  that  it  was  stipulated  that  he  was  to  })e  liable 
only  wlien  certain  estates  were  sold ;  ^  nor  that  the  paper 
was  only  to  be  negotiated  at  a  certain  bank  ;  ^  nor  that  it  was 
to  be  renewed  for  two  months;^  nor  that  the  liability  was 
otherwise  conditional  or  different  from  w^hat  the  indorsement 
imported. 

It  has  also  been  held  that  it  cannot  be  shown  that  the 
indorser  agreed  at  the  time  of  indorsement  to  be  absolutely 
liable  without  demamd  and  notice;^  but  we  concur  wiih  the 
authorities  which  sustain  his  freedom  to  waive  his  right  to 
demand  and  notice  at  any  time.^  He  merely  relieves  the  in- 
dorsee of  the  ordinary  duties  of  diligence.  A  written  agree- 
ment making  the  indorsement  "  without  recourse  "  might  l)e 
shown,  as  between  the  parties  ;^°  and  also  a  written  agreement 
to  exhaust  the  mortgage  before  providing  against  the  in- 
dorser,^^ 

§  7'20.  The  language  of  the  rule  implies  its  limitation, 
for  it  does  not  extend  to  exclude  evidence  otfered  to  show 
want  or  failure  of  consideration,  or  to  impeach  the  original 
or  present  validity  of  the  indorsement  on  the  ground  of  fraud.^'^ 
There  are  three  classes  of  cases  in  which  evidence  for  this 
purpose  is  admissible,  and  it  will  be  seen  that  it  does  not 
contradict  or  vary  the  contract  imported  by  the  indorsement, 

'  Howe  V.  Merrill,  5  Cush.  80;  Dibble  v.  Duncan,  2  McLean,  353  ;  Aller  v. 
McDonald,  8  Green] .  213. 

'  Hauer  v.  Patterson,  84  Penn.  St.  275;  Barnard  v.  Guslin,  23  Minn.  194. 

3  Finlcy  v.  Green,  85  111.  536. 

^  Prescott  Bank  v.  Caverly,  7  Gray,  217. 

'  Free  v.  Hawkins.  8  Taunt.  92;  Holt's  R.  550;  1  Moore.  535. 

"  Stubbs  V.  Goodall,  4  Ga.  106.  '  Hoare  v.  Graham,  3  Camp.  57. 

^  ]}ank  of  Albion  v.  Smith,  27  Barb.  489;  Barry  v.  Morse.  3  N.  II.  132;  see 
Free  v.  Hawkins,  3  Camp.  57,  which  is  quoted  tor  this  doctrine,  but  is  not  clearly 
in  support  of  it  by  any  means;  Story  on  Notes,  §  148;  2  Parsons  N.  &.  B.  520, 
note. 

°  See  Chapter  on  Excuses  for  want  of  Presentment,  ante,  and  Notice,  vol.  2. 

'"  Davis  V.  Brown,  94  U.  S.  (4  Otto),  423. 

"  Planters'  Bank  v.  Houser,  57  Ga.  140.         "  Kirkham  v.  Boston,  07  111.  599. 


576      TRANSFER  OF   BILLS  AND  NOTES  BY   INDORSEMENT. 

but  impeaches  it  as  a  valid  iiulorsemeiit  to  the  extent  claimed 
by  the  indorsee.  Thus,  fi'dlt/,  it  may  be  shown  that  the  in- 
dorsement was  without  consideration,  as  for  instance  that  it 
was  for  tbe  indorsee's  accommodation.^ 

§  721  Secondly,  it  might  be  shown  that  the  indorsement 
was  upon  trust  for  some  special  purpose,  as  from  a  principal 
to  an  agent,  to  enable  him  to  use  the  instrument  or  the  money 
in  a  particular  way;~  or  for  collection  merely;*^  or  as  an 
escrow  uj^on  an  express  condition  that  has  not  been  complied 


-  Woodward  v.  Foster,  18  Grat.  205.  Joyues,  J.,  saying:  "When  the  legal 
import  of  a  contract  is  clear  and  definite,  the  intention  of  the  parties  is  for  all 
substantial  purposes  as  distinctly  and  as  fully  expressed  as  if  they  had  written 
out  in  words  what  the  law  implies.  It  is  immaterial  how  much  or  how  little  is 
expressed  in  -words  if  the  law  attaches  to  what  is  expressed  a  clear  and  definite 
import.  Though  the  writing  consists  only  of  a  signature,  as  in  the  case  of  an 
indorsement  in  blank,  yet,  where  the  law  attaches  to  it  a  clear,  unequivocal  and 
definite  import,  the  contract  imported  by  it  can  no  more  be  varied  or  contra- 
dicted by  evidence  of  a  contemporaneous  parol  agreement  than  if  tlie  whole  con- 
tract had  been  fully  written  out  in  words.  The  mischiefs  of  admitting  parol 
evidence  would  be  the  same,  in  such  cases,  as  if  the  terms  implied  by  law  had 
been  expressed.  *  *  =*  *  In  Pike  v.  Street,  1  Mood.  «fc  Malk.  R.  226  (22  E. 
C.  L.  R.  299),  tried  before  Lord  Tenderden  at  Nisi  Prius,  the  action  was  brought 
by  the  indorsee  of  a  bill  of  exchange  against  his  immediate  indorser.  The 
defense  was,  that  though  the  plaintiff  gave  value  to  the  defendant,  it  was  upon  a 
verbal  ao-reement  that  he  should  sue  the  acceptor  only,  and  that  he  should  not 
Bue  the  defendant  as  indorser.  Lord  Tenterden  held  that  such  an  agreement,  if 
proved,  would  be  a  good  bar  to  the  action.  This  case  was  cited  by  counsel  iu 
Foster  v.  Jolly,  1  C.  M.  &  R.  708,  as  an  authority  to  show  that  evidence  of  a  con- 
temporaneous parol  agreement  might  be  given  to  vary  the  written  contract  of  an 
indorser.  But  Parke,  B.,  said  that  that  case  fell  within  the  cases  in  which  the 
consideration  is  contradicted ;  the  evidence  went  to  show  that  there  was  no  con- 
sideration as  between  the  plaintiflfand  the  defendant.  Whether  this  observation 
was  or  was  not  justifiable  by  the  facts  of  the  case,  it  indicates  the  ground  upon 
which  alone,  in  the  opinion  of  a  judge  of  the  greatest  learning  and  eminence, 
the  opinion  of  Lord  Tenterden  can  be  sustained."  Case  v.  Spaulding,  24  Conn. 
578;  Dale  v.  Gear,  38  Conn.  15;  Smith  v.  Carter,  25  Wis.  283;  Denton  v.  Peters, 
5  Q.  B.  L.  R.  457  ;  Chaddock  v.  Van  Ness,  35  N.  J.  L.  R.  520. 

•'  Pollock  V.  Bradbury,  8  Moore,  P.  C.  227;  Dale  v.  Gear,  38  Conn.  15;  Chad- 
dock  V.  Van  Ness,  35  N.  J.  L.  R.  520. 

=■  Lawrence  v.  Stonington  Bank,  6  Conn.  521  ;  Dale  v.  Gear,  38  Conn.  15;  39 
Conn.  89;  Smith  v.  Childress,  27  Ark.  328;  Ricketts  v.  Pendleton,  14  Md.  320; 
Hill  v.  Ely.  5  Serg.  &  R.  3(53  ;  Manley  v.  Boycot,  2  El.  &  Bl.  4(1  (75  E.  C.  L.  R.); 
see  also  McWhirt  v.  McKee,  0  Kan.  412.  But  see  Martin  v.  Cole,  3  Colorado, 
114,  where  the  contrary  is  held,  Stone,  J.,  saying  that  the  offer  to  prove  an  in- 


now   1 AK  PAROL   EVIDENCE   APPLICABLE.  577 

with.^  In  such  cases  the  indorsement  is  really  without  a 
legal  consideration ;  and  the  evidence  does  not  vary  its  ett'ect 
as  to  a  third  person,  but  only  discloses  relations  of  trust 
which  raio;ht  be  shown  asjainst  the  drawer  of  a  bill,  oi-  other 
party  with  whom  the  holder  is  in  privity.  Indeed,  such  evi- 
dence is  competent  even  between  parties  to  deeds  absolute 
on  their  face.  It  has  been  held  that  it  cannot  be  shown  by 
parol  evidence  that  an  indorsement  "  for  collection  "  was  ab- 
solute, its  very  terms  importing  the  restriction.'^ 

§  722.  TJiirdhj,  it  may  be  shown  that  there  were  repre- 
sentations made  at  the  time  of  the  indorsement,  w^hicli  were 
relied  on  by  the  indorser,  and  which,  if  his  liability  were  en- 
forced, would  operate  as  a  fraud  upon  him.^  In  Pennsylvania, 
where  defendant  purchased  coffee  of  })laintitT,  upon  an  agree- 
ment that  the  latter  should  receive  certain  notes  in  payment, 
without  defendant  assuming  any  responsibility,  the  latter 
handed  plaintiff  the  notes,  when  he  said,  "  Hill,  you  must  in- 
dorse those  notes."  Defendant  replied,  '•'  That  is  not  our  un- 
derstanding." The  plaintiff  rejoined,  "  They  are  made  paya- 
ble to  yon ;  how  will  you  convey  them  to  me  ?  You  must 
indorse  them,  in  order  that  I  may  collect  them."  Defendant 
then  said,  "  I  indorse  them ;  but,  remember,  I  am  not  to  be 
held  responsible  for  their  payment."  The  Court  said :  "  The 
evidence  went  to  prove  a  direct  fraud  in  obtaining  the  in- 
dorsements, or  their  perversion  to  a  use  never  intended—  a 
fraudulent  purpose."  "*  This  case  is  distinguished  from  those 
in  which  a  mere  agreement  that  the  indorser  shall  not  be 
responsible  is  offered  to  be  shown,  no  circumstances  which 

dorsement  in  blank,  was  "for  collection"  was  "an  attempt  to  make  a  general 
indorsement  a  restrictive  indorsement." 

'  Chaddock  v.  Van  Ness,  35  N.  J.  L.  R.  520;  Ricketts  v.  Pendleton.  U  Md. 
320;  Goggerty  v.  Guthbert,  2  B.  &  P.  N.  R.  170;  TVallis  v.  Little,  U  C.  B.  3G'J  ; 
Bell  V.  Lord  Ingestre,  12  Q.  B.  317  (G4  E.  C.  L.  R.) 

«  Third  Nat.  Bank  v.  Clark,  23  Minn.  263 ;  Rock  Co.  Nat.  Bank  v.  Ilollister, 
21  Minn.  3S5. 

'  Kirkham  v.  Boston,  07  111.  599. 

*  Hill  V.  Ely,  5  Serg.  &  R.  303.     In  New  York  it  has  been  held  that  if  there 
be  a  written  or  verbal  agreement  not  to  sue  the  indorser,  it  may  be  shown.    Bruce 
V.  Wright,  3  Hun,  548  (10  N.  Y.  S.  C.  R.) ;  Benton  v.  Martin,  52  N.  Y.  570. 
Vol.  L— 37 


bis      TRANSFER   OF   BILLS   AND   NOTES   BY   INDORSEMENT. 

would  otherwise  render  the  transactions  fraudulent  or  show- 
ing a  secret  trust,  appearing.^  So,  evidence  has  been  held 
admissible  to  sliow  that  the  indorsement  was  made  on  the 
indorsee's  assurance  that  it  was  merely  as  a  receipt.-  And  in 
a  case  (going  too  far,  as  we  think)  it  has  been  held  that  one 
of  two  acconmiodation  indorsers  might  show  that  only  one 
was  to  be  liable,  and  his  own  indorsement  was  required 
merely  for  formal  compliance  with  a  rule  of  the  bank.'^ 

§  723.  The  cases  prohibiting  the  introduction  of  parol 
evidence  to  vary  the  contract  implied  in  an  indorsement  are 
in  direct  conflict  with  others  ;  but  there  is  no  conflict  between 
them  and  the  cases  which  permit  such  evidence  in  order  to 
ascertain  the  circumstances  under  which  the  indorsement  was 
made,  and  whether  or  not  it  was  accompanied  by  a  transfer 
in  the  usual  course  of  business.  It  would  be  useless  to  at- 
tempt to  reconcile  the  authorities  on  the  subject;  but  the 
true  line  of  distinction  which  should  be  observed  is  this : 
when  it  appears  that  the  indorsement  was  accompanied  by  a 
transfer  for  value,  and  is  unimpeached  by  fraud,  it  imports  a 
distinct  liability,  which  cannot  be  varied ;  but  wdien  several 
indorse  for  accommodation,  or  the  indorsement  was  made  for 
any  of  the  peculiar  purposes  which  we  have  already  de- 
scribed, extrinsic  evidence  is  admissible  to  show  tliem. 

A  parol  agreement  between  the  first  and  second  indorser 
of  a  note  by  which  the  latter  undertakes  to  pay  the  note,  pro- 
vided the  former  would  deliver  him  goods  to  the  amount  so 
paid,  would  be  valid  ;  and  is  not  within  the  statute  of  frauds 
as  an  undertaking  to  answer  the  debt,  default,  or  miscarriage 
of  another.^ 


'  Dale  V.  Gear,  38  Conn.  15,  is  a  very  able  and  instructive  case  on  this  ques- 
tion, and  takes  this  distinction.  In  a  note  in  the  Law  Register,  Judge  Redfield 
criticises  it  as  ''thin"  and  untenable  (Law  Reg.  Jan.  1873,  p.  2\).  It  is  nice, 
undoubtedly,  and  difficult,  perhaps,  in  some  cases  to  apply  ;  but,  if  not  recog- 
nized, the  departure  should  be  in  ruling  out  such  evidence  altogether  (see  s.  c. 
39  Conn.  3').  '-  Morris  v.  Faurot,  21  Ohio,  N.  S.  155. 

^  Ilockhill  V.  Moore,  1  Penn.  Law  Jour.  Rep,  392. 

'  Sanders  v.  Gillespie,  59  N.  Y.  250  (1874). 


THE  TIME  AND  DATE  OF  TRANSFER.  679 

SECTION  vr. 

THE    TIME     AND    DATE     OF    TRANSFER. 

§  T24.  As  to  time  of  transfer. — Negotiable  paper,  whether 
made  for  accommodation  or  otherwise,  may  l)e  transferred 
l)y  indorsement  or  by  delivery  (as  the  case  may  be)  either  be- 
fore it  has  fallen  due  or  afterward.^  Negotiable  paper  does 
not  lose  its  negotiable  character  by  being  dishonored  for  non 
payment  or  non-acceptance.^ 

It  still  passes  from  hand  to  hand  ad  infiiiitiim  until  paid. 
Moreover,  the  indorser,  after  maturity,  writes  in  the  same 
form,  and  is  bound  only  upon  the  same  condition  of  demand 
upon  the  drawer  and  notice  of  non-payment  as  any  other  in- 
dorser. The  paper  retains  its  commercial  attributes,  and 
circulates  as  such  in  the  community ;  but  there  is  this  vital 
distinction  between  the  rio-hts  of  a  transferee  who  received 
the  paper  before,  and  of  one  who  received  it  after  maturity ; 
The  transferee  of  negotiable  paper  to  whom  it  is  transferred 
after  maturity,  acquires  nothing  but  the  actual  right  and 
title  of  the  transferrer ;  ^  and  the  like  rule  applies  to  the 

•  Dehers  v.  Harriott,  1  Show.  163;  Mitfoid  v.  Walcott,  Ld.  Raym.  575; 
Charles  v.  Mursden,  1  Taunt.  224;  Graves  v.  Kay,  3  B.  &  Ad.  313;  Stein  v. 
Tglesias,  3  Dowl.  252.  The  fivct  of  its  being  an  accommodation  bill  does  not 
prevent  its  being  negotiable  when  overdue.  2  Rob.  Pr.  (new  ed.)  252.  Thomson 
on  Bills  (Wilson's  ed.)  178. 

^  Davis  V.  Miller,  14  Grat.  1;  Baxter  v.  Little,  6  Mete.  7;  Britton  v.  Bishop, 
11  Vt.  70;  Leavitt  v.  Putnam,  3  Corns.  494;  Powers  v.  Neeson,  19  Mo.  190;  Long 
V.  Crawford,  18  Md.  320;  McSherry  v.  Brooks,  46  Md.  118;  Morgner  v.  Bigelow, 
3  Mo.  App.  592;  National  Bank  v.  Texas,  20  Wall.  72. 

'  Texas  V.  llardenburg,  10  Wall.  68;  Murray  v.  Lardner,  2  Wall.  110;  Smith 
v.  Foley,  6  Wall.  492;  Arents  v.  Commonwealth,  18  Grat.  750;  Davis  v.  .Miller, 
14  Grat.  1 ;  Clark  v.  Deaderick,  31  Md.  148;  Merrick  v.  Butler,  2  Lans.  (N.  Y.) 
103;  Livermore  v.  Blood,  40  Mo.  48;  Brainard  v.  Reavis,  2  Mo.  App.  490; 
Thomas  v.  Kinsey,  8  Ga.  421 ;  Fields  v.  Tunslon,  1  Cold.  40  ;  Barker  v.  Valen- 
tine, 10  Gray,  341  ;  Flint  v.  Flint,  6  Allen,  34;  Diamond  v.  Harris,  33  Tex.  034. 
In  California  it  has  been  held  that  the  contract  of  one  who  indorses  a  promissory 
note  after  it  falls  due,  and  as  additional  security  to  prevent  legal  proceedings 
from  being  taken  against  the  payee  and  indorser,  is  that  of  a  guarantor,  and  even 
if  based  on  a  valid  consideration,  is  defective,  unless  the  writing  express  the  con- 
sideration.    Crooks  V.  Tullv,  50  Cal.  254. 


580       TRANSFER  OF   BILLS   AND   NOTES   BY   INDORSEMENT. 

transferee  who  takes  the  paper  after  a  refusal  to  accept  by 
the  drawee,  provided  he  had  notice  of  such  refusal.^  In 
other  words,  the  transferee  of  negotiable  paper  refused  ac- 
ceptance (with  notice  thereof),  or  overdue,  takes  it  subject 
to  all  the  equities  with  wliicli  it  was  encumbered  in  tlie 
hands  of  the  party  from  whom  he  received  it ;  for  it  comes, 
to  use  Lord  Ellenborough's  woi'ds,  "disgraced  to  him." 
Thus,  if  he  took  it  from  a  thief  or  finder,  he  could  not  recover 
on  it,  inasmuch  as  the  thief  or  finder  could  not,^  so  if  it  were 
without  consideration  in  the  hands  of  the  transferee,'^  or  had 
been  paid,^  he  could  not  recover.  It  is  competent  against 
the  transferee  after  maturity  to  show  any  equities  attaching 
to  the  paper  itself,  but  not  to  show  by  parol  evidence  that  it 
was  not  to  be  negotiated,  or  not  sued  on  until  a  certain 
event,  for  this  would  be  to  contradict  the  w^ritten  contract 
by  mere  parol. ^ 

Where  several  notes  are  secured  by  mortgage,  and  the  in- 
dorsee receives  one  overdue,  he  is  not  thereby  affected  with 
equities  as  to  the  other.*' 

§  725.  Defenses  subject  to  which  the  indorsee  of  overdue 
paper  takes  it. — The  modern  English  doctrine  is  that  the  in- 
dorsee of  an  overdue  bill  or  note  takes  it  subject  to  equities 
arisino"  out  of  the  transaction  in  which  the  instrument  was 
executed,  and  existing  at  the  time  of  the  transfer,  and  not  to 
a  set-off  arising  out  of  collateral  matters  ;  in  other  words,  he 
takes  the  paper  subject  to  its  existing  equities.  This  doc- 
trine was  settled  in  England  by  the  case  of  Burrough  v. 
Moss,  10  Barn.  &  C.  558  (21  E.  C.  L.  R.  128),  1830,  and  has 
been  uniformly  followed,"^  and  applies  even  though  the  in- 

'  O'Keofc  V.  Dunn,  6  Taunt.  305  (1  E.  C.  L.  R.)  5  M.  &  S.  283;  Whitehead 
V.  Walker,  11  L.  J.  Exch.  1G8;  9  M.  &  W.  50G;  Bartlett  v.  Benson,  14  M.  &  W. 
733. 

■'  Byles  on  Bills  (Sharswood's  ed.)  [*1G1,  162],  284. 

=  McSherry  v.  Brooks,  46  Md.  118.  "  Ilalsey  v.  Lange,  28  La.  Ann.  248. 

"  McSlierry  v.  Brooks,  46  Md.  118.  "  Boss  v.  Hewitt,  15  Wis.  2G0. 

'  Stein  V.  Yglesias,  1  Cronip.  M.  &  R.  565;  Holmes  v.  Kidd,  28  L.  J.  113;  3 
H.  &  N.  891  ;  Whitehead  v.  Walker,  10  Mces.  &  Wei.  096  ;  Edwards  on  Bills, 
259. 


THE   TIME    AND   DATE   OF   TRANSFER.  581 

dorsee  had  notice,  gave  no  consideration,  and  took  the  paper 
on  purpose  to  defeat  the  set-off.^  But  no  equity  arising  after 
the  transfer  can  affect  the  holder,^ 

The  doctrine  of  Burrough  v.  Moss  has  l^een  followed  in 
most  of  the  United  States  in  which  the  question  has  been 
presented,  as  remarked  in  Virginia,  and  may  be  considered  a 
fixed  principle  of  commercial  law."  In  ^Mississippi  it  has 
been  held  that  one  who  bought  a  bill  or  note  after  maturity, 
for  value  and  without  notice,  w^as  not  bound  by  any  secret 
equity  in  favor  of  a  third  person  not  connected  with  the  legal 
title ;  as,  for  instance,  the  interest  of  a  beneficiary  in  a  note 
which  a  trustee  has  sold  in  violation  of  his  trust.* 

§  726.  The  general  rule,  that  the  purchaser  of  overdue 
paper  can  stand  in  no  better  position  than  his  tranferrer,  does 
not  apply  so  far  as  to  invalidate  bills  and  notes  drawn,  in- 
dorsed, or  accepted  for  accommodation,  overdue  at  the  time 
they  are  negotiated  or  transferred,  it  being  considered  that 
parties  to  accommodation  paper  hold  themselves  out  to  the 
public,  by  their  signatures,  to  be  bound  to  every  person  who 
shall  take  the  same  for  value,  the  same  as  if  it  w^ere  paid  to 
themselves.^     And  the  fact  that  the  purchaser  knew  that  the 

'  Byles  on  Bills  (Sharswood's  ed.)  [*2G3],  286  ;  Oulds  v.  Harrison,  24  L.  J. 
Exch.  66,  s.  c.  10  Exch.  572. 

^  Fields  V.  Tanston,  1  Cold.  40;  Baxter  v.  Little,  6  Mete.  7;  Heywood  v. 
Stearns,  39  Cal.  58;  Edwards  on  Bills,  261. 

»  See  Davis  v.  Miller,  14  Grat.  8 ;  also,  1  Rob.  Prac.  (new  ed.)  252 ;  Amion  v. 
Houck,  4  Gill,  332  ;  Hughes  v.  Large,  2  Barr.  103;  Epler  v.  Fank,  8  Barr,  468; 
Clay  V.  Cottrell,  6  Harris,  413;  Britton  v.  Bishop,  11  Vt.  70 ;  Barlow  v.  Scott,  12 
Iowa,  63;  Bates  v.  Kemp,  12  Iowa,  99;  Way  v.  Lamb,  15  Iowa,  79;  Arnot  v. 
Woodburn,  35  Mo.  99  ;  Gullett  v.  Hoy,  15  Mo.  399  ;  Byles  on  Bills  (Sharswood's 
ed.)  [*263],  286;  Flint  v.  Flint,  6  Allen,  31;  Trafford  v.  Hall,  7  R.  L  104;  Rich- 
ards Vt  Daily,  34  Iowa,  429;  Wilkinson  v.  Jeffcrs,  30  Ga.  153;  Barker  v.  Valen- 
tine, 10  Gray,  341 ;  Baxter  v.  Little,  6  Mete.  7;  Woods  v.  Viozca,  26  La.  Ann.  716. 

In  Nevv  York,  the  doctrine  of  the  text  does  not  obtain.  Sec  Edwards  on  Bills, 
260;  Dri^o-s  v.  Rockwell,  11  "Wend.  504.  And  there  are  other  States  in  which 
oifsets  stand  on  the  same  footing  as  equities.  Odiorne  v.  Woodman,  39  N.  H. 
644;  Davis  v.  Neligh,  7  Neb.  78. 

*  Hibernian  Bank  v.  Everman,  52  Miss.  500. 

"  Charles  v.  Marsden,  1  Taunt.  224;  Sturtevant  v.  Ford,  4  M.  &  G.  101  (43  E. 
C.  L.  R.);  Carruthers  v.  West,  11  Q.  B.  143  (63  E.  C.  L.  R);  see  Stien  v.  Ygle- 
sias,  1  C.  M.  &  R.  565;  Byles  on  Bills  (Sharswood's  ed.)  [*262],  285.    The  earlier 


582      TRANSFER  OF   BILLS  AND  NOTES   BY   INDORSEMENT. 

paper  was  so  drawn,  indorsed,  or  accepted  for  accommodation, 
does  not  weaken  his  position/  This  principle  is  well  estab- 
lished in  England,"  and  it  is  to  be  regretted  that  the  decis- 
ions in  the  United  States  do  not  uniformly  follow  the 
English  rule,^  In  England,  a  plea  that  it  was  agreed  by  the 
parties  that  the  paper  should  not  be  negotiated  overdue  has 
been  held  bad,  knowledge  of  the  ])urchaser  not  being  alleged.'* 
If  the  accommodation  bill  or  note  had  been  paid  at  maturity, 
the  position  of  the  purchaser  would  be  altered,  for  a  defense 
is  then  established  which  goes  to  the  merits  of  the  case.^  It 
is  a  settled  principle,  however,  that  if  the  party  who  trans- 
ferred the  instrument  to  the  holder  acquired  the  note  before 
maturity,  and  was  himself  unaffected  by  any  infirmity  in 
it,  the  bolder  acquires  as  good  a  title  as  he  held,  although  it 
were  overdue  and  dishonored  at  the  time  of  transfer/  Thus, 
it  has  been  held  that  in  an  action  by  a  second  indorsee  of  a 
bill  given  for  a  smuggling  debt,  lie  could  recover  against  the 

authorities  were  otherwise,  see  Tensen  v.  Francis,  1  Camp.  19 ;  Brown  v.  Davis, 
3  T.  R.  80;  7  T.  R.  429;  Chitty  on  Bills  (13th  Am.  ed.)  347;  Story  on  Bills,  §192. 

'  Charles  v.  Marsden,  1  Taunt.  224;  Brown  v.  Mott,  7  Johns.  361,  overruled 
by  Chester  v.  Dorr,  41  N.  Y.  279.  In  Redfield  and  Bigelow's  Leading  Cases,  217, 
it  is  said:  "The  indorser  (for  accommodation)  is  equally  bound,  whether  the 
transfer  is  made  before  or  after  the  paper  falls  due,  or  whether  the  purchaser 
knew  the  indorsement  was  made  for  accommodation  or  not.  To  hold  otherwise 
would  be  to  encourage  fraud,  and  to  relieve  the  party  from  the  very  responsibility 
which  he  expected  to  meet,  and  which,  upon  every  principle  of  justice  and  fair 
dealing,  he  should  be  compelled  to  abide  by."  Powell  v.  Waters,  17  Johns.  170; 
Grandin  v.  Leroy,  2  Paige,  509;  Bank  of  Ireland  v.  Beresford,  6  Dow.  237. 

^  See  the  cases  cited  in  preceding  notes. 

'  As  dissenting  from  the  doctrine  of  the  text,  see  Hoffman  v.  Foster,  43  Penn. 
137;  Bower  v.  Hastings,  12  Casey,  280;  Chester  v.  Dorr,  41  N.  Y.  279  (overrul- 
ing Brown  v.  Mott,  7  Johns.  361);  Battle  v.  Weems,  44  Ala.  105. 

*  Carruthers  v.  West,  11  Q.  B.  143  (63  E.  C.  L.  R.) 

'  Lazarus  v.  Cowie,  3  Q.  B.  459  (43  E.  C.  L.  R.) ;  Parr  v.  Jewell,  16  C.  B.  684 
(81  E.  C.  L.  R.) 

•  Woodman  v.  Churchill,  52  Me.  58  ;  Roberts  v.  Lane,  64  Me.  108;  Riegel  v. 
Cunningham,  9  Phil.  (Penn.)  177;  Bissell  v.  Gowdy,  31  Conn.  48;  Wilson  v. 
Mechanics'  Sav.  Bank,  45  Penn.  St.  494;  Bassett  v.  Avery,  15  Ohio  St.  299; 
Peabody  v.  Rees,  18  Iowa,  171;  Richert  v.  Koerner,  54  111.  306;  Bradley  v.  Mar- 
shall, 54  m.  173;  Lock  V.  Tulford,  52  111.  166;  Howell  v.  Crane,  12  La.  Ann. 
126;  Smith  v.  Hiscock,  14  Me.  449;  Thompson  v.  Shepherd,  13  Mete.  311  ;  Chitty 
on  Bills  (13th  Am.  ed.)  250;  Fairclough  v.  Pavia,  9  Exch.  6i;0. 


THE  TIME  AND  DATE  OF  TRANSFER.  583 

acceptor,  altliough  he  took  it  overdue,  liis  indorser  having  ac- 
quired it  bona  JiJe,  without  notice  before  it  fell  duc^ 

§  727.  If  a  party  indorses  a  Vjill  or  note  "without  re- 
course," and  should  re-acquire  it  after  maturity,  his  owner- 
ship not  arising  out  of,  or  being  referable  to,  his  previous  in- 
dorsement, would  stand  in  no  higher  ground  than  that  of  any 
other  party  acquiring  after  maturity,  and  equities  could  V)e 
pleaded  against  him.-  In  the  absence  of  spe  cial  circum- 
stances equity  will  not  compel  the  surrender  of  a  past  due 
note,  on  the  ground  that  it  was  paid  but  not  taken  up,  the 
maker  having  an  available  defense,  that  of  payment,  as 
against  any  one  who  might  thereafter  acquire  it.'^  But 
special  circumstances  might  exist  authorizing  its  interference 
to  compel  surrender  of  the  paper.^ 

§  728.  As  to  tlie  date  of  indorsement. — If  the  indorsement 
of  a  bill  or  note  be  undated,  it  ^\\\\  be  presumed,  wdien  tlie 
paper  is  in  the  hands  of  a  third  party,  to  have  been  made  at 
the  time  of  execution,  or  at  least  before  maturity  and  dis- 
honor.^    It  is  difficult  to  see  how  a  more  definite  presump- 

'  Chalmers  v.  Lanion,  1  Camp.  383.     See  post,  §§  783,  78G,  803. 

'  Calhoun  v.  Albin,  48  Mo.  30  k 

=  Fowler  v.  Palmer,  63  N.  Y.  533.     See  AUerton  v.  Belden,  40  N.  Y.  373. 

'  McHenry  v.  Hazard,  45  N.  Y.  583. 

'  New  Orleans,  &c.  v.  Montgomery,  95  U.  S.  (5  Otto)  18  (1877) ;  Swayne,  J. : 
"  It  is  not  shown  in  the  proofs  when  the  notes  were  transferred.  *  *  * 
In  the  absence  of  such  proof,  the  law  presumes  they  were  taken  underdue, 
in  good  faith,  and  without  notice  of  any  infirmity  attaching  to  them."  Good 
V.  Martin,  95  U.  S.  (5  Otto)  94  (1877) ;  Collins  v.  Gilbert,  94  U.  S.  (4  Otto) 
753;  Frazer's  Adm'r  v.  Frazer,  13  Bush  (Ky.)  400;  Cripps  v.  Davis,  13  M. 
&  W.  165;  Lewis  v.  Lady  Parker,  4  Ad.  &  E.  838  (31  E.  C.  L.  R.) ;  Parkin  v. 
Moon,  7  C.  &  P.  408  (33  E.  C.  L.  R.) ;  Snyder  v.  Oatraan,  16  Ind.  265;  Stewart 
V.  Smith,  28  111.  397  ;  Leland  v.  Farnham,  25  Vt.  553;  Hopkins  v.  Kent,  17  Md. 
387;  McDowell  v.  Goldsmith,  6  Id.  319;  Dickerson  v.  Burke,  25  Ga.  235;  Web- 
ster V.  Lee,  5  Mass.  334;  Hendricks  v.  Judah,  1  Johns.  319  ;  Pinkerton  v.  Bailey, 
8  Wend.  600 ;  Watson  v.  Flannagan,  14  Tex.  354 ;  Mason  v.  Noonan,  7  Wis.  60'.» ; 
Smith  V.  Clopton,  4  Tex.  109:  Barrick  v.  Austin,  31  Barb.  241 ;  Moblcy  v.  Ryan, 
14  III.  51;  Burnham  v.  Wood,  8  N.  H.  334;  Noxon  v.  DeWolf,  10  Gray,  346; 
Alexander  V.  Springfield,  3  Mete.  (Ky.)  534:  Webster  v.  Calden,  56  Me.  204; 
New  Orleans  Caual  v.  Templeton,  30  La.  Ann.  75;  White  v.  Weaver,  41  111.  409; 
Depuy  V.  Schuyler.  45  111.  506;  Rhode  v.  Alley,  27  Tex.  443;  Johnson  v.  Joscy, 
34  Tex.  533.  (In  Arkansas,  it  is  held  otherwise.  Ruddell  v.  Landers,  25  Ark. 
338.) 


584       TRANSFER   OF   BILLS   AND   NOTES   BY   INDORSEMENT. 

tion  than  that  the  indorsement  was  before  maturity  can  he 
sustained,  and  tliis  seems  to  he  all  that  is  necessary  to  the 
protection  of  commercial  paper/  As  said  in  Ranger  v.  Carey, 
1  Met.  300,  "  a  negotiable  note  being  offered  in  evidence  duly 
indorsed,  the  legal  presumption  is  that  such  indorsement  was 
made  at  the  date  of  the  note,  or  at  least  antecedently  to  its 
becomino-  due;  and  if  the  defendant  would  avail  himself  of 
any  defense  that  %vould  be  open  to  him  only  in  case  the  note 
were  negotiated  after  it  was  dishonored,  it  is  incumbent  on 
him  to  show  that  the  indorsement  was  in  fact  made  after  the 
note  was  overdue." 

If  any  question  should  arise,  however,  in  ^\  hich  the  date 
of  the  indorsement  during  some  period  of  the  currency  of  the 
instrument  was  put  in  issue,  the  presumption,  according  to 
the  authorities,  would  fix  the  date  at  the  time  of  the  execu- 
tion, there  being  no  evidence  to  the  contrary. 

An  indorsement  will  also  be  presumed  to  have  been  made 
at  the  place  where  the  1)ill  or  note  is  dated.'^ 

A  bill  or  note  becomes  merged  in  a  judgment,  and  cannot 
be  indorsed  or  assigned  afterward,^  but  it  may  be  transferred, 
as  we  think,  pending  suit.'*  In  Chapter  XXIV,  Sec.  IV,  the 
rights  of  the  holder  who  acquires  overdue  paper,  and  when 
it  is  deemed  overdue,  are  more  fully  treated. 

'  2  Parsons  N.  &  B.  9,  10 ;  Burnham  v.  Wood,  8  N.  H.  334  ;  Parkin  v.  Moon, 
7  C.  &  P.  408  ;  Lewis  v.  Parker,  4  Ad.  &  El.  838. 
^  Maxwell  v.  Vaiisant,  56  111.  58. 
'  Wooten  V.  Maullsby,  69  N.  C.  462. 
'  See  §  1199;  Obcr  v.  Goodridge,  27  Grat.  888. 


CHAPTER  XXII. 

TRANSFER    OF    BILLS    AND    NOTES    BY    ASSIGNMENT. 

§  729.  As  to  transfer  of  negotiaUe  iiistruvients  hy  assign- 
ment.— The  term  assignment  is  usually  applied  to  denote  the 
transfer  of  bonds  and  notes  not  negotiable,  and  also  the 
transfer  of  instruments  which  are  negotiable,  without  indorse- 
ment. If  the  bill  or  note  be  payable  to  bearer  in  express 
terms  upon  its  face,  or  has  l)ecome  in  legal  effect  payable  to 
bearer  by  being  indorsed  in  V)lank,  it  is  then  transferable  by 
delivery ;  and  the  assignment  by  mere  delivery  is  in  accord- 
*ance  with  the  custom  of  merchants.  If  the  bill  or  note  be 
payable  to  order  of  a  particular  person,  it  may  be  transferred 
by  him  without  indorsement.  Bat  in  sucli  case  the  assign- 
ment is  not  in  the  usual  course  of  business,  in  accordance 
with  mercantile  custom,  only  the  equitable  title  passing  to 
the  assignee.  We  shall,  therefore,  distinguish  the  two  classes 
of  assignors  by  the  terms :  I.  Assignors  of  the  legal  title ; 
and,  II.  Assignors  of  the  equitable  title. 

SECTION  I. 

I.IABir.ITY  OF  THE  ASSIGNOR  OF  THE  LEGAL  TITLE  TO  BILLS  AND  NOTES. 

§  730.  As  to  the  liahiUty  of  the  assignor  of  the  legal  title 
to  negotiaUe  instruments. — Although  not  a  party  to  the  bill 
or  note,  the  assignor  of  the  legal  title  to  bills  and  notes  pay- 
able in  terms  to  bearer,  or  indorsed  in  blank,  incurs  certain 
responsibilities,  not  so  numerous,  but  equally  as  binding  as 
the  responsibilities  of  an  indorser.  He  warrants  by  implica- 
tion, unless  otherwise  agreed,  that  its  ftice  is  a  true  descrip- 
tion of  its  character,  both  in  respect  (1)  to  its  genuineness; 
(2)  to  its  validity  and  legal  operation;  (3)  to  the  compe- 


580  TRANSFER  BY  ASSIGNMENT. 

tency  of  the  parties;  and  also  (4)  that  he  is  a  lawful  holder, 
haviug  a  valid  title  and  a  right  to  transfer  it,  and  (5)  that 
he  had  no  knowledge  of  any  facts  which  prove  the  paper,  if 
originally  valid,  to  be  worthless,  either  by  the  insolvency  of 
the  principal,  or  by  having  been  paid,  or  otherw^ise  by  hav- 
inir  become  void  and  defunct. 

§  731.  In  the  first  jjJace^  as  to  tlie  genuineness  of  the  hill 
or  note. — It  is  well  settled  that  the  transferrer  by  delivery  of 
the  l)ill  or  note  is  liable  for  failure  of  consideration,  if  it  turn 
out  that  it  was  fictitious,  or  originally  forged  or  subsequently 
altered  either  in  the  signatures,  or  in  the  amount.^  As  said 
in  Rhode  Island  by  Ames,  C.  J.  :^  "  If  the  signatures  or  either 
of  them  be  forged,  what  he  sells  is  not  what  upon  its  face  it 
purports  to  be,  and  what  therefore  he  affirms  and  thus  war- 
rants it  to  be;  and  he  is  liable  to  the  vendee  for  w^hat  he  has 
received  from  him  for  it,  on  the  ground  of  failure  of  consid- 
eration." Where  the  defendant  sold  the  plaintiff  a  navy  bill 
purporting  to  be  for  £'1,800,  and  it  turned  out  that  it  had 
been  altered  to  that  amount  from  £800,  w^hich  real  sum  the 
British  Government  paid,  it  was  held  that  the  plaintiff  could 
recover  the  balance  for  which  it  was  altered  from  his  vendor.'*' 
And  when  there  has  been  a  forgeiy  in  the  signatures,  it  mat- 
ters not  that  some  are  genuine.  Where  the  bill  was  sold  on 
wdiich  all  the  signatures  were  forged  but  that  of  the  last  in- 
dorser,  it  was  sought  to  distinguish  the  case  from  the  one 
just  quoted,  on  the  ground  that  as  the  last  indorser  was 
l)()un(l,  tlie  bill  was  of  some  value.     But  it  was  held  that  the 

»  Bell  V.  Dagg,  60  N.  Y.  530 ;  Whitney  v.  Nat.  Bank,  45  N.  Y.  305 ;  Ros3  v. 
Terry,  63  N.  Y.  613;  Lyons  v.  Miller,  6  Grat.  439  (1849);  Merriam  v.  Wolcott,  3 
Allen,  258;  Bell  v.  Cafferty,  21  Ind.  411;  Cabot  Bank  v.  Morton,  4  Gray,  158; 
Coolidge  V.  Brigham,  1  Mete.  (Mass.)  547;  5  Id.  68;  Barton  v.  Trent,  3  Head, 
167;  Snyder  v.  Reno,  36  Iowa,  329;  Markle  v.  Hatfield,  2  Johns.  455;  Swauzey 
V.  Parker,  50  Penn.  St.  441;  Jones  v.  Ryde,  5  Taunt.  488;  Bigelow  on  Estoppel, 
446;  Cliitty  on  Bills  (13  Am.  ed.)  |*245],  279;  Bylcs  on  Bills  (Sharswood's  ed.) 
[*157J,  278;  Story  on  Notes,  §  118;  Bayley,  179;  Story  on  Bills,  §111;  contra, 
see  Baxter  v.  Duren,  29  Me.  434. 

^  Aldrich  v.  Jackson,  5  R.  I.  218;  see  Lyons  v.  Miller,  0  Grat.  440;  ante, 
§  284. 

'  Jone?  V.  Ryde,  1  Marsh.  157. 


LIABILITY   OF    ASSIGNOR   OF   THE   LEGAL   TITLE.  587 

seller  of  a  Ijill  offers  it  as  an  iiistruuient  drawn,  accepted,  and 
indorsed  according  to  its  purport.^ 

In  some  cases  the  distinction  has  been  taken  between 
transfers  of  papers  on  which  a  name  is  forged,  l)y  agreement 
of  exchange  for  a  commodity,  and  transfers  where  it  is  taken 
in  lieu  of  money,  for  accommodation — it  being  considered 
that  in  the  latter  case  only  is  the  transferrer  by  delivery  lia- 
ble.^ But  this  distinction  has  been  justly  deemed  unsound, 
and  in  Massachusetts,  where  it  was  obtained,  it  has  been 
overruled,'^  and  now  cannot  be  said  to  obtain  in  Maine  as 
formerly.*  Unless  the  negotiation  upon  the  sale  or  transfer  of 
the  paper  by  assignment  is  so  framed  as  to  exclude  such  war- 
ranty— and  especially  where  it  is  so  sold  or  transferred  for  a 
full  and  fair  price — the  transferrer  will  be  deemed  to  war- 
rant the  genuineness  of  the  preceding  endorsement  upon  it.^ 
"  But  it  is  equally  certain  that  the  contract  of  sale  may  be 
made  in  such  form  as  to  exclude  the  warranty  of  genuineness, 
which  would  be  implied  by  law  in  case  of  a  contract  silent 
ujion  that  sul)ject."  *^ 

§  732.  Li  tlte  second  place^  as  to  the  validity  and  legal 
operation. — If  the  bill  or  uote  is  not  a  valid  subsisting 
obligation,  binding  in  law  according  to  its  purport,  the 
transferrer  is  liable,  because  the  article  is  not  that  which 
it  was  held  out  to  be.'^  Thus  where  a  bill  dated  as  at 
Sierra  Leone,  and  drawn  upon  London,  was  sold  without 
indorsement;    and    it   turned   out    afterward    that    it    was 

*  Gurney  V.  Womersley,  4  E.  «fc  B.  133;  24  L.  J.  Q.  B.  46;  Hurst  v.  Cham- 
bers, 12  Bush.  (Ky.)155;  Merriam  v.  Wolcott,  3  Allen,  258 ;  Allen  v.  Clark,  4U 
Vt.  390. 

=  Ellis  v.  Wild,  G  Mass.  321 ;  Baxter  v.  Duren,  29  Me.  4:34. 

'  Morriam  v.  Wolcott,  3  Allen,  258. 

'  Hus'^ey  v.  Sibley,  GO  Me.  192  (18TG).  Danforth,  J.:  ''It  wouUl  appear  that 
the  distinction  noticed  in  Ellis  v.  AVild  and  Baxter  v.  Duren  is,  to  say  the  least, 
somewhat  shadowy.'' 

"  Giffert  v.  West,  37  Wis    115. 

'  Bell  V.  Dagg,  GO  N.  Y.  530;  Ross  v.  Terrj-,  G3  N.  Y.  G15. 

'  Bell  V.  Dagg,  GO  N.  Y.  530;  Littaner  v.  Goldman,  IG  N.  Y.  S.  C.  (9  linn). 
234:  Fuke  v.  Smith.  7  Abb.  N.  Y.  X.  S.  lOG;  Ross  v.  Terry,  G3  N.  Y.  G14  ;  Hiird 
V.  Hall,  12  Wis.  112. 


588  TRANSFER  BY   ASSIGNMENT. 

really  drawn  within  the  kingdom  of  Great  Britain,  and  was 
therefore  an  inland  bill,  and  void  because  without  a  stamp, 
which  a  foreign  bill  did  not  require — it  was  held  that  the 
assignee  could  recover  back  the  price  paid,  *of  the  assignor, 
the  consideration  having  failed.  Lord  Campbell,  C.  J.,  and 
Coleridge  and  Wightman,  JJ.,  agi-eed,  and  Coleridge  J., 
said  :  ^  "  The  vendor  was  not  bound  to  see  that  he  sold  a  bill 
of  good  quality,  or  to  answer  for  the  insolvency  of  the  par- 
ties" (who  had  become  bankrupt);  "but  the  vendee  is  still 
entitled  to  have  an  article  answering  the  description  of  that 
which  he  bought.  Here  he  bought  as  a  foreign  bill  what 
turns  out  not  to  be  a  foreign  bill,  and  therefore  valueless. 
Common  justice  requires  that  he  should  have  back  the  price." 
Lord  Campbell,  C.  J.,  said :  "This  is  not  a  case  in  which  an 
article  answering  the  description  l)y  which  it  is  sold  has  a 
latent  defect,  but  one  in  which  the  article  is  not  of  the  kind 
which  was  sold.  I  think,  therefore,  that  the  money  paid  for 
it  may  be  recovered,  as  paid,  in  mistake  of  facts." 

§  733.  So,  where  the  defendant  sold  as  Guatemala  bonds, 
in  1836,  bonds  which  had  been  repudiated  by  the  Govern- 
ment of  that  State  in  1829,  because  unstamped,  and  which 
were  valueless,  it  was  held  that  the  price  should  be  refunded, 
Tindal,  C.  J.,  saying,  that  the  contract  was  for  real  Guate- 
mala bonds,  and  that  the  case  was  just  as  if  the  contract  had 
been  to  sell  foreign  coin,  and  the  defendant  had  delivered 
counters  instead.  And  that  "  it  is  not  a  question  of  warranty, 
but  whether  the  defendant  has  not  delivered  something 
which,  though  resembling  the  article  contracted  to  be  sold,  is 
of  no  value."  ^ 

So  where  the  holder  of  a  note  transferred  it  without  in- 
dorsement, and  it  was  void  for  usury  as  between  original 
parties.^  "  In  this  case,"  said  Comstock,  J.,  "  the  defendant 
held  a  promissory  note  which  was  void,  which  he  had  him- 

■  Gompertz  v.  Bartlctt,  2  El.  &  B.  854  (1853). 
^  Young  V.  Cole,  3  Bing.  N.  C.  724. 

=  Delaware  Bank  v.  Jervis,  20  N.  Y.  228;  Webb  v.  Odell,  49  N.  Y.  583;  Lett- 
ancr  v.  Goldman,  16  N.  Y.  S.  C.  (9  Ilun),  232  (1870). 


LIABILITY   OF   ASSIGNOR  OF   THE  LEGAL   TITLE.  589 

Bclf  taken  in  violation  of  the  statutes  of  usury.  When  he 
sold  the  note  to  the  plaintitfs,  and  received  the  cash  therefor, 
by  that  very  act  he  affirmed,  in  judgment  of  law,  that  the 
instrument  was  sustained,  so  far  at  least  as  he  had  been  con- 
nected with  its  origin."  In  another  ease,  Davis,  P.  J.,  says: 
"  There  is  an  implied  warranty  that  the  note  is  what  it  pur- 
ports to  be, — a  legal,  valid  instrument.  It  is  nothing  un- 
less it  be  this.^  So,  though  a  certificate  of  deposit  be  void 
as  between  the  original  parties,  because  constituting  a  trans- 
action between  alien  enemies,  yet  the  assignor  thereof  is 
bound."  In  such  cases  the  transferee  can  recover  not  only 
the  amount  paid  for  the  paper,  with  interest,  but  also  his 
costs  of  suit  against  prior  parties,  the  defendant  was  notified 
of  the  pendency  of  suit,  and  the  defense  made.^ 

§  734  In  the  third  place,  as  to  competency  of  parties. — 
If  a  prior  party  be  not  competent  to  contract,  the  paper  is 
not  in  fact  his  bill,  note  or  indorsement,  as  the  case  may 
be,  and  the  transferrer,  for  reasons  already  stated,  is  bound. 
Thus,  if  the  drawer,  or  acceptor,  or  prior  indorsor,  be  an 
infant,  lunatic,  married  w^oman,  or  otherwise  be  under  in- 
capacity to  contract,  the  transaction  lacks  the  consideration 
agreed  upon  as  existing,  and  the  transferee  may  recover  back 
the  money  paid.''  In  Massachusetts  where  the  defendant, 
knowing  that  one  Swan  was  an  infant,  put  in  circulation  a 
note  with  his  blank  indorsement  upon  it,  he  was  held  bound, 
and  Shaw,  C.  J.,  said  :  "  Whoever  takes  a  negotiable  note  is 
understood  to  ascertain  for  himself  the  ability  of  the  con- 
tracting parties;  but  he  has  then  got  to  believe,  without  in- 
quiring, that  he  has  the  legal  obligation  of  the  contracting 
parties  appearing  on  the  bill  or  note.  Unexplained,  the  pur- 
chaser of  such  a  note  has  a  right  to  believe,  upon  the  faith 
of  the  security  itself,  that  it  is  indorsed  by  one  capable  of 

•  Lettaner  v.  Goldman,  IG  N.  Y.  S.  C.  (9  Hun),  234  (1870). 
■  Morrisou  v.  Lovcll,  4  West  Va.  (Ilagans),  350  (1870). 
'  Lettaner  v.  Goldman,  16  N.  Y.  S.  C.  (9  Hun),  232. 

"  Baldwin  v.  Van  Deusen,  37  N.  Y.  487;  Lobdell  v.  Baker,   1  :Metc.  193;  3 
Mete.  469. 


500  TRANSFER  BY  ASSIGNMENT. 

binding  himself  by  the  contract  which  an  indorsement  by 
Inw  imparts.  It  is  an  averment  to  that  effect  on  the  part  of 
him  who  procures  such  an  indorsement  and  puts  the  note 
bearing  it  into  circulation."  ^  On  the  principle  stated  in  the 
text,  it  was  held  in  Maine  that  the  transferrer  was  bound 
where  a  town  order  was  transferred  in  payment  of  a  debt, 
and  it  turned  out  to  be  worthless  on  account  of  the  incapac- 
ity of  the  drawers  and  acceptors  to  draw  or  accept  for  the 
town.^  And  so  in  Wisconsin  the  assignor  was  held  where 
the  note  assio-ned  bore  an  indorsement  which  was  void  for 
usury.^ 

§  734  a.  In  the  Supreme  Court  of  the  United  States  the 
following  case  recently  arose.  The  Legislature  of  Kansas 
passed  two  acts  under  which  the  city  of  Topeka  was  author- 
ized to  issue  bonds  for  certain  purposes,  which  were  after- 
ward held  to  be  private  purposes,  and  the  bonds  were  con- 
sequently invalid.'*  Some  of  these  coupon  bonds  were  sold 
by  the  First  National  Bank  of  Topeka,  and  default  being 
made  in  payment  of  interest,  suit  was  brought  against  the 
receiver  of  the  bank  to  recover  back  the  amount  paid  for 
the  invalid  bonds,  on  the  ground  of  failure  of  consideration. 
The  Supreme  Court  held  that  the  seller  w^as  not  bound  by 
any  implied  warranty  of  the  bonds,^  and  maintained  doc- 

'  Lobdell  V.  Baker,  3  Mete.  472  (1842),  1  Mete.  547. 

^  Ilussey  V.  SeT)lcy,  06  Me.  193  (1876). 

=  Gitfert  v.  West,  37  Wis.  117  (1875);  33  Wis.  623  (1873). 

*  See  Loan  Association  v.  Topeka,  20  Wall.  655. 

"  Otis  V.  Galium,  2  Otto  (92  U.  S.),  448  (1875);  Swayne,  J.,  saying:  "In  Lam- 
bert V.  Heath,  15  Mees.  &  Wels.  486,  the  defendant  bought  for  the  phiintiflf  cer- 
tain "certificates  of  Kentish-Coast  Railway  scrip,"— and  received  from  him  the 
money  for  them.  Subsequently  the  directors  repudiated  the  scrip  upon  the 
ground  that  it  had  been  issued  by  the  secretary  without  authority.  The  enter- 
prise to  which  it  related  was  abandoned.  The  action  which  was  for  money,  had 
and  received,  was  thereupon  brouglit  to  recover  back  what  had  been  paid  for  the 
scrip.  The  court  put  it  to  the  jury  to  say  whether  the  scrip  bought  was  "  real 
Kentish  railway  scrip."  A  verdict  was  found  for  the  plaintiff  upon  this  issue. 
A  new  trial  was  moved  for,  the  defendant  insisting  the  court  had  misdirected 
the  jury.  After  hearing  the  argument,  the  Court  said  :  "  The  question  is  simply 
this:— was  what  the  parties  bought  in  the  market  Kentish-coast  railway-scrip. 
It  appears  that  it  was  signed  by  the  secretary  of  the  company,  and  if  tliis  was 


LIABILITY   OF   ASSIGNOR   OF   THE    LEGAL   TITLE.  591 

trines  in  conflict  witli  those  wliicli  had  been  conceived  appli- 
cable to  the  question.  It  is  quite  clear  from  the  decisions 
quoted  in  the  text  that  the  transferrer  of  a  bill  or  note  by  de- 
livery is  bound,  if  it  be  invalid  by  reason  of  the  incompetency 
of  anterior  parties,  or  by  reason  of  any  contract  V)et\veen  them 
which  prevents  the  transferee  from  enforcing  it  against  them. 
The  Court,  without  commenting  on  that  doctrine,  evidently 
regards  it  as  not  to  be  extended  to  public  securities,  in  so  far 
as  the  competency  of  the  corporation  to  issue  them  is  con- 
cerned. 

§  735.  In  the  fourth  xilace^  as  to  title  and  rigid  to  trans- 
fer.— If  the  transferrer  had  no  lawful  title  to  the  instrument, 
the  transfer  of  it  as  his  property  is  a  fraud  both  upon  the 
owner   and   upon   the   transferee.^     And    the   transferee,  if 

the  only  Kentisti-coast  railway-scrip  in  the  market,  as  appears  to  have  been  the 
case,  and  one  person  chooses  to  sell  and  another  to  buy,  that  then  the  latter  has 
got  all  that  he  contracted  to  buy.  That  was  the  question  for  the  jury;  but  it 
was  not  so  left  to  them.     The  rule  must  therefore  be  absolute  for  a  new  trial." 

The  judges  were  unanimous. 

Here  also  the  plaintiffs  in  error  got  exactly  what  they  intended  to  buy  and 
did  buy.  They  took  no  guaranty.  They  are  seeking  to  recover  as  it  were  upon 
one  while  none  exists.  They  are  not  clothed  with  the  rights  which  such  a  stipu- 
lation would  have  given  them.  Not  having  taking  it  they  cannot  have  the  benetit 
of  it.     The  bank  cannot  be  charged  with  a  liability  which  it  did  not  assume. 

Such  securities  throng  the  channels  of  commerce  which  they  are  made  to  seek, 
and  where  they  find  their  market.  They  pass  from  hand  to  hand  like  bank  notes. 
The  seller  is  liable  ex  delicto  for  bad  faith;  and  ex  contractu,  there  is  an  implied 
warranty  on  his  part  that  they  belong  to  him,  and  that  they  are  not  forgeries. 
When  there  is  no  express  stipulation,  there  is  no  liability  beyond  this.  If  the 
buyer  desires  special  protection,  he  must  take  a  guaranty.  He  can  dictate  his 
terms  and  refuse  to  buy  unless  it  be  given.  If  not  taken  he  cannot  occupy  the 
vantage-ground  upon  which  it  would  have  placed  him. 

It  would  be  unreasonably  harsh  to  hold  all  those  through  whose  hands  such 
instruments  may  have  pas'^ed,  liable  according  to  the  principles  which  the  plain- 
tiff in  error  insists  shall  be  apiilied  in  this  case.     Judijment  affinned. 

'  Baxter  v.  Duren,  29  Me.  434;  see  Story  on  Note?,  j  118.  In  2  Parsons  N. 
&  B.  187,  this  doctrine  is  denied.  "Why,"  says  the  learned  author,  "should 
this  be  so  (that  is,  a  warranty  of  title),  when  an  honest  transferee  need  give  no 
such  warranty?  For,  as  we  have  seen,  property  follows  possession ;  and  the  mere 
possession  of  the  transferrer  is  enough  to  give  a  perfect  title  to  the  honest  taker 
of  the  paper,  negotiable  by  delivery  only.  We  hold  that  the  doctrine  of  implied 
warranty  in  sales  is  applicable  to  the  sule  of  bills  and  notes  only  to  the  extent 
that  one  who  sells  indorsed  notes  warrants  the  indorsement  genuine." 


592  TRANSFER  BY  ASSIGNMENT. 

unable  to  recover  against  the  owner,  might  sue  the  transferrer 
for  the  consideration  paid. 

And  indeed,  we  perceive  no  good  reason  why  the  trans- 
feree might  not,  on  discovering  the  fraud,  return  the  bill  or 
note  to  the  true  owner,  and  recover  back  the  consideration 
from  tlie  transferrei",  for  no  man  can  take  advantage  of  his 
OAvn  wrong. 

But  in  most  cases  he  would  likely  be  indisposed  to  do 
this,  as  he  would,  if  himself  a  lona  fide  transferee  without 
notice,  acquire  a  better  title  than  his  transferrer,  and  be  thus 
enabled  to  bold  the  paper  against  the  true  owner. 

§  736.  Ill  the  fifth  place^  as  to  hiorvledge  respecting  the 
hill  or  note. — If  the  transferrer  knew  that  there  was  a 
defense  to  the  recovery  upon  the  bill  or  note,  or  that  the 
amount  could  not  be  realized  because  of  insolvency  of 
the  parties  to  it,  his  suppression  of  such  knowledge  was  a 
fraud  upon  the  transferee,  and  the  latter  may  hold  him 
responsible.^  And  if,  knowing  the  paper  to  be  worthless,  he 
represents  it  to  be  good,  his  fraud  is  all  the  greater,  and  the 
transferee  may  recover  against  him.~ 

Thus,  in  Massachusetts,  where  the  notes  of  a  third  person 
were  passed  off  by  a  purchaser  of  goods  to  the  vendor  in 
payment,  with  fraudulent  assurance  that  they  were  valid, 
and  that  the  maker  was  solvent,  and  they  were  made  l)y  an 
insolvent  without  consideration,  it  ^vas  held  that  the  vendor 
might  disregard  tbem  altogether,  and  sue  the  purchaser  for 
the  value  of  the  goods.^ 

§  737.  Whether  or  not  he  warrants  solvency  of  the  prin- 
cipal.— The  transferrer  of  a  bill  or  note  without  indorsement 
is  clearly  not  liable  on  the  bill  or  note ;  but  there  is  conflict 
of  authority  upon  the  question  whether  or  not  he  is  bound 
to  refund  the  consideration,  if  it  should  happen  without  his 
knowledge  that  at  the  time  of  the  transfer  the  maker  or  prin- 

'  Fenn  v.  Harrison,  3  T.  R.  759;  Popley  v.  Ashley,  6  Mod.  147;  Holt,  121 ; 
Camidge  v.  Allenby,  6  Barn.  &  Ores,  373 ;  Stoiy  on  Bills,  §  225 ;  2  Parsons  N.  & 
B.  41 ;  poi^t,  §  739. 

'  Kennedy  v.  O'Connor,  35  Ga.  199.  '  Bridge  v.  Batclieldcr,  9  Allen,  394. 


LIABILITY  OF  ASSIGNOR  OF  THE   LEGAL  TITLE.  593 

cipal  party  to  the  bill  or  note  was  insolvent,  and  the  instru- 
ment in  fact  worthless. 

It  is  contended  l)y  some  of  the  text  writers,  and  has  been 
decided  in  a  number  of  cases,  that  the  loss  under  such  circum- 
stances should  fall  upon  the  party  who  held  the  bill  or  note 
at  the  time  the  insolvency  occurred;  ^  while  others  maintain, 
and,  as  we  think,  with  correctness,  that  the  loss  should  fall 
upon  the  party  holding  the  bill  or  note  at  the  time  when  the 
insolvency  was  made  known  to  him.^  After  acquiring  knowl- 
edge of  the  insolvency  of  the  principal  party,  it  would  be  a 
fraud  to  conceal  it  when  transferring  the  bill  or  note ;  but 
until  it  is  known  to  them  the  transferrer  and  transferee 
mutually  take  the  chances  as  to  its  value.^ 

*  Roberts  v.  Fisher,  43  N.  Y.  159;  Lightbody  v.  Ontario  Bank,  11  Wend.  1; 
13  Wend.  107;  Ilarley  v.  Thornton,  3  Hill  (So.  Car.)  509;  Fogg  v.  Sawyer,  9  N. 
H.  365;  Wainwright  V.  Webster,  11  Vt.  576;  Thomas  v.  Todd,  G  Hill  (N.  Y.) 
340;  Townstnds  v.  Bank  of  Racine,  7  Wis.  185  ;  Westfall  v.  Braley,  10  Ohio  St 
188;  Story  on  Notes,  §  119;  Story  on  Bills  (Bennett's  ed.)  §  225  ;  see  Chapter  L, 
on  Bank  Notes,  Sec.  III.  vol.  2. 

^  Edmonds  v.  Digges,  1  Grat.  359;  Young  v.  Adams,  6  Mass.  182;  Scruggs  v. 
Cass,  8  Yerg.  175;  Lowry  v.  Murrell,  3  Port.  283;  Bayard  v.  Shunk,  1  Watts  &  S. 
93;  Corbet  v.  Bank  of  Smyrna,  3  Har.  (Del.)  335;  Ware  v.  Street,  3  Head.  609; 
Barton  v.  Trent,  3  Head.  167 ;  see  Story  on  Bills,  §  335  ;  Thomson  on  Bills  (Wilson's 
ed.)  187,  188.  In  Chitty  on  Bills  [*347],  381,  it  is  said:  "  When  a  transfer  by 
deliveiy  without  indorsement  is  made,  merely  by  way  of  sale  of  the  bill,  as  some- 
times occurs,  or  exchange  of  it  for  other  bills,  or  by  way  of  discount,  and  not  as, 
security  for  money  lent,  or  where  the  assignee  expressly  agrees  to  take  it  in  pay- 
ment, and  to  run  all  risks,  he  has  in  general  no  right  of  action  whatever  against 
the  assignor  in  case  the  bill  turns  out  to  be  of  no  value.  But  there  can  be  no- 
doubt,  that  if  a  man  assign  a  bill  for  any  sufficient  consideration  knowing  it  to  be 
of  no  value,  and  the  assignee  be  not  aware  of  the  fact,  the  former  would,  in  all 
cases,  be  compelluijle  to  repay  the  money  he  had  received." 

In  Byles  on  Bills  (Sliarswoocl's  ed.)  [*154],  275,  it  is  said  :  "  It  is  conceived  to 
be  the  general  rule  of  the  English  law  and  the  fair  result  of  the  English  authori- 
ties, that  the  transferrer  is  not  even  liable  to  refund  the  consideration,  if  the  bill 
or  note  so  transferred  by  delivery  without  indorsement  turn  out  to  be  of  no  value, 
l>y  reason  of  the  failure  of  other  parties  to  it.  For  the  taking  to  market  of  a  bill 
or  note  payable  to  l>earer  without  indorsing  it,  is,  'prima  Jacie,  a  sale  of  the  bill. 
And  there  is  no  implied  guaranty  of  the  solvency  of  the  maker,  or  of  any  other 
party.  Judge  Siiarswood,  concurring  with  the  text  of  Byles  on  Bills,  says  in  his 
note  ("ith  Am.  ed.)  p.  275,  "  it  is  conceived  that  the  confusion  has  arisen  from 
neglecting  to  distinguish  between  the  abstract  question  of  law,  and  question  of 
fact  in  the  particular  case."  See  Rcdficld  and  Bigelow's  Lead.  Cas.  p.  634;  and 
Chapter  L,  on  Bank  Notes,  Sec.  Ill,  vol  2.  '  Ante,  §  736;  poal,  §  739. 

Vol.  I.— 38 


694  TRANSFER  BY  ASSIGNMENT. 

The  transferrer  declines  to  bind  liimself  as  a  party  Ly  de- 
clining to  indorse.  The  transferee  impliedly  relies  on  the 
bill  or  note  itself,  by  not  requiring  an  indorsement.  And 
if  tlius,  both  being  innocent,  a  loss  by  insolvency  arises,  there 
seems  to  us  no  more  reasonable  rule  than  to  let  it  rest  where 
it  falls.  These,  at  least,  would  be  the  presumptions  of  law, 
whether  the  transfer  was  by  way  of  sale  of  the  bill  or  note, 
or  an  exchange,  or  discount ;  but  there  being  no  written  con- 
tract, any  special  agreement  might  be  given  in  evidence  to 
relnit  them,^  And  it  has  been  said  that  there  is  an  excep- 
tion to  the  general  rule  when  the  bill  or  note  is  transferred 
in  payment  of  a  precedent  debt,  of  which  we  shall  presently 
£peak. 

There  is  no  fraud  in  the  transferrer  when  he  assigns  the 
"bill  or  note  without  being  aware  that  the  principal  is  insolv- 
•ent,  and  there  is  no  failure  of  consideration,  for  the  considera- 
tion is  the  principal's  promise  to  pay.  The  value  of  that  prom- 
ise must  be  judged  of  by  the  transferee  when  he  acquires  it. 

§  738.  The  doctrine  of  the  text  was  well  expressed,  in 
Khode  Island,  in  a  case  arising  out  of  the  barter  of  cotton 
for  the  notes  of  third  persons,  which  were  taken  without  in- 
dorsement, Ames,  C.  J.,  saying :  ^  "  The  well-known  common 
law  principle,  applicable  alike  to  sales  and  exchanges  of  per- 
.'sonal  things,  is,  that  fraud  or  warranty  is  necessary  to  render 
the  exchanger  or  vendor  liable,  in  any  form,  for  a  defect  in 
the  quality  of  the  thing  sold  or  exchanged.  Applying  this 
principle  to  the  sale  or  exchange  of  the  note  of  a  third  per- 
;son,  transferred  by  indorsement  without  recourse,  or  by  de- 
livery merely,  the  vendee  or  person  taking  it  in  exchange 
takes  the  risk  of  the  past  or  future  insolvency  of  the  maker 
•or  other  party  to  it ;  unless,  indeed,  in  case  of  past  insolv- 
ency, the  vendor  or  exchanger  is  guilty  of  the  fraud  of  passing 
it  off  with  knowledge  of  that  fact."  • 

§  739.    In  England,  the  doctrine    to    this  eifect  is  well 

'  Monroe  v.  HoflF,  5  Denio,  360. 

'  Bicknall  v.  Waterman,  5  R.  I.  43;  see  also  Burgess  v.  Chapin,  5  R.  I.  225; 
Beckwith  v.  Farnum,  5  R.  I.  230;  Aldrich  v.  Jackson,  5  R.  I.  218. 


LIABILITY    OF   ASSIGNOR  OF   TIIR   LHGAL   TITLE.  595 

settled,  and  when  the  transfer  is  without  indorsement, 
whether  it  be  a  sale  of  the  bill  or  note,  or  an  exchanj^e,  or 
by  way  of  discount,  or  where  the  assignee  agrees  expressly 
to  take  it  in  payment,  he  can  neither  recover  against  the 
assignor  upon  the  bill,  or  recover  back  the  amount  given  for 
it,  on  account  of  failure  in  the  consideration  ;  unless,  indeed 
the  assignor  knew  the  bill  or  note  to  be  that  of  an  insolvent 
when  he  assigned  it.  Thus,  it  has  been  said  by  Lord 
Kenyon:  ^  "  It  is  extremely  clear  that  if  the  holder  of  a  bill 
send  it  to  market  without  indorsing  his  name  upon  it,  neither 
morality  nor  the  laws  of  this  country  will  compel  him  to  re- 
fund the  money  for  which  he  sold  it,  if  he  did  not  know  at 
the  time  he  sold  it  that  it  was  not  a  good  bill.  If  he  knew 
the  bill  to  l)e  bad,  it  would  be  like  sending  out  a  counter 
into  circulation  to  impose  upon  the  world,  instead  of  the 
current  coin."  And.  in  another  case,  where  the  party  dis- 
counted bills  with  a  banker,  and  received  in  part  of  the  dis- 
count other  bills,  without  the  banker's  indorsement,  and  they 
turned  out  to  be  bad,  the  same  high  authority  said  :  -  "  Hav- 
ing taken  them  "without  indorsement,  he  has  taken  the  risk 
on  himself.  The  bankers  were  the  holders  of  the  bills,  and 
by  not  indorsing  them,  have  refused  to  pledge  their  credit 
to  their  validity,  and  the  transferee  must  be  taken  to  have 
received  them  on  their  own  credit  only." 

§  740.  When  the  bill  or  note  of  a  third  party  is  trans- 
ferred without  indorsement,  in  payment  of  an  antecedent 
debt,  it  has  been  held  that,  if  dishonored,  the  prior  debt  re- 
vives, because  the  instrument  was  given  as  money,  and  did  not 
produce  it.^  But  this  distinction  does  not  seem  to  us  tenable.. 
Tiie  transferrer,  by  not  indorsing,  has  declined  to  warrant 
that  it  will  produce  money,  and  the  transferee  has  consented 
to  take  the  security  instead  of  money,  and  without  such  war- 


■  Fenn  v.  Harrison,  3  T.  R.  759. 

'  Fydell  v.  Clark,  1  Esp.  447;  see  .ilso  Emly  v.  Lye,  15  East,  7;  Bank  of  En- 
land  V.  Newman,  1  Ld.  Rayni.  442. 

'  Camidge  v.  Allenby,  B  B.  &  C.  373;  see  CInpter  L,  on  Bank  Notes,  Sec.  Ill, 
vol.  2;  see  2  Pars.  N.  &  B.  104,  note;   156,  note  m  ;  also  Chapter  XXXIX,  vol.  2. 


596  TRANSFER  BY  ASSIGNMENT. 

ranty.^  Still  this  is  to  Le  observed :  The  law  presumes,  in 
the  al)sence  of  proof,  that  tlie  instrument  was  passed  as  con- 
ditional payment  only,  in  whicli  case  the  preexisting  debt  is 
only  suspended  during  its  currency,  and  revives  on  its  dis- 
honor ;  ^  but  if  there  was  an  express  contract,  or  circumstances 
implying  a  contract,  on  the  part  of  the  creditor,  to  accept  the 
stranger's  paper  in  payment,  then  he  would  be  held  to  his 
bargain,  although  it  threw  upon  him  an  entire  loss — tlie 
burden  of  proof  to  this  effect  being  upon  the  transferrer.^ 
The  transferrer  by  delivery  is  not  entitled  in  such  cases  to 
notice  of  dishonor ;  but  if  there  is  unreasonable  delay  in  in- 
fomiing  him  of  it,  he  may  show  in  defense  any  injury  he 
has  sustained  by  the  actual  laches  of  the  creditor.* 


SECTION  11. 

LIABILITY   OF   THE    A8SIGN0K    OF   THE   EQUITABLE     TITLE   BY    DELIVERY. 

§  741.  We  have  already  seen  that  where  a  bill  or  note 
payable  "  to  order  "  is  transferred  without  indorsement,  the 
transferee  does  not  acquire  the  legal,  but  only  the  equitable 
title.^  TLe  holder  under  such  a  transfer  must  aver  and 
prove  the  assignment,  for  the  mere  possession  of  the  instru- 
ment unindorsed  is  not  evidence  of  ownership,  and  its  exhi- 
bition in  a  suit  not  sufficient  ground  of  recovery.®  And  he 
can  only  stand  in  the  shoes  of  his  assignor,  and  recover  sub- 

'  In  Timmins  v.  Gibbius,  18  Q.  B.  722  (14  Eng.  L.  &  Eq.  64),  Lord  Campbell 
said :  "  I  feel  great  difficulty  in  seeing  any  distinction  between  payment  lor  goods 
sold  at  the  time,  and  payment  for  tlicm  at  a  future  day.  In  both  cases  it  is  a 
transaction  of  buying  and  selling  ;  and  even  where  the  money  is  paid  over  the 
counter,  there  must  be  some  interval  during  which  the  buyer  was  debtor." 
Dennis  v.  Williams,  40  Ala.  633 ;  see  Chapter  XXXIX,  vol.  2. 

^  Marsh  v.  Peddcr,  4  Camp.  257;  Taylor  v.  Briggs,  Moody  &  M.  28;  Robinson 
V.  Read.  9  B.  &  C.  449;  see  Chapter  XXXIX,  vol.  2. 

'  Eagle  Bank  v.  Smith,  5  Conn.  71. 

*  2  Parsons  N.  &  B.  184.  '  A7}te,  CJiapter  XXI. 

"  Hull  V.  Conover,  35  Ind  372;  Pre?cott  v.  Hull,  17  Johns.  284;  Van  Eman 
V.  Stanchficld,  10  Minn.  255;  see  Chapter  XX,  on  Presentment  for  Payment, 
Sec.  I. 


LIABILITY  OF  ASSIGNOR  OF  THR   EQUITABLE  TITLE.      507 

jecfc  to  such  defense's  as  were  available  against  liim.'  There 
fore,  if  the  party  who  transfers  a  note  payable  to  the  order 
of  another,  but  unindorsed  by  him  to  whose  order  it  is  pay- 
able, and  it  turn  out  that  the  transferrer  had  no  title,  the 
transferee  could  not  recover,  there  being  no  equitable  right 
to  which  he  can  claim  succession.^  In  such  a  case  in  Indiana 
it  was  said  by  Blackford,  J. :  "  Whether  the  property  in  this 
note  could  pass  without  indorsement  under  any  circum- 
stances need  not  be  considered.  Supposing  it  could,  the 
transfer  in  such  case  must  be  governed,  not  by  commercial 
law,  but  by  the  rules  which  govern  the  sale  of  ordinary 
goods  out  of  market  overt."  '^  It  is  quite  well  settled  that 
delivery  of  such  an  instrument  may  operate  as  an  assign- 
ment* but  the  assisrnee  would  have  to  sue  in  the  name  of 
the  assignor,  unless  permitted  by  statute  to  sue  in  his  own.^ 
The  hona  fide  holder  by  assignment,  while  not  protected 
against  existing  defenses,  is  protected  agaiust  all  defenses 
subsequently  arising." 

§  742.  These  principles  apply  to  bills  and  notes  which 
are  not  drawn  payable  to  bearei',  or  to  order,  and  are  not 
negotiable.  The  party  who  becomes  transferee  of  such  in- 
struments takes  only  the  right  and  title  of  his  transferrer — 
can  sue  only  in  the  name  of  such  transferrer — and  is  subject 
to  all  offsets,  equities,  and  other  defenses,  which  might  have 
been  pleaded  against  him  up  to  the  time  when  the  debtor 
first  receives  notice  of  the  assignment.  As  soon  as  a  trans- 
feree receives  such  an  instrument,  he  should  therefore  notify 
the  debtor,  in  order  to  protect  himself  He  need  not,  how- 
ever, exhibit  the  security  to  the  debtor,  or  offer  him  other 
evidence  than  his  own  information  of  the  assignment ;  for 

'  Hedges  v.  Sealy,  9  Barb.  318;  Haskell  v.  Mitchell,  53  Me.  468  :  Boeka  v. 
Nuellu,  28  Mo.  181 ;  Terry  v.  AUis.  16  Wis.  478. 

^  Myers  v.  Friend,  1  Rand.  13-,  see  ante^  §  441. 

=  Elliott  V.  Armstrong,  2  Blackf.  212.  *  Jones  v.  Witter.  13  Mass.  304. 

''  Wheeler  v.  Wheeler,  9  Cow.  34;  Grand  Gulf  Bank  v.  Wood,  12  Sm.  it  M. 
482:  Amherst  Academy  v.  Cowls,  6  Pick.  427:  Smalley  v.  Wight,  44  Me.  412; 
Pease  v.  Hirst,  10  B  &  C.  12.j;  5  Man.  &  R.  88. 

,•  Beard  v.  Dcdolph,  29  Wis.  143  (1871). 


598  TRANSFER  BY  ASSIGNMENT. 

although  the  debtor  may  require  evidence  of  the  assignment 
before  he  makes  payment  to  the  assignee,  the  notice  is  a  mei-e 
measure  of  precaution  to  put  him  upon  inquiry.  ^  If  the 
debtor  finds  the  original  creditor  still  retaining  the  evidence 
of  the  debt,  he  may  still  make  payment  to  him ;  but  if  he 
cannot  produce  it,  there  would  be  the  best  reason  to  believe 
tbe  notice  of  the  assignment.^  Where  the  assignee  sues  in 
the  assignor's  name,  the  defendant  may  set  off  a  debt  due 
from  the  assignee  to  him,  in  like  manner  as  if  the  suit  had 
been  brought  in  his  own  name.' 

§  743.  Bills  and  notes  which  are  not  payable  to  bearer, 
or  to  Older,  cannot  be  so  transferred,  either  by  indorsement 
or  delivery,  so  as  to  substitute  the  transferee  for  the  trans- 
ferrer, and  enable  the  former  to  sue  in  his  own  name,  unless 
he  be  empowered  to  do  so  by  statute.**  Anciently,  transfers 
of  all  choses  in  action,  which  term  includes  bills  and  notes, 
were  forbidden  by  the  common  law,  but  courts  of  equity 
have  long  since  disregarded  the  rule,  and  in  that  forum  all 
assignees  of  choses  in  action  are  permitted  to  enforce  their 
rights  in  their  own  name.^  It  is  otherwise  in  courts  of  law, 
w^here  the  assignee  (unless  permitted  by  statute)  can  only 
sue  in  the  name  of  the  assignor,  or  of  his  executor  or  admin- 
istrator, according  to  the  ancient  rule,  when  the  assignor  is 
dead.^  But  the  doctrine  of  equitable  assignments  has  l)een 
constantly  extending  to  meet  the  conveniences  of  trade  and 
business ;  and  it  has  long  been  settled  that  the  assignee  of  a 

'  Davenport  v.  Woodbridge,  8  Grecnl.  17.  '^  Ibid. 

'  Corser  v.  Craig,  1  Wash.  C.  C.  424. 

*  Tassell  v.  Lewis,  1  Ld.  Raym.  743 ;  Hill  v.  Lewis,  1  Salk.  133 ;  Backus  v. 
Danforth,  10  Conn.  297;  White  v.  Heylman,  34  Penn.  St.  143;  arde,  §  741. 

'  Coles  V.  Jones,  2  Vern.  693;  Wright  v.  Wright,  1  Ves.  Sr.  411 ;  Hughes  v. 
Nelson,  29  N.  J.  (Eq.)  549  (1878).  In  this  case  the  transferrer  contracted  to  in- 
dorse, but  omitted  to  do  so.  Defeated  in  suit  at  law,  the  transferee  sued  in 
equity.  Judgment  against  him  at  law  was  held  no  bar  to  the  suit  in  equity, 
and  Vice-Chancellor  Van  Fleet  said:  •' The  delivery  of  the  note  under  the  cir- 
cumstances stated,  constituted  the  complainant  an  indorsee  in  equity,  with  all 
the  rights  of  a  lona  fide  holder  for  value  before  maturity.  *  *  Equity  looks 
upon  that  as  done  which  ought  to  have  been  d(me." 

*  Skinner  v.  Somes,  14  Mass.  107 ;  Amherst  Academy  v.  Cowls,  6  Pick.  427. 


LIABILITY  OF  ASSIGNOR  OP  THE   EQUITABLE  TITLE.      599 

cbo^!e  in  action  may  sue  in  a  court  of  law  in  the  name  of  his 
assignors,  and  recover,  subject,  liowever,  to  such  defenses  as 
were  avaihible  ao:aiust  the  assiornor  at  the  time  the  debtor 
received  notice  of  the  assio-uraent.^ 

§  744.  If  the  transferee  delivers  a  bill  without  indorsing 
it,  where  it  was  upon  good  consideration  agreed  or  under- 
stood that  it  should  be  indorsed  by  him,  and  afterward  he 
refuse  to  indorse,  he  may  be  sued  for  damages  for  breach  of 
contract.^  And  he,  or  his  personal  representatives,  may  be 
compelled  l)y  bill  in  equity  to  indorse.^  But  the  transferee, 
by  delivery  under  such  circumstances,  has  no  right  to  sign 
his  transfeirer's  name  as  iudorser.* 

§  745.  It  has  been  thought  that  where  an  assignment  of 
a  note  or  bill  payable  to  order  has  been  made  for  a  valuable 
consideration,  an  indorsement  thereof,  whenever  made,  will 
relate  back  to  the  time  of  assignment,  and  operate  as  if  then 
made.^  This  doctrine  may  be,  and  doubtless  is,  true  when 
the  indorsement  at  the  time  of  the  assignment  was  agreed 
upon  and  intended,  but  omitted  by  mistake,  accident  or 
fraud.*'  But  beyond  this  it  cannot  go.  If  the  instrument  be 
payable  to  order,  an  assignment  is  not  in  the  usual  course  of 
business.  It  transfers  the  equitable,  but  not  the  legal 
title;  and  an  indorsement  after  maturity,  or  after  notice  of 
a  defense,  cannot  effectuate  an  anterior  imperfect  transaction, 


'  Gibson  v.  Cooke,  20  Pick.  15. 

'  Rose  V.  Sims  1  B.  &  Ad.  521  (20  E.  C.  L.  E.) 

^  Watkins  v.  Maule,  2  Jac.  &  Walk.  242;  RoUeston  v.  Ilibbert,  3  T.  R.  411 ; 
«r  parte  Greening,  13  Ves.  206;  Byles  [*150],  270;  1  Parsons  N.  &  B.  279; 
Hughes  V.  Nelson,  29  N.  G.  (Eq.)  549;  Story  on  Notes,  §  120;  1  Story  Eq.  Juris. 
§  99   729. 

♦Rose  V.  Sims,  supra;  Harrop  v.  Fisher,  30  L.  J.  C.  P.  283;  Byles  [*150], 
270;  Story  on  Bills,  §201. 

'  Baker  v.  Arnold,  3  Caincs,  283  (180^),  Livingston,  J.;  1  Parsons  N.  B.  279. 

•  Southard  v.  Porter,  43  N.  H.  380  (1861).  The  party  had  notice  of  the  de- 
fense at  the  time  of  the  indorsement,  but  not  at  time  of  assignment.  But  see 
II;iskell  V.  Mitchell,  53  Me.  468.  In  AVatkins  v.  Maule,  2  Jacob  &  Walker,  237, 
it  is  said  by  Lord  Eldon:  "  When  a  note  is  handed  over  for  a  valuable  consider- 
ation the  indorsement  is  a  mere  form  ;  the  transfer  for  consideration  is  the  sub- 
stance; it  creates  an  equitable  right  and  entitles  the  party  to  call  for  the  form." 
Hughes  V.  Nelson,  29  N.  J.  (Eq.)  549. 


GOO  TRANSFER  BY  ASSlGJiMENT. 

and  exclude  equitable  defenses  wbieb  bad  become  available.^ 
In  Wisconsin  it  is  beld  tbat  a  post  iudoisement  relates  back 
to  delivery  in  respect  to  any  equity  outside  of  tbe  note  it- 
self.2 

In  Maine  it  bas  been  beld.  tbat  wbere  an  assignment  is 
made  before  maturity,  a  contemporaneous  promise  of  tbe 
payee  to  indorse,  if  not  complied  witb  until  after  maturity, 
will  not  avoid  tbe  defense  of  want  of  consideration,  made 
by  tbe  maker  against  tbe  indorsee.^ 

§  74C).  In  respect  to  set-off  a  different  principle  applies. 
An  indorsement  at  any  time  before  suit  brougbt,  wlietber 
before  or  after  maturity,  cuts  out  tbe  rigbt  of  tbe  maker  or 
acceptor  to  plead  it,  for  a  set-off  is  not  an  equity.'^ 

§  747.  A  second  assignee  wbo  gives  immediate  notice  of 
bis  assignment  will  be  protected  against  a  prior  one  wbo 
failed  to  give  notice,^  or  wbo  is   guilty  of  any  neglect   or 

'  Lancaster  National  Bank  v.  Taylor,  100  Mass.  24  (18G8);  Clark  v.  Whitaker, 
50  N.  H.  474 ;  Southard  v.  Porter,  43  N.  H.  380 ;  Whistler  v.  Forster,  14  J. 
Scott,  N.  S.  (108  E.  C.  L.  R.)  354  (1863).  Erie,  C.  J. :  "  Griffiths,  at  the  time  he 
so  handed  the  bill  over  to  the  plaintiff,  omitted  to  indorse  it.  Under  these  cir- 
cumstances, the  condition  of  things  was  this,  that  the  plaintitY  had  at  that  time 
the  same  rights  as  if  an  ordinary  chattel  had  passed  to  him  by  an  equitable  as- 
signment: he  would  have  all  the  rights  which  Griffiths  could  convey  to  him. 
Now,  Griffiths  having  defrauded  the  defendant  of  the  bill,  he  could  pass  no  right 
by  merely  handing  over  the  bill  to  another.  According  to  the  law  merchant  the 
title  to  a  negotiable  instrument  passes  by  indorsement  and  delivery.  A  title  so 
acquired  is  good  against  all  the  world,  provided  the  instrument  is  taken  for  value 
and  without  notice  of  any  fraud.  The  plaint ilfs  title,  under  the  equitable  assign- 
ment here,  therefore,  was  to  be  rendered  valid  by  indorsement;  but,  at  the  time 
he  obtained  the  indorsement,  he  had  notice  that  the  bill  had  been  fraudulently 
obtained  by  Griffiths  from  the  defendant,  and  that  Griffiths  had  no  right  to  make 
the  indorsement  Assuming,  therefore,  that  there  may  be  conflicting  equities 
between  the  plaintiff  and  the  defendant,  I  think  the  right  should  prevail  accord- 
ing to  the  rules  of  law,  and  that  the  plaintiff  had  no  title  as  transferee  of  the  bill 
at  all." 

"  Beard  v.  Dedolph,  29  Wis.  13G. 

'  Haskell  V  Mitchell,  53  Me.  468  (1866). 

*  Ranger  v.  Carey,  1  Mete.  369  (1840);  contra,  Odiorae  v.  Woodman,  39  N.  H. 
544  (1859).  The  case  of  Ranger  v.  Carey  is  often  quoted  in  support  of  the  doc- 
trine that  indorsement  relates  back  to  the  assignment;  but  the  contrary  is  ex- 
pressly decided  in  Lancaster  National  Bank  v.  Taylor,  100  Mass.  24,  and  that 
case  is  there  explained. 

'  Judson  V.  Corcoran,  17  How.  612, 


LIABILITY  OF  ASSIGNOR  OF  THE  EQUITABLE  TITLE.       GOl 

fmiid  wliich  enables  the  assignor  to  make  a  second  assign- 
ment to  a  ho na  fide  assignee.^ 

The  assignee  may  sue  the  debtor  in  his  own  name,  when 
the  assignor  has  discharged  him,  and  the  debtor,  in  considera- 
tion thereof  and  of  the  assignment,  has  promised  the  assignee 
to  pay  the  debt  to  him.'-  And  the  debtor,  after  making  such 
promise  to  pay  the  assignee,  could  not  make  defenses  avail- 
able against  the  assisjnor  which  he  did  not  reserve  in  his 
promise  to  the  assignee.^ 

§  748.  Equitable  assignment. — There  is  a  peculiar  kind 
of  assignment  which  remains  yet  to  be  noticed.  It  is  an 
assignment  which  arises  not  from  the  direct  act  of  the  person 
from  whom  the  beneficial  interest  in  the  thing  assigned 
passes;  but  is  effected  by  operation  of  law,  and  is  called 
equitable  assignment. 

The  assignment  of  any  particular  claim  is  considered  an 
equitable  assignment  of  all  securities  held  by  the  assignor  to 
assure  it.  Thus  the  assignment  of  a  debt  by  whatever  form 
of  transfer,  carries  with  it  any  bill  or  note  by  which  it  is 
secured  ;  ^  and  the  converse  of  the  proposition  is  equally  true, 
that  the  transfer  by  indorsement  or  assignment  of  a  bill  or 
note  carries  with  it  all  securities  for  its  payment,^  whether  a 
mortirao-e  or  otherwise.*  A  renewal  note  has  the  benefit  of 
any  security  for  the  payment  of  the  original,  whether  by 
way  of  mortgage,  deed  of  trust,  or  otherwise,  and  the  holder 
may  enforce  it.''^ 

'  Maykin  v.  Kir'oy,  4  Ricli.  Eq.  105. 

^  Tatlock  V.  Harris,  3  T.  R.  174;  Weston  v.  Barker,  13  Johns.  27G:  Doty  v. 
Wilson,  14  Johns.  378;  Murry  v.  Todd,  12  Mass.  281 ;  Currier  v.  Ilodgdon,  3  K 
II.  82;  Myers  v.  York,  &c.  R.  R.  Co.  43  Me.  232. 

'  Wiggin  V.  Damrell,  4  N.  II.  60 ;  Thompson  v.  Emery,  7  Foster,  269. 

*  Marston  v.  Allen,  8  M.  &  W.  494  ;  Adams  v.  Jones,  12  Ad.  &  E.  455  ;  Hayes 
V.  Caultiekl,  5  Q.  B.  81. 

'  Freeman's  Bank  v.  Ruckman,  16  Grat.  129 ;  see  post,  §  834,  Mechanics' 
Building  Ass'n,  29  La.  549. 

"  Dunn  V,  Snell,  15  Mass.  485;  Titcomb  v.  Thomas,  5  Greenl.  282;  Jones  v. 
Witter,  13  Mass.  282;  Waller  v.  Tate,  4  B.  Mon.  529 ;  Miller  v.  Ord,  2  Binn.  382; 
Fox  V.  Foster,  4  Penn.  St.  119;  Croft  v.  Bunster,  9  Wis.  503;  Johnson  v.  Car- 
penter, 7  Minn.  183;  Holmes  v.  McGintry,  44  Miss.  94  ;  see  post,  §  834,  Murray  v. 
Jones,  50  Ga.  118;  Fisher  v.  Otis,  3  Chandler,  83;  Dodge  v.  Bank,  1  Mc Arthur, 
420.  '  Gleason  v.  Wright,  53  Miss.  247. 


G02  TRANSFER  BY  ASSIGNMENT. 

Negotiable  instruments  may  also  be  assigned  by  a  sep- 
arate and  distinct  pajier,  although  not  delivered,  as  by  deed 
or  mortgage,  conveying  them  specifically,  or  all  "  choses  in 
action ;  "  ^  but  it  has  been  held  that  such  an  assignment  car- 
ried only  the  equitable  and  not  the  legal  title.^  For  such 
mode  of  transfer  separates  the  evidence  of  ownership  from 
the  paper  itseH?  The  deed,  or  other  instrument  by  which 
the  assignment  is  made,  operates  as  a  constructive  delivery 
of  the  paper,  and  the  transferrer  holds  it  as  agent  of  the 
transferee.*  Where  a  person  who  has  made  a  voluntary  as- 
si<^nment  for  the  benefit  of  creditors,  retains  certain  promis- 
sory notes  which  passed  by  the  assignment,  he  may  be  sued 
by  the  assignee  in  trover  for  their  conversion.^ 

'  McGee  v.  Ridcllesgarber,  39  Mo.  365 ;  Grand  Gulf  Bank  v.  Wood,  12  Smed. 
&  M.  483 ;  Ducarse  v.  Keyser,  28  La.  419. 

'  Franklin  v.  Tvvogood-,  18  Iowa.  517  ;  French  v.  Turner,  15  Ind.  63  ;  Grand 
Gulf  Bank  v.  Wood,  13  Smed.  &  M.  483. 

'  Hopkirk  v.  Page,  3  Brock,  41  Marshall,  C.  .7. 

*  Byles  on  Bills  (Sbarswood's  ed.)  [*143],  260,  note  1. 

*  Burrows  v.  Kcays,  37  Mich.  431. 


CHAPTER  XXIII. 

THE     SALE     AND     DISCOUNT     OF     BILLS     AND     NOTES,     AND     THE 
AMOUNT     OF     RECOVERY. 


SECTION  I. 

THE   VALIDITY   OF   THE   ORIGINAL   NEGOTIATION. 

§  749.  When  suit  is  brought  upon  a  negotiable  instru- 
ment by  the  payee,  or  indorsee,  or  by  an  assignee  without 
indorsement  where  it  is  payable  to  bearer,  he  is  presumed  to 
have  paid  therefor  its  full  face  value,  and  is  therefore  prima 
facie  entitled  to  recover  the  whole  amount  of  all  the  parties 
bound  to  him  for  its  payment.^  But  suppose  the  indorsee, 
where  such  an  instrument  is  payable  to  order,  or  the  assignee, 
by  delivery  where  it  is  payable  to  bearer,  has  paid  liis  im- 
mediate transferrer  less  than  its  face  value,  there  are  then 
several  important  questions  presented.  The  first  is,  is  the 
transaction  of  sucli  a  character  as  to  constitute  the  instru- 
ment usm'ious  in  its  inception  ?  Second^  if  there  be  no  usury, 
what  is  the  amount  of  recovery  as  against  the  maker  or 
acceptor  ?  Third,  is  the  contract  of  transfer  usurious  as  be- 
tween tbe  parties  thereto  ?  And  fourth,  what  is  the  amount 
of  recovery  against  the  indorser? 

§  750.  Is  transaction  usurious? — In  the  first  place,  is  the 
transaction  of  such  a  character  as  to  render  the  instrument 
usurious  in  its  incepti(-)n  I  There  is  no  doubt  that  if  a  note 
be  executed  by  A.  to  B.  for  a  valuable  consideration,  that  B. 
may  sell  it  to  C.  for  any  amount,  and  that  C,  regardless  of 
the  amount  he  pays  for  it,  may  recover  its  full  face  value  of 

'  Lee  V.  Pile,  39  Ind.  109;  Youse  v.  McCreary,  2  Blackf.  246;  Duncan  & 
Sherman  v.  Gilbert,  20  N.  J.  L.  K.  (5  Dutch.)  521 ;  AUairc  v.  Hartshorne,  1  Zab. 
C7S. 


C04  SALE   OF   BILLS   AND   NOTES. 

the  maker.^  And  wliere  B.  transfers  the  note  without  in- 
dorsement (or  by  indorsement  without  recourse),  the  trans- 
action is  clearly  the  mere  sale  or  assignment  of  a  debt  due  to 
him,  which  he  has  as  much  right  to  sell  as  he  has  to  dispose 
of  any  other  species  of  property.^  But  if  A.  had  made  his 
note  to  B.  for  B.'s  accommodation,  and  C,  knowing  the  fact, 
were  to  purchase  it  fiom  B.,  the  transaction  would  wear  a 
different  complexion.  In  such  a  case  B.  does  not  sell  an 
article  of  which  he  himself  possesses  full  ownership.  And  if 
the  amount  paid  for  it  by  C.  is  at  a  greater  rate  of  discount 
than  allowed  by  law,  the  contract  is  usurious,  as  it  is  really 
a  loan  of  money  by  C.  upon  the  undertaking  of  A.  to  pay 
him  back  a  sum  so  far  greater  that  it  exceeds  the  xate  of 
interest  which  C.  may  legally  receive  upon  his  advancement.^ 
§  751.  Hence  this  rule  may  be  laid  down:  if  no  party 
prior  to  the  holder  could  himself  bring  an  action  upon  the 
note,  and  the  holder  knew  that  fact  at  the  time  he  received 
it,  then  no  prior  party  owned,  or  seemed  to  own  it,  and  the 
holder  who  is  the  first  owner  must  be  taken  to  have  loaned 
the  money  to  the  maker.  And  consequently,  if  the  consider- 
ation paid  for  it  amounts  to  usury,  such  holder  cannot  recover 
at  all.*  Many  authorities  go  further  than  this,  and  declare 
that  although  the  holder  when  he  took  the  note  did  not  know 
that  no  pi'ior  party  could  sue  upon  it,  that,  nevertheless,  if 
such  were  the  fact,  he  must  be  held  to  have  loaned  the  money 
to  the  maker ;  and  that  if  the  sum  to  be  paid  amount  to  more 
than  the  legal  rate  of  interest  on  the  amount  paid,  the  holder 
can  have  no  recovery  against  the  maker.'"^     In  New  York  this 


'  Nichols  V.  Pearson,  7  Pet.  109;  Freeman  v.  Britton,  2  Har.  209;  Newman  v. 
Williams,  29  Miss.  222;  Cowles  v.  McVickar,  3  Wis.  (Smith)  731. 

^  Ibid. 

'  Whitworth  v.  Adams,  5  Rand.  333  (1827);  Overton  v.  Hardin,  G  Coldw. 
378. 

*  Whitworth  v.  Adams,  5  Rand.  333  (1829);  Veazie  Bank  v.  Faulk,  40  Me. 
109  (1855);  Richardson  v.  Scobec,  10  B.  Morr.  12  (1849);  May  v.  Campbell,  7 
Humph.  450  (1840). 

="  Sweet  V.  Chapman,  14  N.  Y.  S.  C.  (7  Hun),  576  (1876);  Munn  v. 
Commission  Co.  15  Johns.  53  (1818),  bill  of  exchange;  Powell  v.  Waters, 
17    Johns.    177    (181C):    affirmed    in    8   Cow.    669    (1826),    promissory   note; 


VALIDITY  OF  THE  ORIGINAL  NEGOTIATION.  C05 

view  lias  been  taken  in  numerous  cases,  it  being  said  tliat 
the  note  "  to  he  tlie  subject  of  such  sale  must  have  a  pre- 
existing vitality.  Its  breath  of  life  cannot  l)e  imparted 
tbrough  a  usurious  transaction."  ^  But  it  is  there  also  held 
tliat  usury  in  the  inception  of  a  note  is  no  defense  to  the 
maker  against  the  accommodation  payer  and  indorser  \vho 
takes  up  the  note  after  protest  with  no  notice  of  the  usury .^ 
The  question  of  the  inception  of  the  paper  and  the  time  it 
took  place  is  a  question  of  fact,  and  if  evidence  be  conflict- 
ing, should  be  submitted  to  tlie  jury.^ 

§  752.  It  has  been  there  also  held  that  the  principle  does 
not  apply  where  a  note  has  been  obtained  by  fraud  by  the 
payee  from  the  maker,  and  has  been  actually  delivered  to 
him  as  and  for  a  valid  security,*  although  it  would  apply 
where  there  was  no  delivery  by  the  maker  but  an  obtaining 
of  possession,  and  putting  of  it  in  circulation  by  fraudulent 
means.^     These  decisions  are  exceedingly  refining  in  the  dis- 

Williams  v.  Storm,  2  Duer,  52  (1853),  a  note ;  Catlin  v.  Gunter,  6  Kern.  368 
(1854),  a  note;  Hall  v.  Wilson,  IG  Barb.  548  (1853),  a  note;  Bessange  v.  Ross, 
29  Barb,  57G  (1859),  a  note;  Clark  v.  Loomis,  5  Duer,  468  (1858),  a  note;  East- 
man V.  Shaw,  65  N.  Y.  522;  Belclen  v.  Lamb,  17  Conn.  452  (1816),  a  note;  Hole- 
man  V.  Hobson,  8  Humph.  129,  130  (1847).  a  note;  Overton  v.  Hardin,  6  Coldw. 
378,  a  note;  Corcoran  v.  Powers,  6  Ohio  St.  19  (1856),  bill  of  exchange;  Bock  v. 
Laum.in,  24  Penn.  St.  448  (1855),  bill  of  exchange;  Van  Schaack  v.  Stafford,  12 
Pick.  565  (1832),  a  note ;  Saltmarsh  v.  Planters',  &c.  Bank,  14  Ala.  G6S  (1848), 
bill  of  exchange;  Simpson  v.  FuUenwider,  12  Ired.  Law,  335  (1851).  a  note; 
Fleming  v.  Mulligan,  2  McCord,  173  (1822),  a  note;  see  §  758. 

'  Powell  V.  Waters,  8  Cow.  669,  aliirmiug  same  case  in  17  Johns.  176.  Cas- 
sebeer  v.  Kalbflcisch,  18  N.  Y.  S.  C.  (11  Hun),  120. 

»  Casscbecr  v.  Kalbflcisch,  18  N.  Y.  S.  C.  (U  Hun),  123. 

'  Sweet  V.  Chapman,  14  N.  Y.  S.  C.  (7  Hun),  577. 

*  Harger  v.  Wilson,  63  Barb.  237  (1872).  The  note  was  obtained  from  the 
maker  by  the  payee  on  fraudulent  representations  on  the  sale  of  a  worthless 
patent  right.  It  was  for  $1.0nO,  and  was  sold  for  $900  to  the  holder,  the  rate  of 
discount  amounting  to  twenty  six  per  cent,  interest.  It  was  held  not  usury,  as 
the  note  was  delivered  as  a  valid  security. 

'  Hall  V.  Wilson,  16  Barb.  548  (1853).  In  this  case  the  note  for  $120  payable 
to  bearer  was  never  delivered,  but  was  stolen  from  the  maker's  desk  by  a  laborer, 
and  sold  to  Bigelow  for  $115.  It  was  held  that  the  latter  could  not  recover,  as 
the  transaction  constituted  a  loan,  the  note  having  no  existence  as  such  until  it 
came  into  the  hands  of  Bigclow  upon  a  consideration  that  amounted  to  u  urious 
interest.  ' 

In  Iowa,  it  is  held  that  the  fact  that  the  lonafide  holder  of  a  promissory  note 


GOG  SALE  OF  BILLS  AND  NOTES. 

tiiu'tions  taken,  and  the  hetter  opinion,  it  seems  to  ns,  is,  that 
in  all  cases,  if  the  liolder  at  the  time  he  received  the  note  did 
not  know  the  fact  that  it  was  not  a  valid  subsisting  security, 
there  is  no  intention  of  borrowing  and  lending,  which  is 
necessary  to  create  usury ;  and  the  holdei-  may  recover  upon 
it  ao-ainst  the  maker.^  And  to  hold  otherwise,  it  has  been 
well  said,  "  would  reverse  the  general  and  sound  principle  of 
law  and  justice,  that  whenever  one  of  two  persons  must 
suffer  by  the  act  of  a  third,  he  who  has  enabled  that  third 
person  to  occasion  the  loss  must  sustain  it  himself."  ^ 

§  753.  If  a  note  is  offered  for  discount  hy  the  mciker^  it  is 
plainly  usurious  as  betw(;en  him  and  the  party  to  whom  it  is 
delivered  if  the  discount  from  its  face  value  were  greater 
than  that  allowed  upon  a  loan  ;  and  if  it  be  already  indorsed, 
its  presence  in  the  maker's  hands  is  evidence  that  the  in- 
dorsement was  for  accommodation,  and  that  it  is  not  a  valid 
security  which  may  be  the  subject  of  sale.^  An  accepted 
bill  offered  for  sale  by  the  acceptor  would  stand  upon  the 
same  footing,  as  the  acceptor  is  the  party  primarily  bound 
for  its  payment,  and  could  not  himself  sue  any  party  to  it.* 
It  is  also  clear  that  if  the  payee  of  a  bill  or  note  whose 
name  appears  indorsed  thereon  prior  to  other  indorsers, 
offers  it  for  discount,  the  subsequent  indorsers  must  be  taken 
to  have  indorsed  for  such  prior  indorser's  accommodation, 
and  that  it  would  be  usurious  if  the  party  discounting  it  de- 
ducted more  than  legal  discount  as  between  him  and  the 
indorsers  for  accommodation,  of  whose  character  the  nature 

obtained  originally  by  fraud  and  without  consideration,  purchased  it  for  a  con- 
siderably less  amount  tlian  its  face,  will  not  affect  or  limit  his  right  of  recovery. 
Lay  V.  Wissman,  36  Iowa,  305. 

'  Whitworth  v.  Adams,  5  Rand.  333;  Taylor  v.  Bruce,  Gilmer  (Va.),  42; 
Brummel  v.  Enders,  18  Grat.  873;  Gimmi  v.  Cullen,  20  Grat.  439;  Gaul  v. 
Willis,  26  Penn.  St.  259. 

'  Coalter,  J.,  in  Whitworth  v.  Adams,  mjna. 

•  Whitworth  v.  Adams,  5  Rand.  411,  Cabell,  J.;  Wallace  v.  Branch  Bank,  1 
Ala.  565;  Overton  v.  Hardin,  6  Cold.  370;  Ilendrie  v.  Berkowitz,  37  Cal.  113. 
See  also  Fielden  v.  Lahens,  2  Abb.  (N.  Y.)  App.  111. 

'Carlisle  v.  Hill,  16  Ala.  405;  Saltmarsh  v.  Planters',  &c.  Bank,  U  Ala.  008; 
see  Witte  v.  William,  8  Rich.  (S.  C.)  304. 


VALIDITY  OF   TIIH  ORIGINAL  NEGOTIATION.  007 

of  the  transaction  gives  notice.^  AVhetber  or  not  tlie  same 
rule  would  apply  where  a  V)ill  is  offered  for  discount  l)y  the 
drawer  is  a  question  upon  which  the  authorities  ditfer,  some 
taking  the  view  that  the  transaction  would  be  a  usurious 
loan,^  others  that  it  would  be  a  mere  sale  of  a  debt  due  the 
drawer  by  the  drawee  or  acceptor.''  The  latter  opinion  seems 
to  us  correct,  for  reasons  elsewhere  stated.** 

An  individual  negotiating  for  tlie  purchase  of  a  bill  or 
note  from  one  having  it  in  possession,  and  whose  name  is 
upon  it,  must  assume  that  the  title  of  the  holder,  as  well  as 
the  liability  of  all  prior  parties,  is  precisely  that  indicated 
by  the  paper  itself^  Where  the  maker  of  a  note  places  it  in 
the  hands  of  a  bi-oker  to  be  sold;  without  any  restrictions  as 
to  the  manner  in  which  such  sale  is  to  be  made,  he  is  bound 
by  the  broker's  representations  to  a  ho na  fide  purchaser,  that 
it  is  good  business  paper,  and  he  cannot  maintain  salt 
against  such  purchaser  to  have  the  note  canceled  on  the 
ground  that  it  never  had  legal  inception  until  it  came  in  such 
purchaser's  hands,  by  whom  it  was  discounted  at  a  greater 
rate  than  allowed  by  law.® 

§  753  a.  By  the  common  law,  a  contract  for  the  sale  of 
specific  ascertained  goods  vests  the  property  therein  imme- 
diately in-  the  buyer,  and  a  right  to  the  price  in  the  seller, 
unless  it  can  be  shown  that  such  w\as  not  the  intention  of  the 
parties ;  and  title  passes  without  delivery.^  This  principle 
is  applicaide  to  the  sale  of  bills  and  notes ;  and  where  the 
payee  of  a  note  has  made  a  contract  to  sell  it  to  one  Parks, 
and  the  plaintiff  was  aware  of  the  fact  when  he  purchased 
the  note,  it  was  lield  that  by  the  agreement  made  title  passed 

'  ManUHn  v.  Branch  Bank,  2  Ala.  513. 

'  Lowes  V.  Mazarcdo,  1  Stark.  385  (3  E.  C.  L.  R) ;  Comyn  on  Usury,  181; 
see,  on  this  subject,  King  v.  Ridge,  4  Price,  50,  copied  in  Appendix,  5  Rand. 
617;  Whitworth  v.  Adams,  5  Rand.  333;  Noble  v.  Walker,  17  Ala.  4r)G. 

•  Lloyd  V.  Kcach,  3  Conn.  175.  *  See  post,  §§  168,  707. 

'  Central  Bank  v.  Ilammctt,  50  N.  Y.  158;  Hoge  v.  Lansing,  35  X.  Y.  136; 
see  also  fost^  §.?  781,  812. 

•  Aliern  v.  Goodspced,  IG  N.  Y.  S.  C.  (9  Hun),  265. 
'  Benjamin  on  Sales  (3d  ed.),  226. 


COS  SALE   OF   BILLS   A>?D   NOTES. 

to  Parks,  and  that  the  plaintiff  was  not  a  hona  fide  holder, 
and  conld  not  recover.^ 


SECTION  II. 

AMOUNT   OF   RECOVERY    AGAINST   MAKER   OR   ACCEPTOR. 

§  754.  Ill  the  second  place^  as  to  the  amount  of  recovery 
ai^ainst  the  maker  or  acceptor,  we  have  seen  already  that  the 
holder  may  recover  the  full  amount  if  the  note  was  made,  or 
bill  accepted,  upon  a  valuable  consideration.  And  even  if  there 
was  no  consideration,  as  between  the  original  pai'ties,  but  a 
mere  "becoming  a  party  for  accommodation,  the  holder,  al- 
though he  knew  the  fact,  could  recover  the  whole  amount, 
provided  he  paid  full  value.'^  But  if  he  paid  less  than  value, 
it  is  a  matter  of  dispute  whether  or  not  he  is  limited,  in  his 
recovery,  against  the  maker,  to  the  amount  advanced. 

§  755.  Englisli  authorities. — ^The  view  taken  in  England 
on  this  subject  has  been  stated  by  Mr.  Chitty  as  follows : 
"  With  respect  to  the  principal  money,  or  that  sum  which  is 
payable  on  the  face  of  the  l)ill  or  note,  many  instances  occur 
in  whicli,  although  the  plaintiff  may  not  have  given  full 
value  for  the  bill,  &c.,  he  may,  nevertheless,  recover  the 
whole  sum,  holding  the  overplus  beyond  his  own  demand  as 
trustee  for  some  other  party  to  the  bill,  <fec.,  entitled  to  re- 
ceive such  overplus.  Thus,  if  a  bill  be  drawn  in  the  regular 
course  of  business,  as  for  money  really  due  from  the  drawee 
to  the  drawer,  in  such  case,  in  order  to  avoid  several  actions, 
an  indorsee,  although  he  has  not  given  the  full  value  of  the 
bill,  may  recover  the  whole  sum  payable,  and  be  the  holder 
of  the  overplus  as  a  trustee  for  the  indorser.  *  *  This 
rule,  peimitting  the  holder  of  a  bill  to  recover  more  than  is 
due  to  himself,  only  applies  where  there  is  some  other  person 
entitled  to  receive  from  the  defendant  the  overplus  of  what 
is  due  to  the  plaintiff,  and  if  there  be  no  such  person,  the 

'  Sheldon  v.  Parker,  10  N.  Y.  S.  C.  (3  Hun),  499. 
"  Charles  v.  Marsden,  1  Taunt.  224. 


AMOUNT  OF   RECOVERY.  609 

plaintiff  will  be  permitted  only  to  recover  what  ia  flue  to 
himself."  ^  And  he  is  certainly  sustained  by  judicial  author- 
ity ;  but  the  cases  are  in  a  state  of  confusion,  without  follow- 
ing clearly  defined  principles, 

§  756.  In  the  Court  of  King's  Bench,  where  it  appeared 
that  the  bill  for  £SG  was  for  accommodation  as  between  the 
drawer  and  acceptor,  and  was  indorsed  by  the  payee  to  an- 
other for  £29,  and  the  iudoi'see,  who  knew  the  circumstances, 
brought  suit  against  the  accommodation  drawer,  it  was  held 
that  he  could  only  recover  the  £29  paid.^  So  where  the  bill 
for  £415  -was  accepted  for  the  drawer's  accommodation,  and 
indorsed  by  him  to  the  plaintiff  for  £265,  the  plaintiff's  as- 
signees, it  was  held,  could  only  recover  £265  from  the  ac- 
commodation acceptor.^ 

It  has  been  observed,  however,  in  respect  to  the  nisi  prius 
decision  of  Lord  Kenyon  referred  to  in  the  notes,  that  he 
proceeded  upon  the  fact,  probably  proved  in  the  cause,  that 
the  bill  was  not  sold  out  and  out  to  the  plaintiff,  but  was 
only  pledged  as  a  security  for  the  money  advanced  ;  and  that 
the  case  of  a  deposit  or  transfer  of  a  bill  for  the  security  of 
money  advanced  upon  its  credit,  and  not  for  its  absolute  pur- 
chase, is  the  only  case  in  which  the  holder  can  be  trustee  for 
the  indorser  for  a  part  of  the  bill,  unless  he  has  repaid  to  the 
holder,  on  account  of  the  bill,  a  part  of  its  amount.*  And 
this  is,  \YQ  think,  clearly  a  correct  view  of  the  law.     And  it 

'  Chitty  on  Bill^  (13tb  Am.  ed.)  [*G77],  757. 

'  Wiffen  V.  Roberts,  1  Esp.  261  (1795),  Lord  Kenyon,  C.  J.,  saying:  "  Where 
a  bill  of  exchange  is  given  for  money  really  due  from  the  drawee  to  the  drawer, 
or  is  drawn  in  the  regular  course  of  business,  in  such  case  the  indorsee,  though  he 
has  not  given  to  the  indorser  the  full  amount  of  tlie  bill,  yet  he  may  recover  the 
whole,  and  be  the  liolder  of  the  overplus  above  the  sum  he  has  really  paid  to  the 
use  of  the  indorsee;  but  where  the  bill  is  an  accommodation  one,  and  that  known 
to  the  indorsee,  and  he  pays  but  part  of  the  amount,  in  such  case  he  can  only  re- 
cover the  sum  he  has  actually  paid  for  the  bill ;  and  if  the  plaintitf  in  this  case, 
was  entitled  to  recover,  he  could  only  do  it  to  the  amount  of  £29,  the  sum  he 
really  paid  for  it." 

=  Jones  V.  Ilibbert,  2  Stark.  271  (1817);  see  Barber  v.  Backhouse.  Peake's 
Cases,  01. 

*  Whitworth  v.  Adams,  5   Rand.  377   (1827),  Green,   J.,  dissenting  on   main 
point  decided,  but  not  on  this  proposition. 
Vol.  I.— 39 


610  SALE   OF   BILLS   AND   NOTES. 

may  be  further  observed  tliat,  unless  this  explanation  be  cor- 
rect, the  transaction  would  have  been  usurious  and  void. 

§  757.  Authorities  in  the  United  States. — In  the  United 
States,  the  authorities  are  directly  at  war.  But  tlie  true  doc- 
trine, as  it  seems  to  us,  is,  that  the  party  paying  less  than  its 
face  value  for  paper  made,  accepted,  drawn,  or  indorsed  for 
accommodation,  and  not  knowing  the  fact  at  the  time  of  pur- 
chase, is  entitled  to  recover  the  full  amount  against  the 
accommodation  parties,  because  they  have  deliberately  and 
intentionally  put  forth  themselves  to  be  treated  as  being 
bound  in  the  mannei*  indicated.^  But  the  view  has  been 
taken  in  a  number  of  cases  that  he  is  only  a  bona  fide  holder 
to  the  extent  of  the  consideration  paid  by  himself  or  a  })rior 
party,  and  can  recover  that  only  against  the  accommodation 
party.^  ^nd  even  if  he  knew  they  were  accommodation 
parties  at  the  time  of  purchase,  it  would  make  no  difference, 
provided  the  party  he  purchased  it  from  was  a  bona  fide 
holder,  who  could  himself  enforce  it,^  or  was  a  subsequent 
'holder  to  the  parties  between  whom  the  accommodation  ex- 
isted, and  appeared  to  the  purchaser  to  be  himself  a  bona  fide 
holder,  and  not  an  agent  for  any  of  the  parties  to  the  accom- 
modation.* It  will  be  observed  that  if  the  purchaser  of  a  bill 
accepted,  on  note  made  for  accommodation,  gives  for  it  an 
amount  less  than  the  discount  allowed  by  law,  he  will  come 
within  the  provision  of  the  statutes  against  usury,  provided 
he  knew  its  accommodation  character.^  Where  no  question 
.of  usury  arises,  and  there  is  no  question  of  fraud,  we  think 
,that  it  matters  not  what  the  purchaser  pays,  and  that  he  may 
recover  the  whole  amount  against  anterior  parties  accommo- 
dation, or  otherwise. 


'  Moore  v-  Baird,  30  Penn.  St.  138;  Gaul  v.  Willis,  2G  Pcnn.  St.  209. 

*  Ilolcomb  V.  WyckofF.  35  N.  J.  L.  R.  (6  Vroom),  37  (1870);  Allaire  v.  Harts- 
horne,  1  Zab.  665;  Stoddard  v.  Kimball,  6  Cusli.  469;  Story  on  Bills  (Bennett's 
ed.),  §  188. 

'  Ilolcomb  V.  WyckofF,  85  N.  J.  L.  R.  37. 

*  Whitworth  v.  Adams,  5  Rand.  333;  Gimmi  v.  Cullen,  20  Grat.  439. 

*  See  ante,  §  751. 


AMOUNT  OF  RECOVERY.  Oil 

§  758.  Whe7i  hill  or  vote  has  inception  in  fmnd. — When 
the  execution  of  the  ))ill  or  note  has  been  induced  by  fraud, 
a  different  rule,  according  to  a  number  of  authorities,  would 
apply.  The  honafide  holder  of  it  for  value,  and  without  no 
tice  is  undoubtedly  entitled  to  be  protected  against  a  loss 
which  would  l)efall  him  if  the  party  defrauded  were  permit- 
ted to  set  up  the  defense  of  fraud  on  the  part  of  the  payee 
against  him,  as  we  have  already  seen.  But  it  does  not,  there- 
fore (as  has  been  considered),  follow  that  he  may  recover  of 
such  party  the  whole  amount,  when  he  has  paid  a  less  sum. 
For  his  protection  and  security  against  loss,  it  is  only  neces- 
sary that  he  should  be  paid  back  the  amount  which  he  was 
induced  to. give  for  the  instrument  by  its  appearance  of  val- 
idity ;  and  therefore  such  amount  is  the  limit  of  his  recovery 
against  tlie  drawer  or  maker  who  was  defrauded  into  the  ex- 
ecution of  the  instrument.^  Thus,  in  New  York,  where  the 
payee  obtained  a  note  for  $1,000  by  fraud,  for  a  worthless 
patent  right,  and  sold  it  to  the  plaintiff  for  $900  two  days 
afterward,  it  was  held  that  only  $900  could  be  recovered 
airainst  the  maker.^ 

And  in  the  same  State,  where  the  payee  obtained  a  note 
from  the  maker  by  false  and  fraudulent  representations  made 
on  the  sale  of  a  patent  right,  and  passed  it  to  the  holder  with 
another  note  for  a  span  of  horses,  worth  but  half  as  mucli  as 
the  amount  of  the  note,  it  was  held  that  the  value  of  the 
consideration  only  could  be  recovered  against  the  maker.* 

'  Ilolcomb  V.  Wyckoff,  35  K  J.  L.  R.  38;  Story  on  Bills,  §  188. 

-  Ilarger  v.  Wilson,  03  Barb.  237  (1872),  Talcott,  J.:  "A  majority  of  tho 
Court  think  that  the  honafide  holder  of  a  note  tlms  fraudulently  obtained,  lias  no 
equity  as  against  the  party  defrauded,  beyond  the  amount  of  the  advances  he 
has  made  upon  the  faith  of  the  note." 

'^  Huff  V.  Wagner,  03  Barb.  2:i0  (1872),  Talcott,  J.,  saying  in  the  course  of  his 
opinion :  'The  plaintiff  had  a  verdict  under  the  instruction  of  the  court  that  he 
was  a  ho:>afide  holder,  and  was  entitled  to  recover  on  the  note,  notwithstanding 
the  fraud  practiced  by  Ferguson  in  obtaining  the  note.  The  special  term  granted 
a  new  trial  upon  the  exception  to  the  ruling  as  to  the  admission  of  the  evidence, 
and  upon  the  principle  that  a  bona  fide  holder  of  commercial  paper,  to  which,  as 
between  maker  and  payee,  there  is  a  good  defense,  is  entitled  to  be  protected 
only  to  the  extent  of  the  value  which  he  has  paid.     This,  I  think,  is  correct. 


612  SALE   OF   BILLS   AND   NOTES. 

Again,  where  a  note  for  $10,000  was  left  at  the  payee's  place 
of  business,  in  contemplation  of  a  settlement  between  him 
and  the  maker,  but  was  not  delivered  to  the  payee  or  to  any 
one  for  his  use,  and  no  settlement  was  effected,  and  the  note 
was  taken  by  the  payee  and  indorsed  by  him  to  the  plaintiff 
for  the  sum  of  $1,500,  it  was  held  that  the  latter's  recovery 
against  the  maker  was  limited  to  the  sum  paid,  with  interest. 
Daniels,  J.,  quoting  numerous  authorities  said :  "  Accordingly, 
it  has  been  held  that  the  indorser  of  commercial  paper, 
not  valid  as  a  legal  obligation  in  the  hands  of  the  payee 
negotiating,  must  be  restricted  in  his  recovery  to  the  value 


The  protection  of  the  holder  for  value  in  such  cases,  as  in  other  cases,  where  the 
law  protects  lona  fide  purchasers  againt  latent  claims,  is  founded  upon  the  idea 
of  protecting-  such  bona  fide  purchaser  for  value  against  any  possible  loss.  And 
this  is  the  precise  reason  why  a  lona  fide  holder  of  such  paper,  which  has  been 
transferred  to  him  to  secure  an  antecedent  debt,  cannot  recover  against  the  party 
who  has  been  defrauded,  namely,  that  he  has  lost  nothing  by  his  reliance  upon 
the  face  of  the  paper. 

"  These  principles  are  discussed  and  laid  dov,'n  in  a  very  elaborate  opinion  of 
,  the  late  chancellor,  delivered  in  the  Court  of  Errors,  in  the  leading  case  of  Stalker 
V.  McDonald.  0  Hill,  93,  in  which  he  expressly  holds  that,  if  the  holder  of  such 
paper  has  paid  but  a  part  of  the  consideration  or  value  of  the  property,  he  is 
only  entitled  to  be  considered  as  a  lona  fide  purchaser  pro  tanto,  and  refers  with 
approbation  to  the  case  of  Edwards  v.  Jones,  7  Car.  &  P.  633,  in  which,  in  an 
action  on  a  note  for  £100,  the  consideration  of  which  was  impeached  by  a  plea, 
the  plaintiflF  replied  that  it  was  indorsed  to  him  for  the  consideration  of  £49. 
And  he  was  only  permitted  to  recover  the  £19  advance. 

"  The  proposition  sought  to  be  maintained  by  the  counsel  for  the  appellant 
in  this  case,  namely,  that  whatever  may  have  been  the  consideration  of  the  trans- 
fer of  a  negotiable  note,  if  it  was  a  valuable  one,  the  holder  without  notice  of 
the  invalidity  of  the  note  may  recover  the  entire  face  thereof,  without  reference 
to  the  amount  paid  by  him  for  it,  would  produce  most  unjust  and  startling  re- 
sults. It  would  enable  the  holder  of  a  stolen  note  for  $1,000  to  recover  the  en- 
tire amount  thereof  from  the  maker,  from  whom  it  had  been  stolen,  although 
the  holder  had  purchased  the  same  without  notice  for  only  $100 — a  result  revolt- 
ing to  common  sense,  and  going  far  beyond  affording  that  protection  which  pub- 
lic policy  requires  should  be  extended  to  parties  who  purchase  negotiable  paper 
for  value.  I  see  no  reason  for  any  distinction  between  the  case  of  a  purchaser  for 
money,  and  one  where  the  note  is  exchanged  for  property.  If  such  a  distinction 
could  be  made,  the  maker  of  the  note  could  have  no  protection.  Such  notes 
would  then  be  used  in  the  purchase  of  property,  as  in  this  case,  instead  of  sold 
for  money.  The  purchaser  is  fully  protected  against  loss  by  being  enabled  to 
recover  the  full  value  of  the  property  parted  with  on  the  purchfise."  Moore  v. 
Ryder,  65  X.  Y.  443. 


AMOUNT  OF   RECOVERY.  613 

with  interest  advanced  by  the  payee  upon  the  faith  of  it. 
These  authorities  fully  sustain  that  proposition,  and  they  are 
in  no  sense  in  conflict  with  the  rule  that  allows  a  recovery 
for  the  full  amount  of  paper  improperly  negotiated  when  an 
adequate  consideration  has  been  advanced  in  good  faith  upon 
it.  The  paper  derives  its  vitality  wholly  from  the  circum- 
stance that  it  has  been  obtained  for  value  without  notice  by 
an  innocent  purchaser.  For  his  protection  it  is  maintained 
in  his  hands  as  a  legal  obligation.  The  object  of  the  law  is 
to  save  him  from  loss;  and  to  do  that  a  recovery  of  the 
amount  he  may  have  advanced  is  all  that  can  be  required. 
To  go  beyond  it  w^ould  be  inequitable  and  unjust  to  the 
party,  after  that,  equally  entitled  to  be  protected  from  unnec- 
essary loss."  ^  But  in  the  same  State  it  has  been  also  held 
that  if  there  was  no  intent  to  deliver  the  paper,  and  in  fact 
no  delivery,  and  the  holder  should  acquire  it  from  the  payee 
at  a  price  less  than  the  discount  allowed  by  \slw,  the  transac- 
tion would  be  usurious,  and  the  holder  could  not  recover  at 
all.^     Where  some  legal  consideiation  exists  in  the  inception 

'  Todd  V.  Shelbourae,  15  N.  Y.  S.  C.  (8  Ilun),  512  (1876). 

-'  Hall  V.  Wilson,  16  Barbour,  518  (1873);  ante,  §  751  :  Eastman  v.  Shaw.  65 
N.  Y.  522.  In  this  case  the  defendant  signed  a  note  and  put  it  in  the  hands  of 
the  paj-ee  to  show  to  others  as  evidence  that  he  would  contribute  that  amount  to 
a  certain  proposed  enterprise.  The  company  to  carry  it  on  was  never  formed  as 
proposed,  and  the  payee  sold  the  note  at  a  discount  greater  than  legal  interest. 
In  an  action  by  the  holder  against  the  maker  it  was  held  that  the  note  had  no 
inception  until  the  sale,  and  was  usurious  and  void ;  and  therefore,  that  the 
holder  could  recover  nothing.  Dwight,  C.,said:  "These  authorities  serve  to 
show  that  a  note  must  have  had  an  inception,  to  make  it  the  subject  of  sale,  is 
not  confined  to  the  case  of  accommodation  paper,  but  extends  to  all  cases  where 
the  paper,  though  in  the  similitude  of  a  note,  has  no  existence  as  between  the 
immediate  parties  to  it.  Tliis  point  is  well  shown  by  the  case  of  :\Luvin  v. 
McCuIlum,  20  Johns.  R.  288.  *  *  On  this  ground  it  appears  to  me  that  the  case 
of  Hall  V.  Wilson,  16  Barb.  548,  was  correctly  decided.  *  *  *  It  is  not  nec- 
essary m  reaching  this  conclusion  to  disagree  with  such  cases  as  Howe  v.  Potter, 
61  Barb.  350,  and  Harger  v.  Wilson,  63  Id.  237.  In  each  of  these  cases  the  trans- 
action had  all  the  elements  of  a  contract.  In  Harger  v.  Wilson  the  maker  of  the 
note  intentionally  issued  the  note  and  put  it  in  circulation,  though  induced  to  do 
so  by  the  fraud  of  the  payee.  Hero  was  a  valid  contract,  though  in  its  nature 
defeasible.  The  payee  could  have  brought  an  action  on  the  note,  tiiough  the 
fraud  might  have  been  urged  as  a  defense.     It  was  properly  held  that  the  note 


C14  SALE   OF   BILLS  AKD   JSOTES. 

of  the  paper,  it  seems  that  in  New  York  the  bona  fide  holder 
may  recover  the  full  amount,  no  matter  what  amount  he  may 
give  for  it.^  This  seems  to  us  the  true  distinction  in  such 
cases.  If  the  paper  is  issued  in  fraud  without  consideration, 
the  bona  fide  purchaser  should  be  limited  in  recovery  to  the 
amount  paid  with  interest.^  But  if  there  was  an  original 
valid  consideration,  or  the  paper  was  issued  fairly  and  inten- 
tionally without  consideration,  then  he  is  entitled  to  recover 
the  whole  amount  regardless  of  the  amount  he  pays.^ 

§  758  a.  Confiicting  authorities. — There  are  authorities 
Vvhich  conflict  with  the  doctrine  of  the  text,  and  there  is  no 
doubt  that  some  of  these  cited  in  support  of  it,  by  the  courts 

had  an  inception  in  the  hands  of  the  payee.  Such  a  case  is  plainly  no  authority, 
for  the  decision  of  one  where  the  defense  is,  that  the  note  never  took  eflfect  at  all, 
because  there  was  no  intent  to  deliver,  and  in  fact  no  delivery." 

'  Howe  V.  Potter,  Gl  Barbour,  357  (1872).  In  this  case  nothing  is  said  as  to 
the  amount  reserved  by  the  holder,  but  it  appears  to  have  been  a  full  recovery 
upon  the  draft.  As  to  the  rule  in  Tennessee  see  Coliger  v.  Francis,  58  Tcnn.  423; 
post,  §  778,  note;  and  Holman  v.  Holson,  8  Humph.  107;  Petty  v.  Hiuman,  3 
Humph.  102. 

-  Holcomb  V.  AYyckoff,  35  N.  J.  (L.R.)  38  (1870),  Depue,  J., saying:  "The  case 
now  before  the  Court  cannot  be  distinguished  from  Allaire  v.  Ilartshorne  upon 
any  principle  founded  on  r.-ason  or  justice.  In  both  cases  tiie  notes  were  void 
in  the  hands  of  the  original  parties,  and  the  only  vitality  they  possessed  was  that 
which  they  acquired  from  the  consideration  for  which  they  were  transferred. 
In  the  one  case  a  portion  of  the  sum  mentioned  in  the  note  being  a  trust  for  the 
payee,  as  to  whom  the  note  was  void,  it  was  manifest  that  for  so  much  the 
plaintiff  ought  not  to  recover;  in  the  other  case,  the  note  being  equally  void,  the 
plaintiff  has  no  equity  to  recover,  beyond  what  will  be  indemnity  for  the  money 
prepaid  for  it." 

'  See  Daniels  v.  Wilson,  21  Minn  530  (1875).  In  this  case  a  note  for  $380  79, 
with  accumulated  interest,  was  sold  by  indorsement  to  the  holder  for  $150.  It  • 
was  witliout  consideration.  Berry.  J.,  said :  "•  The  familiar  general  rule  is  that  an 
indorsee  of  negotiable  paper,  for  value,  before  maturity,  without  notice  of  any 
infirmity,  takes  it  clear  of  all  equities  and  defenses  between  antecedent  parties, 
and  is.  of  course,  entitled  to  full  amount  of  the  same,  according  to  its  tenor. 
When  the  original  consideration  of  the  paper  is  illegal  or  fraudulent,  or  it  is 
taken  as  collateral  security,  and  perhaps  in  some  other  instances,  an  exception  to 
this  rule  has  been  recognized,  so  as  to  restrict  the  right  of  recovery  to  the  con- 
sideration actually  paid  by  the  indorsee,  or  to  the  amount  of  the  debt  to  which 
the  paper  is  collateral.  The  defendant  contends  for  a  like  exception  in  this 
case,  in  which  it  appears  that  the  note  was  without  consideration,  and  the  plaint- 
ifi"  purchased  it  for  less  than  its  face.  But  in  our  opinion  no  such  exception  is 
admissible  upon  principle. 


AMOUNT  OF  RECOVERY.  (515 

wliicli  adopt  it  as  sound  law,  are  not  strictly  applicable  am 
precedents.  They  are  cases  in  which  the  holder  took  the 
paper  invalid  between  original  parties  as  security  for  a  debt, 
and  would  hold  the  residue  after  discharging  it  as  a  trustee 
for  the  transferrer;  and  in  such  cases  it  has  been  properly 
held  that  as  the  transferrer  could  not  himself  recover,  there 
could  be  no  recovery  as  a  trustee  for  his  benefit,  and  there- 
fore no  recovery  beyond  the  amount  due  the  plaintiff.^ 

While  we  reject  these  cases  as  authoritative  in  support  of 
the  text,  yet  its  conclusions  seem  to  rest  upon  broad  princi- 
ples of  equity,  and  to  extend  a  just  and  sufficient  protection 
to  purchasers  of  commercial  paper  while  not  too  rigorously 
pursuing  those  who  have  been  innocently  defrauded  into  its 
execution. 

In  Iowa,  the  contrary  doctrine  has  been  distinctly  held  in 
a  case  where  a  note  for  $150  obtained  by  fraud  was  indorsed 
to  a  purchaser  for  $80.  Day,  J.,  saying :  "  The  defense  that 
a  note  has  been  obtained  fraudulently,  or  without  considera- 
tion does  not  avail  against  a  bona  fide  holder.  If,  however, 
the  recovery  of  such  holder  may  be  limited  to  the  amount 
paid,  it  is  apparent  that  the  defense  does  avail,  for  without 
such  defense  he  would  recover  the  amount  evidenced  by  the 
note.'"^  And  the  like  view  seems  to  have  obtained  in  other 
cases,  though  the  question  as  to  the  limitation  of  the  amount 
of  recovery  was  not  particularly  presented  but  rather  assumed 
not  to  exist,  if  there  could  be  any  recovery  at  all.^ 

The  United  States  Supreme  Court,  in  a  recent  decision, 
expresses  itself  in  favor  of  the  doctrine  that  "  the  purchaser 
of  a  negotiable  security  before  maturity,  in  cases  where  he  is 
not  personally  chargeable  with  fraud,  is  entitled  to  recover 
its  full  amount  against  its  maker,  though  he  may  have  paid 


'  Allaire  v.  Hartshorne,  1  Zabriskie,  663;  see  §  832. 

'  Lay  V.  Wissnian,  36  Iowa,  305  (1873).  See  Article  in  Albany  L.  J.  vol  18. 
No.  13,  Sept.  38,  1878,  p.  247;  Vinten  v.  Peck,  14  Mich.  29G  (18GG);  Campbell. 
J.:  "The  maker  of  a  note  has  no  concern  with  the  amount  paid  for  it  by  a  Jxma 
^(Ze  holder." 

•Bailey  v.  Saiith,  21  Ohio  St.  390  (1863);  Mathews  v.  Rutherford,  7  La.  An. 


01 G  SALE   OF   BILLS  AND   NOTES. 

less  than  its  par  value,  whatever  may  have  been  its  origi- 
nal infirmity.^ 

§  758  h.  If  the  purchaser  has  paid  only  part  of  the 
amount  agreed  upon  for  the  paper,  and  the  contract  remains 
unexecuted  as  to  the  residue,  when  he  receives  notice  of  fraud 
in  the  inception  of  the  paper,  it  is  clear  that  he  can  then  re- 
cover only  the  amount  which  he  had  paid  before  such  notice 
was  received.  As  to  what  he  pays  after  such  notice  he  is 
not  a  purcliaser  iu  good  faith.^  And  a  portion  of  the  con- 
tract be  entirely  unexecuted  when  he  receives  notice  of  the 
fraud  he  can  recover  nothing.^ 

§  759.  When  there  is  usury  estahlished  as  between  indorser 
and  indorsee  of  a  bill  or  note,  the  indorsee  cannot  sustain 
action  against  the  indorser,  because  the  contract  is  void.  But 
it  is  held  by  some  authorities  that  he  may  sue  prior  parties, 
tracing  title  through  his  indorser,  because,  in  so  far  as  it  trans- 
fers title,  it  is  an  executed  contract;  and  as  a  party  claiming 
a  stolen  horse  could  recover  him  from  the  thief,  althousfh  in 
proving  it  to  be  his  property  it  appears  that  he  acquired  title 
under  a  usurious  bargain,  so  the  holder  may  prove  his  right 
to  recover  the  amount  due  from  those  not  implicated  in  the 
usury .^     By  other  authorities  the  doctrine  is  denied  ;  but 

225,  quoted  for  this  doctrine,  "was  a  case  of  accommodation  paper,  and  not  of 
paper  obtained  by  fraud. 

'  Cromwell  v.  County  of  Sac.  96  U.  S.  (6  Otto),  60  (1877). 

'  Dresser  v.  Misso.  «&c.  R.  R.  Co.  93  U.  S.  (3  Otto),  95;  Hubbard  v.  Chapin,  2 
Allen,  328 ;  Lay  v.  Wissman,  36  Iowa,  309. 

'  Crandell  v.  Vickery  45  Barb.  156. 

*  Armstrong  v.  Gibson,  31  Wis.  66  (1872) ;  Collier  v.  Nevill,  3  Dev.  31 ; 
Knights  V.  Putnam,  3  Pick.  185,  Wilde,  J. :  "  It  is  manifest  that  the  maker  of 
a  note  is  not  affected  by  a  usurious  agreement  between  the  indorser  and  indorsee. 
lie  is  liable  on  his  contract,  and  it  is  immaterial  to  him  whether  tlie  action  be 
brought  in  the  name  of  the  indorser,  or  that  of  the  indorsee.  But  I  hold  further 
that  the  transfer  of  a  note  on  a  usurious  consideration  is  neither  void  nor  voida- 
ble. So  far  as  the  indorsement  operates  as  a  transfer  of  the  note,  it  is  an  ex- 
ecuted contract,  and  the  statute  against  usury  is  not  applicable.  It  only  applies 
to  the  implied  promise  or  guaranty  of  the  indorser,  which,  being  an  executory 
contract,  may  be  avoided.  But  in  no  case  can  an  executed  contract  be  set  aside 
on  the  plea  of  usury.  It  is  not,  however,  necessary  to  insist  on  this  distinction 
or  thi    purpose  of  sustaining  the  present  verdict.     It  is  sufficient  for  this  pur- 


AMOUNT  OF  RECOVERY.  G17 

it  seems  to  us  sound,  tliougli  the  views  expressed  against  it 
are  weighty.^ 

§  760.  Right  to  trace  title  through  usurious  indorsements. 
— ^The  authorities  also  differ  upon  the  question  whether 
or  not  a  subsequent  indorsee  who  is  not  a  party  to  the 
usury,  may  recover  against  parties  prior  to  it,  tracing  title 
through  the  indorser  who  was  a  party  to  it.  The  difficulty 
may  be  avoided  by  such  subsequent  indorsee  striking  out 
the  usurious  indorsement,  and  all  subsequent  -indorsements, 
where  there  is  an  indorsement  in  blank  prior  to  the  usury, 
under  which  he  might  then  deduce  title  and  enforce  pay- 
ment.*^  But  this  may  not  be  practicable,  or  not  desirable ; 
and  the  better  opinion,  as  it  seems  to  us,  is,  that  the  holder 
without  notice  may  sue  and  recover  against  all  the  parties  save 
the  indorser,  from  whom  the  usury  was  exacted.  As  to  him, 
in  so  far  as  his  contract  is  an  assurance  for  the  payment  of 
money,  it  cannot  be  enforced.  But,  nevertheless,  in  so  far  as 
it  evidences  the  fact  that  he  has  transferred  the  legal  title, 
it  seems  to  us  that  the  indorsement  would  be  sustained  as 
valid  for  that  purpose,  upon  the  ground  that  the  object  and 
spirit  of  the  statute  would  be  subserved,  and  no  violence 
done  to  its  letter  fairly  interpreted.  The  objection  to  this 
view  lies  in  the  difficulty  in  distinguishing  a  note  usurious 
as  between  the  maker  and  payee,  from  an  indorsement 
usurious  as  between  the  indorser  and  indorsee.  In  the  iirst 
case,  the  note  would  be  void  in  the  hands  even  of  an  innocent 
holder;  and  some  of  the  authorities  have  held,  that  as  the 
indorsement  would  in  like  manner  be  void,  no  title  could 
be  traced  through  it,  and  no  recovery  had  against  the  in- 
dorser. That  no  recovery  could  be  had  against  him  we 
concede;  but  if  the  indorsement  be  declared  so  fiir  void 
that  title  could  not  be  traced  through  it,  it  would  throw  the 
forfeiture  of  the  debt,  not  upon  the  usurer,  as  the  law  throws 

pose  that  the  transfer  is  voidable  only,  and  that  it  is  not  competent  for  tlie  de- 
fendant, he  not  being  a  party  to  the  transfer,  to  avoid  it.''     See  post,  §  764,  notes. 

'  Lloyd  V.  Kcach,  2  Conn.  17");  Nichols  v.  Pearson,  7  Pet.  103. 

'  Story  on  Notes  §  190;  2  Parsons  N.  &  B.  431. 


G18  SALE   OF   BILLS  AND   NOTES. 

it,  but  upon  the  innocent  holder;  and  to  construe  the  statute 
to  contemplate  and  design  such  a  result  would  reverse  the 
rule  that  courts  should  construe  statutes  so  as  to  favor  the 
remedy.  The  instrument  being  valid  in  its  inception,  stands 
on  the  same  footing  as  a  chattel,  which  the  holder  may  sell 
at  any  price ;  and  if  operated  with,  like  a  horse  or  goods, 
under  a  usurious  contract,  a  subsequent  purchaser  without 
notice  would  be  protected,  at  least  so  fai-  as  the  title  is  con- 
cerned, upon  the  principle  that  the  wrong-doer  will  not  be 
heard  to  deny  rights  acquired  under  executed  contracts  to 
which  he  is  a  party,  although  when  void  he  might  be  per- 
mitted, on  grounds  of  public  policy,  to  resist  tbeir  enforce- 
ment so  far  as  they  are  executory.  If  this  be  not  true,  the 
legal  debtor  would  be  exonerated  from  the  debt,  and  the 
usurer  escape  punishment,  while  the  innocent  holder  alone 
would  suffer.  No  such  result  can  have  been  contemplated. 
The  title  having  actually  passed  from  the  indorser,  we  think 
he  could  be  no  more  heard  to  controvert  it  against  an  inno- 
cent party,  than  he  would  be  to  recover  back  money  paid  un- 
der a  usurious  bargain,  or  to  recover  in  trover  the  instrument 
itself^  The  opposite  view  has  been  taken  by  the  United 
States  Supreme  Court,  and  is  concurred  in  by  other  authori- 
ties.^ 

So  wbere  a  bill  was  given  by  defendant  to  plaintiff  in 


'  Parr  v.  Eliason,  1  East,  92  (1800);  Daniel  v.  Cartony,  1  Esp.  275  (1795), 
[But  these  cases  have  been  overruled.  See  Lowes  v.  Mazaredo,  1  Stark  385  (1816) ; 
Chapman  v.  Black,  2  B.  &  Aid.  588  (1819) ;]  Whitworth  v.  Adams,  5  Rand.  395, 
390,  Coalter,  J.;  but  see  Id.  419,  Cabell,  J.;  Braman  v.  Hess,  13  Johns.  52;  Munn 
v.  Commission  Co.  15  Johns.  44;  Bush  v.  Livingston,  1  Caines'  Cases  in  Error, 
GO  ;  Foltz  V.  Mey,  1  Bay,  486  ;  King  v.  Johnson,  3  McCord,  365 ;  Harick  v.  Jones, 
4  McCord,  402.     See  post,  §  764,  and  notes. 

^  Nichols  V.  Pearson,  7  Pet.  103  ;  Lloyd  v.  Scott,  4  Pet.  205  ;  Gaither  v.  Farm- 
ers', &c.  Bank,  1  Pet.  43;  Johnson,  J.:  "  Suppose  a  note  given  to  a  woman  who 
marries,  and  then  indorses  it  without  her  husband's  authority,  such  an  indorse- 
ment would  be  void,  and  the  indorsee  could  not  recover,  yet  the  husband  and 
wife  could  recover.''  Lloyd  v.  Kcach,  2  Conn.  175;  Lowes  v.  Mazaredo,  1  Stark. 
885;  Chapman  v.  Black.  2  B.  &  Aid.  588;  TVhitworthv  Adams,  5  Rand.  419. 
420;  Cabell,  J.  [and  see,  also,  opinions  of  Carr  &  Greene,  JJ.,  who  dissented 
on  general  grounds  from  the  judgment  of  the  court;  on  this  point  see,  also,  same 
case,  p.  395-6,  Coalter,  J.,  contra;]  Story  on  Notes,  §  190. 


VALIDITY   OF   TRANSFER.  619 

consideration  of  "his  enterini^  into  a  copartnership  witli  him, 
and  the  conti-aet  was  broken,  it  was  held  that  lie  could  not 
recover  the  whole  amount,  but  only,  as  Lord  Keuyon,  C.  J., 
said,  "  tlie  damages  whicli  he  had  really  sustained  T)y  non- 
performance of  the  contract."  ^ 

§  701.  When,  however,  there  has  been  a  novation  of  the 
debt,  the  case  is  different.  Thus  where  the  indorsee  gave 
$900  for  a  note  of  $1,000,  indorsed  first  by  its  vendor,  and 
then  by  L.  ct  K.,  who  indorsed  it  for  accommodation  of  the 
vendor,  at  the  indorsee's  instance,  and  when  the  note 
matured.,  the  indorsee  accepted  two  notes  of  the  vendor  for 
$400  and  $G00  respectively,  indorsed  for  the  vendor's  accom- 
modation by  L.  <fe  K.,  and  surrendered  u})  the  note  for 
$1,000,  it  was  held  that  he  could  recover  the  whole  amount 
of  L.  &  K.,  though  he  knew  they  were  accommodation  in- 
dorsers.^ 


SECTION   III. 

VALIDITY    OF    TRANSFEK    AND    AMOUNT    OF    EECOVERY    AGAINST 
TRANSFERREK. 

§  762.  The  third  question,  whether  or  not  there  is  usury 
upon  the  transfer  of  the  instrument ;  and  i\\Q fourth  question, 
what  is  the  amount  of  recovery  against  the  indorser,  if  there 
be  no  usury — remained  to  be  considered,  and  may  be  better 
presented  in  connection  with  each  other. 

It  is  quite  clear,  and  universally  conceded,  that,  if  the 
transferrer  does  not  indorse  the  instrument,  the  mere  selling 
of  it  at  any  price  is  unobjectionable,  as  the  transferrer  does 
not  bind  himself  for  the  repayment  of  the  amount  paid  him 
in  any  event.^  And  the  same  principle  would  apply  if  there 
were    an   indorsement  "without  recourse."^      And    if   the 


'  Ledger  v.  Ewer,  Peake's  Cases,  217.  "  Ingalls  v.  Lcc,  9  Barb.  647. 

'  Sec  ante,  §  701. 

*  Freeman  v.  Britton,  2  liar.  191 ;   Duraut  v.  Banta,  3  Hutch.  G30.     But  see 
RufRu  V.  Armstrong,  2  Hawks,  411. 


G20  SALE  OP  BILLS  AND  NOTES. 

holder  received  the  instrument  from  an  agent  of  the  in- 
dorsee, not  knowing  the  fact  of  his  agency,  there  would  then 
be  no  usury,  as  the  apparent  owner  does  not  himself  indorse 
it ;  but  appears  as  the  mere  seller  of  a  security  valid  in  his 
hands,  without  warranting  anything  but  its  genuineness.^ 
It  is  also  quite  clear  that  the  transfer  of  a  bill  or  note  by 
delivery,  or  by  indorsement,  may  be  a  feature  of  a  usurious 
contract,  as  for  instance  where  a  note  is  indorsed  as  collateral 
security  for  a  usurious  loan  of  money,  in  which  case  it  is  not 
the  indorsement  7:>f 7' 56  which  constitutes  usury,  but  its  enter- 
ing into  a  usurious  transaction  as  a  component  part  thereof - 
But  when  there  is  an  indorsement  of  a  bill  or  note  upon  its 
transfer  for  an  amount  less  than  the  legal  rate  of  discount 
upon  an  advancement  of  money,  its  effect  jper  se  gives  rise 
to  a  disputation  in  w^hich  many  views  have  been  presented. 

§  703.  The  first  view  is,  that  as  between  indorser  and 
indorsee  the  contract  is  usurious,  and  that  the  indorsee,  who 
is  a  party  to  the  usury,  cannot  sue  any  prior  party,  because 
he  holds  the  instrument  under  a  contract  absolutely  void.* 
Every  indorser  of  a  bill  or  note,  it  is  said,  is  in  law  a  new 
drawer ;  and  that  as  the  drawer  of  a  bill,  who  discounts  it 
at  less  than  the  rate  allowed  by  law,  binds  himself  for  repay- 
ment of  the  amount,  and  in  fact  procures  a  loan  upon  the 
faith  of  the  bill  as  security,  such  discount  by  the  drawer  is 


>  Whitworth  v.  Adams,  5  Rand.  333 ;  Gaul  v.  Willis,  26  Penn.  St.  261 ;  Taylor 
V.  Bruce,  Gilmer  (Va.),  42. 

'  Levy  V.  Gadsby,  3  Cranch,  180.  Where  upon  a  usurious  negotiation  for  a 
loan  in  reference  to  a  pre-existing  debt  the  note  was  indorsed  to  the  plaintiff, 
and  thus  came  within  the  description  of  "  an  assurance  for  forbearance."  See 
also  Gaithcr  v.  Farmers',  &c.  Bank,  1  Pet.  37;  Nichols  v.  Pearson,  7  Pet.  108; 
Newman  v.  Williams,  29  Miss.  212. 

»  Whitworth  v.  Adams,  5  Rand.  419  (1827).  Cabell,  J.,  said:  "If  the  note 
had  passed  from  the  payee  to  the  person  who  paid  the  money,  on  a  contract  of 
indorsement,  by  which  the  payee  received  for  the  bill  less  than  its  nominal 
amount,  deducting  legal  interest,  I  should  be  decidedly  of  opinion  that  the  in- 
dorsement was  usurious  and  void,  on  the  ground  mentioned  by  Bailey,  J.,  in 
Lowes  V.  ]\Iazaredo,  1  Stark.  385;  Comyn's  Usury,  181,  that  'every  indorsement 
is  considered  in  law  as  a  new  drawing.'"  Freeman  v.  Britton,  2  Har.  191,  over- 
ruled in  Durant  v.  Banta,  3  Dutch.  624. 


VALIDITY   OF   TRANSFER.  621 

usurious ;  ^  and  so,  in  like  manner,  the  indorsement  of  a  Llll 
or  note  for  a  less  amount  than  the  legal  rate  of  discount  is 
usurious.^ 

§  704.  The  second  view  is,  that  although,  as  between  in- 
dorser  and  indorsee,  the  transaction  is  usurious,^  and  the  con- 
tract of  the  former,  so  far  as  it  binds  him  to  repay  the  money, 
is  void,  yet  that  so  far  as  it  has  been  executed  by  a  transfer 
of  the  title,  and  right  to  sue  prior  parties,  the  courts  should 
respect  it,  and  enforce  a  recovery  against  them  for  the  full 
amount.'^ 

§  765.  The  third  view  is  that  it  is  not  usurious,  l)ecause 
such  indorsement  shall  be  held  to  have  been  made  for  the 
purpose  of  transfer  merely ;  and  that  although  he  thus  makes 
himself  liable  to  all  the  world  but  the  purchaser,  it  is,  as  be- 
tween them,  a  simple  indorsement  for  the  accommodation  of 
the  purchaser.  And  such  purchaser,  while  he  cannot  recover 
at  all  against  the  indorser,  may  recover  the  whple  amount  of 
the  maker,  acceptor  and  prior  parties.^ 

*  Lowes  V.  Mazaredo,  1  Stark.  385  (3  E.  C.  L.  R.);'  Corayn  on  Usury,  181; 
King  V.  Ridge,  4  Price,  50  (1817),  copied  in  Appendix,  5  Rand.  017  ;  Whitwortli 
V.  Adams,  5  Rand.  419;  Saltmarsh  v.  Planters',  &c.  Bank,  14  Ala.  663;  Noble  v. 
Walker,  17  Ala.  456. 

'  This  doctrine  is  denied  in  Lloyd  v.  Keach,  2  Conn.  175.     See  post^  §  767. 

'  Ballinger  V.  Edwards,  4  Ired.  Eq.  449  (1847);  Ray  v.  McMillan,  3  Jones 
Law,  227  (1854);  Bynum  v.  Rogers,  4  Jones  Law,  399  (1859);  McElwce  v.  Col- 
lins, 4  Dev.  &  B.  (N.  C.)  210  (1839).  Daniel,  J.,  said  :  "  There  is  a  distinction 
between  taking  a  bill  and  advancing  money  on  it,  with  an  indorsement  or  guar- 
anty, and  one  without.  The  last  is  a  purchase,  and  may  be  for  less  tiian  the  real 
value;  the  other  is  a  loan,  and  within  the  operation  of  statute  of  usury. 

*  Collier  v.  Nevill,  3  Dev.  31.  Ruffin,  J.,  said  :  "The  discounting  of  a  bill 
or  bond  and  taking  the  general  indorsement  of  the  holder  does  ex  vi  tei'inini 
constitute  a  loan;  and  if  the  rate  of  discount  exceed  that  fixed  by  statute,  it  is  a 
usurious  loan.  *  '^  But  upon  the  strength  of  the  authorities,  and  the  opinion 
heretofore  generally  received  by  the  country  at  large  and  the  profession,  the  court 
feels  constrained  to  decide  that  the  defendants  cannot  avail  themselves  of  any 
intermediate  illegality.  The  bond  was  available  between  the  obligor  and  ob- 
ligees. The  former  is  not  privy  to  the  usurious  agreement  between  the  latter 
and  the  present  holder."  See,  also,  Littell  v.  Hord,  Hard.  R.  232 ;  Cowles  v. 
McVickar,  3  Wis.  725;  Armstrong  v.  Gibson,  31  Wis.  61. 

*  Whitworth  V.  Adams,  5  Rand.  388;  Coulter,  J.  (not  concurred  in  on  this 
point  by  the  other  judges).  Cowles  v.  McVicker,  3  Wise.  (Smith),  731,  docs  not 
decide  this,  as  seems  to  have  been  thought  by  Prof  Parsons,  vol.  3  N.  &  B.  428; 


622  SALE   OF   BILLS   AND   NOTES. 

§  766.  Tha  fourth  view  is  that  it  is  not  usurious,  because 
altli(ni<2:h  the  indorsee,  who  is  reo;arded  in  the  li^-ht  of  a 
purcliaser,  and  not  as  a  lender,  may  recover  against  the 
maker,  acceptor,^  or  other  prior  parties,^  the  whole  amount, 
as  against  the  indorser  wdio  is  the  seller,  he  can  only  recover 
the  amount  paid  with  legal  interest.^  And  so  as  against  any 
party,  in  whatever  form  lie  may  find  himself,  upon  the  trans- 
fer the  assignee  can  only  recover  back  the  consideration 
paid/ 

§  767.  The  Jiff h  view  is  that  it  is  not  usurious,  for  the 
reason  that  the  contract  between  indorser  and  indorsee  is  at 
best  but  a  conditional  or  provisional  contract,  the  indorser 
not  being  bound  save  upon  the  condition  of  due  presentment 
and  notice,  and  being  regarded  in  the  light  of  a  guarantor 
against  the  insolvency  of  the  promisor ;  and  that  the  valid- 
ity of  the  transaction  turns  upon  the  inquiry,  was  it  an  unaf- 

but  merely  that  tlic  indorsement  may  be  only  to  pass  the  title,  -where  the  transac- 
tion was  by  agreement  a  mere  sale  of  tbe  note. 

-  Munn  V.  Commission  Co.  15  Johns.  44  (1818),  Spencer,  J.  :  -'The  drawer 
and  acceptor  in  a  suit  by  the  indorsee  have  m)thing  to  do  with  the  consideration 
paid  for  the  bill  by  such  indorsee  to  the  drawer.  They  are  bound  to  pay  the 
bill ;  but  as  respects  tlie  payee  and  first  indorsee,  if  he  be  sued  by  his  immediate 
indorsee,  it  will  V)e  competent  for  him  to  siiow  the  real  consideration  paid ;  and 
if  it  be  less  than  the  face  of  the  bill  and  the  legal  interest  for  the  time  the  bill  had 
to  run,  then  he  can  claim  to  have  the  difference  deducted."  Ingalls  v.  Lee,  9 
Barb.  650;  Cobb  v.  Titus,  13  Barb.  47 ;  Cram  v.  Hendricks,  7  Wend.  569. 

""  Ingalls  V.  Lee,  9  Barb.  651,  Parker,  J. :  "  It  is  now  settled,  that  an  indorsee, 
who  buys  a  note  at  less  than  its  face,  can  recover  against  the  indorser  no  more 
than  the  sum  for  which  he  bought  the  note, with  interest;  though  he  may  recover 
the  full  amount  of  the  note  against  the  maker.  Whether  the  rule  thus  limiting 
the  recovery  would  apply  to  third  persons  who  indorse  for  the  accommodation  of 
the  payee,  and  who  are  not  parties  to  the  transfer,  has  not  been  decided.  *  * 
I  think  the  rule  referred  to  applies  only  as  between  the  parties  to  the  sale,  and 
rests  upon  the  consideration  of  recovering  back  the  consideration  paid."  Belden 
V.  Lamb,  17  Conn.  453. 

3  Brown  v.  Mott,  7  Johns.  360  (1811);  Braman  v.  Hess,  13  Johns.  52  (1816); 
Ingalls  V.  Lee,  9  Barb.  647;  Cobb  v.  Titus,  13  Barb.  47;  Cram  v.  Kcndricks,  7 
Wend.  509;  Huff  v.  Wagner,  63  Barb.  215;  Harger  v.  Wilson,  63  Barb.  237;  Lane 
V.  Steward,  20  Me.  104;  Farmer  v.  Sewall,  16  Me.  456;  French  v.  Grindle,  15  Me. 
163;  Brock  v.  Thompson,  1  Bailey  (S.  C.)  Law,  329;  Noble  v.  Walker,  33  Ala. 
456;  Hutchins  v.  McCann,  7  Porter  (Ala.)  99;  Cogc  v.  Palmer,  16  Cal.  158;  Ste- 
venson V.  Unkefer,  14  111.  105. 

*  Cobb  V,  Titus,  13  Barb.  47;  Mazuzan  v.  Mead,  21  Wend.  285. 


VALIDITY  OF  TRANSFER.  023 

fected  sale  of  the  instrument,  or  merely  a  color  for  a  loan/ 
And  further,  that  if  a  bona  fide  sale,  tLe  indorsee  may  recover 
the  full  amount  of  all  the  parties.^ 

§  708.  Our  own  views  coincide  with  that  last  presented, 
although    the  authorities  to  the  contrary  are  weighty  and 
numerous.     The  statutes  against  usury  confine  themselves  to 
the  interdiction  of  excessive  intei-est  for  the  "  loan  or  forbear- 
ance of  money."    And  while  the  indorsement  of  a  bill  or  note 
for  less  than  its  face  value  may  often  be  used  as  a  part  of  the 
shift  to  evade  the  law,  it  does  not  seem  to  us  to  import  pei' 
se  either  a  direct  usurious  loan  or  a  screen  to  hide  it.     No 
direct  or  imperative  obligation  to  return  the  amount  or  any 
part  thereof  is  entered  into  by  the  indorser.    And  it  does  not 
seem  to  us  to  come  within  the  meaning  of  the  terms  usually 
employed,  which  declare  void  "  all  contracts  or  assurances 
made  directly  or  indirectly  for  the  loan  or  forbearance  of 
money,"  as  it  does  not  indirectly  bind  the  indorser  tor  repay- 
ment of  a  loan  by  means  of  any  shift  or  device.     It  only 
binds  him  directly  to  pay  the  full  amount  of  a  debt  for  which 
another  is  primarily  bound,  and  for  which  he  himself  can 
only  become  bound  by  strictest  diligence  on  the  part  of  the 
holder  in  making  presentment  and  giving  notice.     Loans  of 
money  to  be  returned  with  excessive  interest  are  plainly  con- 
tradistinguished from  amounts  paid  for  securities  which  are 
transferred  in  the  usual  course  of  business  by  indorsement ; 
and  as  the  statutes  against  usury  are  to  be  strictly  construed, 
they  do  not  seem   to  us  to  have  contemplated  commercial 
transactions  of  this  kind,  which  partake  rather  of  the  nature 


•  Lloyd  V,  Keach,  2  Conn.  175  (1817),  in  which  it  was  held  that  the  drawer 
may  discount  bills,  or  the  indorser  bills  or  notes  at  any  price,  and  that  it  will 
only  be  usurious  when  a  shift  to  evade  the  statute.  Nichols  v.  Pearson,  7  Pet. 
109 •,  but  the  court  expressly  declined  to  decide  whether  the  whole  amount  might 
be  recovered.  State  Bank  v.  Coquillard,  6  Ind.  232;  Newman  v.  Williams,  29 
Miss.  223;  Gaul  v.  Willis,  20  Penn.  St.  201  ;  Moore  v.  Baird,  oO  Pcnn.  St.  139; 
Roark  v.  Turner,  29  Ga.  458 

"-  National  Bank  of  .Michigan  v.  Green,  33  Iowa.  141  (1871);  Durant  v.  Banta, 
3  Dutcl),  (.24  (1858),  overruling  Freeman  v.  Britton,  2  liar.  191  (1839);  Roark  v. 
Turner,  29  Ga.  458. 


G24  SALE  OF   BILLS  AND   NOTES. 

of  sales  accompanied  by  a  peculiar  and  conditional  warranty. 
Prof.  Parsons  has  expressed  a  similar  opinion,  in  wliicli  he 
compares  the  indorsement  to  a  sale  of  a  chattel  with  warranty 
of  its  value  at  a  certain  future  time.^  The  same  reasons 
which  induce  these  conclusions  respecting  an  indorsement  for 
less  than  the  legal  rate  of  discount  from  the  face  value  of  the 
paper,  \vould  apply  where  the  drawer  of  a  bill  parts  w^ith  it 
for  less  than  the  legal  rate  of  discount.  The  debt  due  him 
by  the  drawee  or  acceptor  is  his  property,  and  that  prop- 
erty he  may  sell  for  any  price.  And  the  fact  that  he  warrants 
its  value  "  at  a  certain  future  time,"  does  not,  as  it  seems  to 
us,  impart  to  the  transaction  the  nature  of  a  loan.  The 
draw^er  does  not  borrow  the  money,  engaging  to  repay  it  with 
illegal  interest,  but  simply  sells  a  debt  due  to  him  by  another, 
engaging  that,  if  that  other  does  not  pay  it,  and  peculiar  acts 
of  diligence  are  observed  by  the  purchaser,  he  will  make  the 
debt  good.  The  responsibility,  trouble,  and  expense  of  pur- 
suing the  drawee  or  acceptor  first,  is  an  independent  and 
often  a  most  important  consideration ;  and  where  such  addi- 
tional consideration  enters  into  the  negotiation,  it  is  sufficient 
to  prevent  it  from  being  usurious. 

•  2  Parsons  N.  &  B.  42'J,  430. 


CHAPTER    XXIV. 

NATURE    AND    RIGHTS    OF  A  BONA  FIDE   HOLDER    OR   PURCHASER. 

§  7G9.  It  is  a  general  principle  of  the  law  merchant  that, 
as  between  the  immediate  parties  to  a  negotiable  instrument 
— parties  between  whom  there  is  a  privity — the  considera- 
tion may  be  inquired  into ;  and  that  as  to  them  the  only 
superiority  of  a  l)ill  or  note  over  other  unsealed  evidences 
of  debt  is,  that  it^^?'mrt  facie  imports  a  consideration.^ 

We  propose  herein  to  consider  the  relations  of  the  pur- 
chaser or  holder  of  the  instrument,  who  has  acquired  the  in- 
strument from  or  through  an  original  party,  and  to  show 
when,  and  under  what  circumstances,  he  may  be  affected  by 
fraud  or  illegality  in  or  failure  of  the  original  consideration. 

By  "  purchaser  "  and  "  holder  "  of  a  negotiable  instrument'* 
is  included  any  one  who  has  acquired  it  in  good  fiiith  for 
a  valuable  consideration,  from  one  capable  of  transferring  it, 
and  the  following  propositions  may  be  considered  as  settled 
principles  of  commercial  law — principles  which  have  been, 
for  the  most  part,  reiterated  by  the  Supreme  Court  of  the 
United  States,  and  prevail  throughout  the  Union: 

First.  That  the  purchaser  or  holder  of  a  negotiable  instru- 
ment, who  has  taken  it  (1)  bona  fide,  (2)  for  a  valuable  con- 
sideration, (3)  in  the  ordinary  course  of  business,  (4)  when 
it  was  not  overdue,  (5)  without  notice  of  its  dishonor,  and 
(6)  without  notice  of  facts  which  impeach  its  validity  as  be- 
tween  antecedent  parties,  has  a  title  unaffected   by  those 

*  See  ante,  §  161   et  seg.  and  §  174  ct  acq. 

^  It  was  recently  held  in  Massachusetts  that  the  defense  that  a  note  was  pur- 
chased by  a  National  Bank  iu  violation  of  the  National  Banking  Act  could  not 
be  availed  of  by  the  parties — that  if  tiUra  vires  for  the  bank  to  purchase,  it  was, 
nevertheless,  not  one  of  those  things  which  it  lay  iu  the  mouth  of  the  parlies  to 
the  note  to  object  to.  National  rcmberton  Bank  v.  Porter,  S.  C.  of  Mass.,  Sept., 
1878;  Bankers'  Magazine,  January,  1879,  p.  563;  Central  Law  Journal,  Oct.  25th, 
1S78,  Vol.  7,  No.  17,  p.  ;]24. 
Vol.  I.— 40 


626  RIGHTS   OF   A   BONA  FIDE   HOLDER. 

facts,  and  may  recover  on  the  instrument,  although  it  may  be 
without  any  legal  validity  .as  between  the  antecedent  parties, 
as,  for  example,  though  it  was  without  consideration  orig- 
inally,^ or  was  subsequently  released^  or  paid,^  and  even 
though  it  was  originally  obtained  by  fraud,  theft,  or  rob- 
bery.* 

Second.  That  the  possession  of  a  negotiable  instrument 
payable  to  bearer,  indorsed  in  blank,  or  specially  indorsed  to 
the  holder,  carries  title  with  it  to  the  holder.  The  possession 
and  title  are  one  and  inseparable.^ 

Third.  That  the  burden  of  proof  lies  on  the  person  who 
assails  the  right  claimed  by  the  party  in  possession.*^ 

Foiirtli.  That  suspicion  of  defect  of  title  or  knowledge 
of  circumstances  which  would  excite  such  suspicion  in  the 
mind  of  a  prudent  man,  or  gross  negligence  on  the  part  of 
the  taker  at  the  time  of  the  transfer,  will  not  defeat  his  title. 

But  these  propositions  are  subject  to  the  following  limi- 
tations or  qualifications :  First.  That  when  it  was  shown  by 
the  defendant  that  the  instrument  originated  in  fraud  or 
illegality,  the  burden  of  proof  will  be  shifted  to  the  holder, 
and  he  must  then  show  that  he  is  a  hona  fide  holder  for 
value.'^  Second.  When  it  is  shown  that  the  instrument  was 
given  for  a  consideration  which  by  statute  is  declared  void, 
the  orio-inal  taint  follows  it,  and  it  is  void  in  the  hands  of 
every  holder,  however  innocent.®  And  Third.  That  no 
party  can  enforce  a  negotiable  instrument  if  it  be  not  gen- 
uine, or  if  it  be  executed  by  a  party  incapable  of  entering 
into  the  contract  in  which  it  was  given.'^ 


'  See  onfe,  §  165  et  seq.,  and  post,  §  810  et  seq. 

^  Schoer  v.  Houghlin,  50  Cal.  528;  Palmer  v.  Marshall,  60  111.  289. 

'  Swall  V.  Clarke,  51  Cal.  227. 

••  See  Chapter  on  Consideration,  §  155  ct  seq.  ;  Kinyon  v.  Wohlford,  17  Minn. 
240;  Brown  v.  Spofford,  95  U.  S.  (5  Otto),  481  (1877);  Goodman  v.  Simonds,  20 
How.  343 ;  Central  Bank  v.  Hanimett,  50  N.  Y.  159 ;  Belmont  Branch  Bank  v. 
Hoge,  35  N.  Y.  65;  Franklin  Savings  Bank  v.  Hcusnian,  1  Mo.  App,  336;  John- 
son V.  Way,  27  Ohio  St.  374;  Ogden  v.  Marchand,  29  La.  61  ;  Taylor  v.  Bowles, 
28  La,  295. 

'  BcG  post,  §  812.  =  See  post,  §  1503.  '  See  a7ite,  §  166. 

"  See  ante,  §  197,  post,  §  807.  "  Post,  §  807. 


BONA  FIDES  AND   GROSS  NEGLIGENCE.  G27 

Let  ns  consider  now  these  principles  in  their  order.  Tn 
some  respects,  they  are  so  interwoven  with  each  other  tliat 
it  is  impossible  to  sev^er  and  disconnect  them.  But  we  will 
endeavor  to  present  as  nearly  as  practicable,  under  separate 
heads,  the  several  elements  which  must  combine  to  panoply 
with  the  full  protection  of  the  law  the  party  who  acquires  a 
negotiable  instrument.  And  first  we  will  endeavor  more 
particularly  to  define  who  is  a  bona  fide  purchaser  or  holder 
for  value. 

SECTIOj^  I. 

BONA   FIDES    AND    GROSS   NEGLIGENCE. 

§  7T0.  In  the  fii'st  place,  the  holder,  in  order  to  be  enti- 
tled to  protection  against  offsets  and  equities  and  defenses 
based  upon  frauds,  pleaded  by  prior  parties,  must  have  ac- 
quired the  paper  in  good  faith  from  his  predecessor.  "  Fraud 
cuts  down  everything,"  ^  and  although  the  holder  may  pay 
value,  yet,  if  his  acquisition  of  the  j^aper  be  in  any  respect 
fraudulent — as  where  it  is  made  or  transferred  to  give  him 
preference  over  other  parties  to  a  compromise  of  creditors — 
he  cannot  claim  the  position  of  a  bona  fide  holder.-  lu 
pleading,  mcda  fides  must  be  distinctly  alleged,  and  an  alle- 
gation that  the  party  is  not  the  bona  fide  holder  is  not  suffi- 
cient.^ It  is  the  bona  fides  of  the  holder  alone  that  is  to  be 
considered,  not  that  of  his  transferrer,  and  the  fact  that  the 
payee  had  an  interest  to  part  with  the  paper,  is  not  a  circum- 
stance which  effects  the  rights  of  his  indorsee.* 

§  771.  The  earlier  English  authorities  regarded  the  bona 
fides  of  the  acquisition  of  a  negotiable  as  the  crucial  test 
by  which  it  was  determined  whether  or  not  the  party  so 
acquiring  it  by  purchase  or  discount  was  entitled  to  stand 
upon  a  better  footing  than  his  transferrer,  and  l)e  entitled  to 

'  Rogers  v.  Hadley,  32  L.  J.  Exch.  248. 

*  See  Chapter  VII,  on  Consideration,  ante,  %  193. 

'  Uther  V.  Rich,  10  Ad.  &  El.  784.  *  Ileluicr  v.  Krolick,  3G  ^^lich.  373. 


028  RIG  UTS  OF  A  BONA   FIDE   HOLDER. 

full  protection  against  equitable  or  other  defenses  which  would 
otherwise  have  been  valid  against  him.  In  a  case  before  Lord 
Kenyon,  where  it  appeared  tliat  a  bill  had  been  lost,  and 
advertised  in  the  news])apers,  and  had  been  discounted  for 
one  who  found  it,  and  fraudulently  offered  it,  it  was  con- 
tended that  the  banker  could  not  recover  without  using  due 
diligence  in  inquiring  into  the  circumstances  as  well  respect- 
ing the  bill  as  of  the  person  who  offered  to  discount  it.  But 
Lord  Kenyon  said :  ^  "  I  think  the  point  in  this  case  has  been 
settled  by  the  case  of  Miller  v.  Kace,  in  Burrow.  If  thei'e 
was  any  fraud  in  the  transaction,  or  if  a  bona  fide  considera- 
tion had  not  been  paid  for  the  bill  by  the  plaintiffs,  to  be 
sure  they  could  not  recover ;  but  to  adopt  the  principle  of 
the  defense  to  the  full  extent  stated  would  be  at  once  to 
paralyze  the  circulation  of  all  the  paper  in  the  country,  and 
with  it  all  its  commerce.  The  circumstance  of  the  bill  hav- 
ing been  lost,  might  have  been  material,  if  tbey  could  bring 
knowledge  of  that  fact  home  to  the  plaintiffs.  The  plaintiffs 
might  or  mischt  not  have  seen  the  advertisement,  and  it 
would  be  going  great  length  to  say  that  a  banker  was  bound 
to  make  inquiry  concerning  every  l)ill  brought  to  him  to  dis- 
count ;  it  would  apply  as  well  to  a  bill  for  £10  as  for 
£10,000."^ 

§  772.  For  a  long  period  this  doctrine  remained  the  un- 
doubted law  of  England,  until,  in  the  case  of  Gill  v.  Cubitt, 
Lord  Chief  Justice  Abbott  (Lord  Tenterden)  laid  down  the 
principle  that,  although  the  holder  had  given  value  for  the 
bill  or  note,  yet,  if  he  took  it  under  circumstances  which 
ought  to  have  excited  the  suspicions  of  a  prudent  and  care- 
ful man,  he  could  not  recover;  and  while  professing  "un- 
feigned reverence  "  for  Lord  Kenyon,  from  whom  the  previ- 
ously accepted  view  had  emanated,  he  declared  that  he  could 
not  regard  it  as  the  correct  one.^ 


'  Lawson  v.  Weston,  4  Esp.  56  (1801).         '  See  Miller  v.  Race,  1  Biir.  452. 

^  Gill  V.  Cubitt,  3  Barn.  &  Cres.  4G6  (1824),  Bayley  and  Holroyd,  JJ.,  concur- 
,ring;  Strange  v.  Wigucy,  G  Bing.  G77  (1830),  19  E.  C.  L.  R.;  Snow  v.  Peacock, 
2  Car.  &  P.  215  (1825);  Beckwith  v.  Corrall,  2  Car.  &  P.  259  (182Gj. 


BONA  FIDES  AXD  GROSS  NEGLIGENCE.  029 

§  773.  This  cautious  ruling  (as  observed  l)y  Read,  J.,  in 
a  well  considered  case  in  Pennsylvania)/  although  carped  at 
and  quarreled  with,  remained  the  law  for  ten  years,  when, 
as  it  seems,  the  discredit  of  Bank  of  England  bills  on  the 
European  continent,  and  the  complaints  of  the  mercantile 
community,  led  to  a  modification  of  the  doctrine  of  Chief 
Justice  Abbott.  And  Lord  Denman,  C.  J.,  told  the  jury,  in 
a  case  where  it  was  contended  that  the  plaintiff  had  not  used 
due  caution,  and  had  taken  the  bill  under  circumstances  that 
ought  to  have  excited  the  suspicions  of  a  prudent  man,  to 
find  for  the  plaintiff,  if  they  thought  that  he  had  not  been 
guilty  of  gross  negligence.^ 

§  774.  Gross  negligence  was  thus  established  as  the  test 
of  the  holder's  right  to  recover.  But  it  did  not  long  remain 
so.  For,  two  years  later,  the  Court  of  King's  Bench,  which 
seems  to  have  been  impatient  under  the  restriction  which 
even  that  test  imposed  on  the  circulation  of  negotiable  instru- 
ments, decided  that,  while  gross  negligence  might  be  evidence 
tending  to  show  7nala  fides ^  and  as  such  admissible,  it  did  not 
in  itself  amount  to  proof  of  mala  fides,  and  was  not  sufficient 
to  deprive  the  holder  of  his  right  to  recover.^    Thus  the  bona 

'  See  Phelan  v.  Moss,  67  Penn.  St.  63  (1870).  Lord  Campbell  says  in  his 
Lives  of  the  Chief  Justices,  3d  vol.  310  (quoted  in  2  Parsons  N.  &  B.  273),  that 
Lord  Tentcrden's  rule  died  with  its  author.  "It  was  soon  much  cirpcd  at;  some 
judges  said  that  fraud  and  gross  negligence  were  terms  known  to  the  law,  but  of 
'  the  circumstances  which  ouglit  to  excite  suspicion,  there  was  no  definition  in 
Coke  or  in  Cowell;'  and  the  complaint  of  bill  brokers  resounded  from  the  Royal 
Exchange  to  Westminster  Hall,  that  tliey  could  no  longer  carry  on  their  trade 
with  comfort  or  safety." 

'  Crook  V.  Jadis,  5  Bam.  &  Ad.  909  (27  E.  C.  L.  R.)  1834.  Lord  Denman, 
C.  J. :  "I  used  the  expression  gross  negligence  advisedly,  because  I  thought  noth- 
ing less  ought  to  have  prevented  the  plaintiff  from  recovery  on  the  bill."'  Lit- 
tledale,  J. :  "  There  must  be  gross  negligence,  at  least,  in  a  case  like  the  present, 
to  deprive  a  party  of  his  right  to  recover  on  a  bill  of  exchange."  Taunton,  J. : 
"  I  think  the  case  was  properly  submitted  to  the  jury.  I  cannot  estimate  the  ele- 
gree  of  care  which  a  prudent  man  should  take.  The  question  put  by  the  Lord 
Chief  Justice,  whether  the  plaintiff  was  guilty  of  gross  negligence,  was  more 
definite  and  appropriate."  Pattcson,  J,:  "I  never  could  understand  what  is 
meant  by  a  party's  taking  a  bill  under  circumstances  which  ought  to  have  excited 
the  suspicion  of  a  prudent  man."  Backhouse  v.  Harrison,  5  Barn.  &  Ad.  1098 
(1834). 

'  Goodman  v.  Harvey,  4  Ad.  &  El.  870  (1836). 


G30  EIGHTS   OF   A   BONA  FIDE   HOLDER. 

fides  of  the  purchaser  or  holder  was  restored  as  the  test  of 
his  riolit  to  recover,  and,  after  a  wide  departure,  tlie  law  re-es- 
tablished upon  the  original  basis  established  by  Lord  Kenyon. 
And  Lord  Denmau,  C.  J.,  said:  "The  question  I  offered  to 
submit  to  the  juiy  was  whether  the  plaintiff  had  been  guilty 
of  gross  negligence  or  not.  I  believe  we  are  all  of  opinion 
that  gross  negligence  only  would  not  be  a  sufficient  answer 
where  the  party  has  given  consideration  for  the  bill.  Gross 
negligence  may  be  evidence  of  mala  fides,  but  it  is  not  the 
same  thing.  We  have  shaken  off  the  last  remnant  of  the  con- 
trary doctrine.  Where  the  bill  has  passed  to  the  plaintiff 
without  any  proof  of  bad  faith  in  him,  there  is  no  objection 
to  his  title." 

The  rule  thus  finally  re-established  in  England  has  been 
followed  and  approved  there  in  subsequent  cases,^  and  has 
met  with  the  approbation  of  most  all  of  the  writters  on  nego- 
tiable instruments,  on  the  ground  that  it  relieves  them  of  the 
clog  which  the  contrary  doctrine  imposes  on  their  negotiabil- 
ity, and  presents  at  once  tlie  clear  and  intelligilde  question  of 
hona  fides  for  the  consideration  of  the  jury  ;  whereas,  to  leave 
it  to  a  jury  to  determine  as  to  the  degree  of  caution  which  a 
prudent  man  must  exercise  on  taking  such  an  instrument, 
would  lead  to  much  perplexity  and  to  frequent  injustice.^ 

§  775.  American  autliorities. — Li  the  United  States,  the 
decisions  of  the  courts  have  varied,  some  following  the  rule 
declared  in  Gill  v.  Cubitt,*^  but  by  far  the  greater  number 

'  Raphael  v.  Bank  of  England,  33  Eng.  L.  &  Eq.  278  (1855);  Arbouia  v. 
Anderson,  1  Ad.  &  El.  N.  S.  498  (1841);  Uther  v.  Rich,  10  Ad.  &  El.  784  (1839); 
Easoley  v.  Crockford,  10  Bing.  243  (25  E.  C.  L.  R.  116),  (1833). 

""  Story  on  Notes,  §§  197,  382;  Story  on  Bills,  §  416;  Edwards  on  Bills,  506; 
2  Parsons  N.  &  B.  277-279 ;  see  preface  of  Chitty  &  Hulme  to  Chitty  on  Bills. 

'  Hamilton  v.  Marks,  52  Mo.  81  (overruled),  Adams,  J.,  saying:  "We  think 
the  old  doctrine  the  better  rule,  and  is  supported  by  the  weight  of  authority  and 
reason  both  in  England  and  America,"  63  Mo.  167;  Buckner  v.  Jones,  1  Mo. 
App.  538;  Edwards  v.  Thomas,  2  Mo.  App  283  (overruled);  Ilolbrook  v.  Mix,  1 
E.  D.  Smith,  154  (1851);  Pringle  v.  Phillip.s,  5  Sand.  157  (1851)  (now  overruled, 
see  below);  Beltzhoover  v.  Blackstock,  3  Watts,  20  (1834)  (now  overruled);  San- 
ford  V.  Norton,  14  Vt.  234  (1842);  Varin  v.  Hobson,  8  La.  50;  Nicholson  v. 
Patton,  13  La.  O.  S.  210  (1838);  Lapice  v.  Clifton,  17  La.  152;  Marsh  v.  Small,  3 


BONA  FIDES  AND   GROSS  NEGLIGENCE.  031 

concurring  in  the  principle  wliich  has  been  finally  estahlisherl 
as  the  law  of  Enirlancl.^  ChanceHor  Kent,  in  his  Comnien- 
taries,  embodies  the  views  taken  in  Gill  v.  Cubitt ;  but  at 
that  time  the  present  prevailing  doctrine  had  not  been  re- 
established, and  it  is  to  be  supposed  that  he  merely  incor- 
porated in  his  text  the  then  existing  decisions  of  the  English 
courts.^  But  both  upon  principle  and  authority,  it  is  safe  to 
say  that  the  experience  of  the  commercial  world,  and  of  the 
courts  before  which  the  doctrines  here  discussed  have  so  often 
passed  in  review,  have  satisfied  jurists,  as  well  as  men  of 
business,  that  the  interests  of  commerce  are  best  subserved 
by  the  liberal  view  wliich  promotes  the  circulation  of  negoti- 
able instruments ;  and  that  the  hona  fides  of  the  transaction 
should  be  the  decisive  test  of  the  holder's  rights.^     It  is  not 

La.  An.  402;  Lanfear  v.  Blosman,  1  La.  An.  148;  Ayer  v.  Hutchins,  4  Mass.  370 
(1808)  (overruled);  Wiggins  v.  Bush,  13  Johns.  306  (1815)  (overruled);  Adkias 
V.  Blake.  2  J.  J.  Marsh.  40  (1829);  Hall  v.  Hale,  8  Conn.  336  (overruled);  Hunt 
V.  Sandford,  6  Ycrg.  3-7;  Cone  v.  Baldwin,  12  Pick.  545;  Ryland  v.  Brown,  2 
Head,  273;  Merrill  v.  Duncan,  7  Heisk.  164;  McConnell  v.  Hodson,  2  Gilm.  640; 
Russell  V.  Hadd'jck,  3  Gilm.  233  (1846). 

'  Phelaa  v.  Moss,  07  Penn.  St.  62  (1870);  Murray  v.  Lardner,  2  Wall.  110 
(1864) ;  Mabie  v.  Johnson,  15  ^.  Y.  S.  C.  309  (1876)  ;  Welsh  v.  Sage,  47  N.  Y.  147 
(1872);  Belmont  v.  Hoge,  35  N.  Y.  67  (1806);  Magee  v.  Badger,  34  N.  Y.  247 
(1859);  Birdsall  v.  Russell,  29  N.  Y.  249;  Hall  v.  Wilson,  16  Barb.  548  (1853); 
Seybel  v.  Nat'l  Currency  Bank,  54  N.  Y.  288  (1873);  Swift  v.  Tyson,  16  Pet.  1 
(1842);  Goodman  v.  Simonds,  20  How.  367  (1857);  Bank  of  Pittsburgh  v.  Neal, 
22  Id.;  Citizens' Nat.  Bank  y.  Hooper,  47  Md.  88;  Maitland  v.  Citizens'  Nat. 
Bank,  40  Md.  540;  Commercial,  &c.  Nat.  Bank  v.  First  Nat.  Bank,  30  Md.  11 
(1868);  Ellicot  v.  Martin,  0  Md.  509  (1854);  Mathews  v.  Poythress,  4  Ga.  287 
(1848);  Brush  v.  Scribner,  11  Conn.  388  (1836);  Craft's  Appeal,  42  Conn.  146; 
Hamilton  v.  Vought,  34  N.  J.  L.  R.  (5  Vroom),  190  (1870);  Spooner  v.  Holmes, 
162  Muss.  503  (1869);  Worcester  County  Bank  v.  Dorchester,  &c.  Bank,  10  Cush. 
488  (1852);  Wyer  v,  Dorchester,  &c.  Bank,  11  Cush.  51  (1853);  Smith  v.  Living- 
ston, 111  Mass.  342;  Lake  v.  Reed,  29  Iowa,  258  (1873);  Gage  v.  Sharp,  24  Iowa, 
19  (1807);  Grenaux  v.  W^ieeler,  6  Tex.  526  (1851);  Spreevcs  v.  Allen,  79  111.  553; 
Jolinson  v.  Way,  27  Ohio  St.  374;  Comstock  v.  Hannah,  76  111.  530;  Edwards  v. 
Thomas,  66  Mo.  483  (1877)  (overruling  former  decisions).  Setnhle  Davis  v.  Miller, 
14  Grat.  5  (1857). 

'  3  Kent  Com.  103,  104. 

'  The  admirable  remarks  of  Chief  Justice  Beasley,  of  New  Jersey,  in  Hamil- 
ton V.  Vought,  34  N.  J.  L.  R.  187,  are  eminently  worthy  of  quotation:  "From 
this  brief  review  of  the  cases,  I  think  it  may  be  safely  said  that  the  doctrine  intro- 
duced by  Lord  Tenterden  stands,  at  the  present  moment,  marked  with  the  dis- 


632  EIGHTS  OF  A  BONA   FIDE  HOLDER. 

tlie  duty  of  parties  about  to  purchase  negotiable  paper  to 
make  any  inquiries  not  required  by  good  faitli,  as  to  possible 
defenses  of  which  they  have  no  notice,  either  from  the  face 
of  the  paj)er,  or  facts  communicated  at  the  time.^ 

§  776,  A  case  before  the  United  States  Supreme  Court, 
in  1864,  fully  ilhistrates  the  doctrine  of  the  text,  and  shows 
the  gradual  growth  of  the  principle.  In  that  case  it  appeared 
that  Lardner,  who  did  business  in  Philadelphia,  owned  cer- 
tain negotiable  couj)on  bonds  of  the  Camden  Sl  Amboy  R. 
E,.  Company  ;  and  that,  on  the  night  of  the  23d  of  February, 
1 859,  they  were  stolen  from  his  office  in  Phihulelphia,  and 
on  the  next  day  negotiated  to  Murray,  a  broker  in  New  York, 

approval  of  the  highest  judicial  authority.     Nor   does  such  disapproval  rest 
upon  merely  speculative  grounds.     That  doctrine  was  put  in  practice  for  a  course 
of  years,  and  it  was  thus,  from  experience,  found  to  be  inconsistent  with   true 
commercial  policy.     Its  defect— a  great  defect,  as  I  think— was,  that  it  provided 
nothing  like  a  criterion  on  which  a  verdict  was  to  be  based.     The  rule  was,  that 
to  defeat  the  note,  circumstances  must  be  shown  of  so  suspicious  a  character  that 
they  would  put  a  man  of  ordinary  prurience  on  inquiry,  and  by  force  of  such  a 
rule  it  is  obvious  every  case  possessed  of  unusual  incidents  would,  of  necessity, 
pass  under  the  uncontrolled  discretion  of  a  jury.     An  incident  of  the  transaction 
from  which  any  suspicion  could  arise  was  sufficient  to  take  the  case  out  of  the 
control  of  the  court.     Therewas  no  judicial  standard  by  which  suspicious  cir- 
cumstances could  be  measured  before  committing  them  to  the  jury.     And  it  is 
precisely  this  want  which  the  modern  rule  supplies.     When  mal  i  fides  is  the 
point  of  inquiry,  suspicious  circumstances  must  be  of  a  substantial  character, 
and  if  such  circumstances  do  not  appear,  the  court  can  arrest  the  inquiry.     Under 
the  former  practice,  circumstances  of  slight  suspicion  would  take  the  case  to  the 
jury;  under  the  present  rule,   the  circumstances  must  be  strong,  so   that  bad 
faith  can  be  reasonably  inferred.    Thus  the  subject  has  passed  from  the  indefinite 
to  the  comparatively  definite;  from  the  intangible  to  the  comparatively  tangible. 
From  a  mere  matter  of  fact,  the  question,  to  some  extent,  has  become  one  of  law. 
I  cannot  doubt,  when  we  recollect  that  inquiries  of  this  nature  always  attend 
that  class  of  cases  where  judgments  are  sought  against  innocent  and  unfortunate 
parties,  that  the  change  is  most  beneficial.     AH  experience  has  shown  how  hard 
it  is  to  prevent  juries  from  seizing  on  the  slightest  circumstance,  to  avoid  gi\ing 
a  verdict  against  the  maker  of  a  note  which  had  been  obtained  by  fraud  or  thelt. 
To  preserve  the  negotiability  of  commercial  paper  and  guard  the  interests  of 
trade,  it  is  absolutely  necessary  that  large'power  should  be  placed  in  the  judicial 
hand  when  the  question  arises  as  to  what  facts  are  sufficient  to  defeat  the  claim 
of  the  holder  of  a  note  or  bill  which  has  been  taken  before  maturity,  and  for 
which  value  has  been  paid.     It  is  only  in  this  mode  that  the  requisite  stability  in 
transactions  of  this  kind  can  be  retained." 

'  Murray  v.  Beckwith,  81  III.  43;  Houry  v.  Eppinger,  34  Mich.  29. 


BONA  FIDES  AND  GROSS  NEGLIGENCE.  033 

for  value.  Lardner  sued  iu  detinue  to  recover  the  bonds,  in 
the  United  States  Circuit  Court  for  the  Southern  District  of 
New  York,  and  obtained  judgment.  To  the  instructions  of  the 
court  that  the  burden  of  proof  rested  on  the  defendant  to 
show  that  he  received  the  paper  without  notice  of  the  theft, 
and  that  it  was  for  the  jury  to  say  whether  there  were  such 
circumstances  in  the  negotiation  as  would  warrant  the  infer- 
ence that  there  was  ground  of  suspicion,  Murray  excepted, 
and  the  Supreme  Court  sustained  his  exception.  Mr.  Justice 
Swayne,  who  delivered  the  opinion,  disapproved  Gill  v.  Cubitt, 
3  Barn.  &  C.  466,  and  quoted  with  approval  Goodman  v. 
Harvey,  4  Ad.  &  El.  870,  in  which  Lord  Denham  said:  "I 
believe  we  are  all  of  opinion  tbat  gross  negligence  only 
would  not  be  a  sufficient  answer  where  the  party  has  given 
a  consideration  for  the  bill.  Gross  negligence  may  be  evi- 
dence of  mala  Jides,  but  is  not*  the  same  thing.  We  have 
shaken  off  the  last  remnant  of  the  contrary  doctrine.  Where 
the  bill  has  passed  to  the  plaintiff  without  any  proof  of  bad 
faith  in  him,  there  is  no  objection  to  his  title."  And  con- 
sidering that  the  good  faith  of  Murray  in  the  transaction  had 
not  been  impeached,  decided  in  his  favor.^  The  same  doc- 
trine has  been  applied  to  coupons  of  United  States  bonds, 
and  coupons.- 

§  776  «.  The  party  who  has  been  defrauded  into  the  ex- 
ecution of  a  note  may  recover  damages  of  the  payee  to  whom 
he  has  delivered  it.  If  the  note  at  the  time  of  trial  be  over- 
due, the  damages  would  be  nominal  only,  as  it  would  then 
be  open  to  defenses  even  if  transferred  thereafter  to  a  hotia 
fide  holder ;  but  if  not  due,  it  might  bind  the  maker  for  the 
full  amount  in  such  a  holder's  hands,  and  the  damages 
awarded  should  be  the  face  value  of  the  note.^ 

^  Murray  v.  Lardner,  2  Wall.  710;  see  Chapter  XLVII,  on  Coupon  Bonds,  Sec. 
m,  vol.  2;  and  Collins  v.  Gilbert,  94  U.  S.  (4  Otto),  757. 

"  Spooner  v.  Holmes,  102  Mass.  503 ;  Seybel  v.  National  Currency  Bank,  54 
N.  Y.  288. 

=>  Thayer  v.  Manley,  15  N.  Y.  S.  C.  (8  Hun),  551  (1876). 


034  EIGHTS  OF   A   BONA  FIDE  HOLDER. 

SECTION  II. 

WHAT    IS    MEANT   BY   VALUABLE    CONSIDERATION, 

§  117.  In  the  mcond  j)lace  ho  must  Lave  acquired  the  in- 
strument for  a  valuable  consideration/  In  some  cases  it  is 
said  that  the  holder  must  have  parted  with  "  full  value," 
sometimes  '4air  value,"  and  sometimes  the  expression,  "for 
value  "  is  used. 

In  New  York  it  has  been  said  that  "  the  consideration 
for  the  transfer  must  be  full  and  fair  as  well  as  valuable,"  ^ 
W'hile  in  another  it  is  said  that  "when  a  parting  W'ith  value 
is  proved,  the  amount  of  the  consideration  is  not  otherwise 
important  than  as  bearing  on  the  question  of  actual  or  con- 
structive notice."^  This  latter  view  seems  to  us  the  correct 
one.  The  owner  of  a  bill  or  note  has  as  much  right  to  sell 
it  as  he  has  to  sell  his  horse.  The  prior  parties,  by  making 
it  negotiable,  •  have  warranted  the  right  of  the  payee  or 
indorsee  to  make  title  to  another. 

And  if  he  does  so  at  any  price,  the  holder  acquires  full 
rights  and  interests  in  the  instruments  as  against  all  parties, 
unless  he  had  notice  of  defects,  or  willfully  abstained  from 
inquiry  under  circumstances  which  justify  the  imputation  of 
bad  ftiith.  The  price  at  which  the  paper  is  oifered  may 
amount  'prima  facie  to  notice,  and  create  the  presumption  of 
bad  faith  in  the  purchaser.  If  a  person  w  ere  to  offer  a  fine 
horse  for  sale  for  five  cents,  the  very  nature  of  the  offer  would 
warn  the  purchaser  that  he  acted  at  his  peril.  And  so  if  the 
amount  which  the  holder  offers  to  take  for  a  negotiable  instru- 
ment is  totally  insignificant  as  compared  to  its  face  value,  it 
might  be  under  the  circumstances  implied  notice  that  there 
was  something  w^rong  about  it ;  and  if  he  took  it  without 
inquiry,  he  should  not  be  protected.  There  is  no  conflict  be- 
tween this  view  and  the  cases  which  hold  that  gross  negli- 


See  as  to  consideration  of  Ncg.  lustr.,  Vol.  7,  §§  160  to  207,  inclusive. 
Goldsmid  v.  Lewis  County  Bank,  12  Barb.  410. 
Gould  V.  Segee,  5  Duer,  270,  Duer,  J.  (1856). 


WHAT   IS  MEANT  BY  VALUABLE   CONSIDERATION.         035 

gence  will  not  of  itself  be  sufficient  to  impeach  the  holder's  or 
purchaser's  title.  This  is  not  merely  gross  negligence,  but 
may  be  regarded  as  willful  or  fraudulent  blindness,  and  ab- 
stinence from  inquiry,  so  great  as  to  amount  to  evidence  of 
bad  fiiith.  For  it  is  the  obvious  suggestion  of  reason  that  a 
hona  fide  owner  w^ould  not  throw  away  his  propei'ty  for  a 
mere  song,  and  that  the  purchaser  acted  in  bad  fiiith  when  he 
acquired  it  for  comparatively  nothing. 

§  778.  Where  the  plaintiff,  knowing  that  the  maker  was 
able  to  pay,  bought  his  note  for  $300  from  a  third  party, 
paying  only  $5,  and  the  note  had  been  executed  without  con- 
sideration, it  was  held  that  the  mere  nominal  price  charged 
him  with  constructive  notice  of  the  defect.^  Like  decisions 
have  been  rendered  where  the  plaintiff  bought  a  note  for 
$333  33,  paying  only  $125;^  and  where  the  plaintiff  pur- 
chased a  $300  note  for  $50;^  but  the  grounds  of  decision 
in  the  latter  cases  were  simply  that  there  was  gross  negli- 
gence, which  alone  is  not  now  deemed  a  sufficient  defense. 

§  779.  It  is  difficult,  indeed  impossible  to  lay  down  the 
exact  line  of  demarcation  and  state  wdiat  proportion  the 
amount  paid  must  bear  to  the  face  of  the  paper  in  order  to 
charge  the  purchaser  'prima  facie  with  notice,  or  raise  the 
presumption  of  bad  faith  on  his  part.  But,  in  general  terms, 
it  may  be  said  that  the  consideration  should  be  so  utterly  tri- 
fling as  to  bear  upon  its  face  the  impress  of  fraud — to  leave 
open  no  reasonable  conjecture  but  that  the  purchaser  must 

'  Dewitt  V.  Perkins,  22  Wis.  474  (18G8),  Dixon,  C.  J. :  ''  The  buying  of  ii  note 
against  a  solvent  maker,  tlie  purchaser  knowing  liim  to  be  such,  for  a  mere  nom- 
inal consideration,  is  very  strong,  if  not  conclusive  evidence  o^  mala  Jides.  It  is 
constructive  notice  of  the  invalidity  of  the  note  in  the  hands  of  the  seller,  such 
as  to  put  the  purchaser  upon  inquiry,  which  if  he  fails  to  make  lie  acts  at  his 
peril.'"     See  also  Lay  v.  Wissman,  36  Iowa,  305. 

=  Hunt  V.  Sanford,  6  Yerg  387  (1834). 

'  Gould  V.  Stevens,  43  Vt.  125  (1870).  In  Coliger  v.  Francis,  58  Tenn.  423, 
the  holder  paid  $355  for  an  overdue  note  for  $1,G50  to  a  party  in  embarrassed 
circumstances,  the  purchaser  had  means  of  ascertaining  approximate  value  of  the 
note.  It  was  held  that  while  there  was  no  proof  of  fraud  the  circumstances  were 
suspicious,  and  the  holder  was  restricted  in  his  recovery  against  the  indorscr's 
estate  to  the  amount  paid  with  interest.  See  also  Petty  v.  Ilinman,  2  Humph. 
102;  Ilolmau  v.  Ilobson,  8  Humph.  107. 


G3G  RIGHTS  OF  A  BONA  FIDE   HOLDER. 

have  known,  from  tlie  very  nature  of  the  facts,  that  they 
could  not  have  originated  from  any  but  a' corrupt  source.^ 
The  known  solvency  of  prior  parties  would  of  course 
strengthen  the  argument  of  implied  notice  and  bad  faith 
wherever  they  were  alleged. 

In  Pennsylvania  the  sale  of  a  $250  note  of  a  maker 
known  to  be  solvent,  by  a  stranger  to  the  plaintiff  for  $100, 
was  considered  legitimate,  and  to  constitute  the  purchaser  a 
bona  fide  holder  without  notice ;  ^  and  so  in  Ohio,  the  pur- 
chase of  a  note  for  $2,500,  secured  by  mortgage,  for  just  half 
the  amount  ($1,250)  was  viewed  in  the  same  light.^ 

SECTION  III. 

THE    OKDEXARY    OK    USUAL    COURSE   OF   BUSINESS. 

§  780.  In  the  third  i^lace^  the  holder  must  have  acquired 
the  paper  in  the  ordinary  or  usual  course  of  business,  by 
w^hich  phrase  is  meant  to  describe  a  transfer  according  to  the 
usages  and  customs  of  commercial  transactions.  Whether 
or  not  a  transfer  in  payment  of  pre-existing  debt  is  of  this 
character,  was  for  a  long  time  questioned ;  but  the  doctrine 
is  now  settled,  that  it  is.^  And  when  the  paper  is  transferred 
as  collateral  security  for  a  contemporaneous  or  pre-existing 
debt,  there  are  many  variations  of  the  question,  and  many 
views  taken,  as  to  whether  or  not  it  is  in  the  usual  course 


'  See  ^oat,  §§  795,  796. 

*  Phelan  v.  Moss,  G7  Pcnn.  St.  59  (1871),  overruling  Bcltzhoover  v.  Black- 
stock,  3  Watts.  20. 

'  Bailey  v.  Smith,  U  Ohio  St.  402,  Rannoy,  J.,  saying:  "There  is  very  little 
difficulty  in  saying  that  the  rule  does  not  require  the  full  face  of  the  paper  to  be 
paid.  No  decision  to  that  effect  has  ever  been  made,  and  the  strongest  expres- 
sions customarily  used  do  not  import  anything  more  than  that  the  holder  must 
have  given  for  the  paper  what  it  was  reasonably  and  fairly  worth.  To  hold 
otherwise  would  be  to  deprive  all  paper,  for  any  cause  not  worth  its  face,  of  one 
of  the  most  essential  and  valuable  incidents  of  negotiability,  and  most  effectually 
to  stop  its  circulation.  A  moment's  reflection  will  satisfy  any  one  how  deeply 
and  disastrously  such  a  holding  would  affect  the  business  and  commerce  of  the 
country."     See  ;>p8«,  §§  795.  796. 

*  See  Chapter  VII,  on  Consideration,  ante^  §  184. 


ORDINATIY  COURSE  OF    BUSINESS.  637 

of  business  for  a  valuable  consideration,  according  to  the 
mercantile  use  of  those  terms.^  There  are  some  transfers, 
however,  in  which  the  legal  or  equitable  title  to  the  instru- 
ment passes,  but  which  are  not  in  the  usual  course  of 
business. 

§  781.  Thus,  a  receiver  appointed  by  a  court,  and  who 
comes  in  possession  of  a  bill  or  note  of  a  litigant  by  operation 
of  law,  acquires  no  better  title  than  such  litigant  possessed, 
for,  as  said  in  New  York,  "  he  acquires  title  by  legal  process, 
and  not  in  the  regular  course  of  dealing  in  commercial 
paper."  ^  The  like  decision  was  rendered  in  Connecticut,  in 
respect  to  the  receivers  of  assets  of  a  bank,  for  the  benefit 
'  of  its  creditors.^  So  the  assignment  of  a  bill  or  note  by 
operation  of  a  bankrupt  or  insolvent  law,  is  an  instance  out 
of  the  usual  course  of  commercial  business.*  So  also  is  a 
transfer  by  the  payee  or  holder  to  a  trustee  for  the  benefit 
of  creditors.^     But  under  statute  in  the  State  of  Iowa,  it  has 

>  See  Chapter  XXV,  Sec.  1. 

^  Briggs  V.  Merrill,  58  Barb.  379  (1870).     As  to  assignments,  see  avte,  Chap. 
XXII. 

'  Litchfield  Bank  v.  Peck,  29  Conn.  384. 

*  Billings  V.  Collins,  44  Me.  271. 

'  Roberts  v.  Hall,  37  Conn.  205.  A.  obtained  a  note  from  B.  by  fraud,  and 
transferred  it  to  C.  as  trustee  for  certain  creditors  in  part,  and  the  balance  for 
A.'s  wife.  The  creditors  accepted  the  transfer,  and  directed  the  trustee  to 
bring  suit.  B.  had  demanded  the  note  back  before  the  transfer,  and  pleaded 
fraud  against  the  trustee.  It  was  held  not  a  transfer  in  the  usual  course  of  busi- 
ness, and  the  defense  was  allowed.  Carpenter,  J.,  saying:  That  commercial 
paper  may  be  properly  used  as  security  for  a  pre-existing  debt.  "  Tiie  purpose 
for  wliich  the  paper  was  used  is  exceptional  and  unusual.  We  apprehend  that 
cases  like  this  are  rarely  to  be  met  with  in  business  circles.  Let  us  examine  it 
more  carefully.  A  man  has  a  piece  of  negotiable  paper,  with  which  he  wishes  to 
pay  or  secure  certain  debts.  If  there  is  but  one  debt,  he  can  transfer  it  directly 
to  the  creditor,  and  the  law  protects  the  transaction.  This  is  according  to  the 
usual  course  of  business.  But  if  he  transfers  it  to  a  friend,  to  hold  till  due,  and 
then  collect  it,  and  with  its  avails  pay  the  creditor,  that  is  unusual  and  sus- 
picious upon  its  face,  and  requires  explanation.  Unless  some  good  reason  can  • 
be  shown  for  such  a  proceeding,  the  law  ought  not  to  i^rotect  it.  But  it  is  said 
there  were  several  creditors,  which,  it  is  claimed,  sufficiently  explains  the  fact, 
that  the  security  was  effected  through  the  intervention  of  a  trustee.  Let  us  test 
this  position.  If  the  paper  is  right  and  free  from  defects  why  not  sell  it  in 
market,  or  get  it  discounted,  and  with  its  avails  pay  the  debts  at  once  ?     Or,  if 


638  RIGHTS   OF   A   BONA  FIDE    OOLDER. 

been  held,  that  an  indorsement  of  a  note  by  the  sheriff,  who 
had  levied  upon  it,  had  the  same  effect  as  if  made  by  the 
holder  himself^ 

§  781  a.  A  bill  or  note  in  the  hands  of  one  not  the 
payee,  and  unindorsed  where  it  is  not  payable  to  the  payee 
or  bearer,  Avould   be  open  to  defenses  in  the  hands  of  the 


the  debts  are  not  to  be  paid  until  the  paper  is  due  and  collected,  why  not  retain 
it  in  his  own  hands  until  due,  and  if  necessary  sue  and  collect  it  in  his  own 
name  ?  Such  a  course  would  be  natural  and  usual.  But  what  honest  reason  can 
be  suggested,  why  it  should. be  transferred  to  a  third  party,  who  has  no  interest 
in  the  matter,  to  be  sued  in  his  name  ?  Such  a  course  is  unusual,  and  not  in  the 
course  of  trade.  The  transaction  at  once  suggests  the  idea  that  there  is  some 
equity  in  favor  of  the  maker,  inherent  in  the  note  itself,  and  which  can  be  made 
available  against  the  payee,  and  which  the  payee  is  seeking  to  avoid  t  *  *  * 
The  fact  that  a  part  of  this  money  was  payable  to  the  wife  of  Yale  (the  payee), 
is  wortliy  of  notice,  also  in  this  branch  of  the  case.  To  tlmt  extent,  as  we  have 
already  seen,  the  plaintiff  was  tlic  agent  of  Yale.  *  *  The  fact  that  Yale 
himself  is  still  interested  in  this  note,  either  in  his  own  right  or  the  right  of  his 
wife,  should  suggest  to  all  parties  concerned  an  inquiry  as  to  the  reason  and  oc- 
casion of  this  conveyance." 

'  Earhart  v.  Gant,  32  Iowa,  481,  Cole,  J.,  saying:  "The  note  was  payable  to 
John  Walker,  but  was  then,  or  afterwaid  became,  the  property  of  Isaac  Walker, 
against  whom  Jolin  Morford  had  a  judgment.  Under  execution  issued  thereon, 
John  Walker,  still  holding  the  note,  was  garnished ;  and  sucii  legal  proceedings 
were  had  as  that  the  note  was  indorsed  by  the  sheriff  to  John  Morford,  pursuant 
to  order  of  the  court.  Morford  agreeing  to  take  the  same  at  its  face.  It  is  now 
and  here  claimed,  by  appellee's  counsel,  that  such  transfer  did  not  operats  as  an 
indorsement  under  the  law  merchant  by  the  payee,  to  transfer  the  note  discharged 
of  its  infirmity.  Our  statute  says  (Rev.  §  3272) :  '  Bank  bills  and  other  things  in 
action  miy  be  levied  upon  and  sold,  or  appropriated  as  hereinafter  provided,  and 
assignments  thereon  by  the  officer  shall  have  the  same  effect  as  if  made  by  the 
defendant,  and  may  be  treated  as  so  made.'  And  it  is  further  provided,  by  sec- 
tion 3222,  that  money,  promissory  notes,  etc.,  may  be  appropriated  without  being 
advertised  or  sold,  if  tlie  plaintiff  will  receive  them  at  their  par  value.  The  pre- 
cise point  made  is,  that  the  transfer  by  the  officer  is  to  have  the  same  effect  as  if 
made  by  the  defendant,  and  that  Isaac  Walker,  and  not  John  Walker,  was  the 
execution  defendant.  We  think  this  loo  narrow  a  construction  to  place  upon 
the  statute,  which  is  surely  a  remedial  one.  In  our  view,  the  garnishee,  holding 
such  paper,  and  having  legal  title  in  himself,  may  properly  be  said  to  be  the 
•  defendant,  at  least  in  the  garnishment  proceedings.  A  fair  construction  of  the 
sections,  when  their  piirposc  is. considered,  will  make  the  defendant  include  not 
only  the  execution  defendant,  but  also  the  garnishee  defendant.  The  indorse- 
ment by  the  officer  is  to  have  the  same  eflect  as  if  made  by  the  defendant  in  the 
garnishment.  Such  an  indorsement  will,  therefore,  have  the  same  effect  in  this 
case  as  an  indorsement  by  the  legal  holder  under  the  law  merchant." 


ORDINARY   COURSE  OF   BUSINESS.  G39 

transferee,  for  such  possession  and  transfer  are  not  in  the 
usual  course  of  business.^  A  bill  in  the  hands  of  the  drawer, 
and  payable  to  his  order,  might  be  properly  acquired  from 
him,  and  the  holder  under  his  indorsement  would  be  pro- 
tected against  defenses,  for  the  acceptor  is  the  primary 
debtor,  and  the  drawer  the  original  creditor.^  Whether  or 
not  a  bill  in  the  hands  of  the  acceptor  before  maturity  could 
be  acquired  from  him  under  an  indorsement  in  blank  by  the 
payee,  so  as  to  protect  the  indorsee  from  defenses  available 
between  anterior  parties  is  a  disputed  question.  In  New 
York,  it  has  been  held  that  it  cannot,  on  the  ground  that  the 
presumption  in  such  a  case  is  that  the  acceptor  either  holds 
it  for  acceptance,  or  after  payment,  in  either  of  which  cases 
he  would  have  no  authority  to  negotiate  it.^  In  England  it 
has  been  held  that  the  party  acquiring  the  bill  for  value 
under  such  circumstances  is  entitled  to  protection  as  a  bona 

'  Gilson  V.  Miller,  29  Mich.        See  post,  §  812;  Mills  v.  Porter,  11  K  Y.  S.  C. 
(4  Hun),  524. 

""  Merritt  v.  Duncan,  7  Ileisk.  156.     ^qq  post,  §  812. 

'  See  ante,  §  753,  and  post,  §  812;    Central   Bank  v.  Hammett,  50  N.  Y.  158 
(1872).     In  this  case,  Balch  &  Co.  being  indebted  to  defendants,  gave  them  an 
acceptance  upon  a  draft  drawn  by  them,  and  made  payable  to  order  of  B.  &  Co. 
Failing  to  get  it  discounted,  they  returned  the  bill  to  B.  &  Co  ,  who  gave  them 
another  acceptance.     Instead  of  canceling  the  first  draft  as  instructed,  Balch  & 
Co.  negotiated  it  to  the  Central  Bank,  before  maturity.     Held,  that  the  Central 
Bank  could  not  recover  against  the  drawers.    No  notice  is  taken  in  the  opinion  of 
the  court,  of  the  case  of  Morley  v.  Culverwell,  7  M.  &  W.  174  (1840),  where  the 
contrary  doctrine  is  held,  and  has  been  well  expounded  by  Lord  Abinger.     Cen- 
tral Bank  v.  Ilammett,  50  N.  Y.  686  (1872).    The  Court  saying:  "  The  possession 
of  a  bill  or  note  payable  to  bearer,  or  indorsed  in  blank  by  one  not  a  party  to 
the  instrument,  is  presumptive  evidence  of  ownership.     But  a  possession  of  such 
an  instrument  by  a  party  to  it  only  authorizes  a  presumption  of  such  rights  and 
obligations  of  the  several  parties  as  are  indicated  by  the  paper  itself.    The  actual 
relations  to  each  other  of  the  several  parties  to  the  instrument,  are  presumed  to 
be  precisely  such  as  the  law  declares,  in  the  absence  of  any  special  circumstances 
to  take  the  instrument  out  of  the  general  rule,  and  vary  the  liabilities  of  the 
parties  as  between  each  other.     An  individual  negotiating  for  the  purchase  of 
a  bill  or  note  from  one  having  it  in  possession,  and  whose  name  appears  upon  it, 
must  assume  that  the  title  of  the  holder,  as  well  as  the  liability  of  all  the  parties, 
is  precisely  that  indicated  by  the  instrument;  that  is,  he  cannot  assume  that  the 
person  in  possession  has  any  other  or  different  rights,  or  tli;it  the  liability  of  the 
parties  is  other  or  diflerent  from  that  which  the  law  would  imply  from  the  form 
and  character  of  the  instrument." 


640  RIGHTS   OF  A  BONA  FIDE  HOLDER. 

fde  liolder  without  notice,  on  tlie  ground  tluat  lie  lias  a  right 
to  presume  that  the  bill  has  been  drawn  for  accommodation  of 
the  acceptor,  and  Lord  Abinger,  C.  B.,  in  giving  judgment 
to  this  effect  has  forcibly  expressed  this  view,  which  seems 
to  us  correct.^ 


SECTION  lY. 

THE   PHRASE    "  BKFORE   MATURITY." 

§  Y82.  In  \\^^  fourth  'place^  the  holder,  in  order  to  acquire 
a  better  right  and  title  to  the  paper  than  his  transferrer,  must 
become  possessed  of  it  before  it  is  overdue.  For  if  it  w^ere 
already  paid  by  the  maker  or  acceptor,  and  had  been  left 
outstanding,  it  would  be  already  discharged,  and  they  would 
not  be  bound  to  pay  it  again  to  any  one  who  acquired  it  after 
the  period  when  payment  was  due.  And  if  it  were  not  paid 
at  maturity,  it  is  then  considered  as  dishonored;  and  although 
still  transferable  in  like  manner  and  form  as  before,  yet  the 
fact  of  its  dishonor,  which  is  apparent  from  its  face,  is  equiv- 
alent to  notice  to  the  holder  that  he  takes  it  subject  to  its 
infirmities,  and  can  acquire  no  better  title  than  his  trans- 
ferrer.^    The  doctrine  applicable  to  this  subject  has  been  ad- 

>  Morley  v.  Culverwell,  7  M.  &  W.  174  (1840).  Lord  Abinger,  C.  B.,  saying: 
"  Suppose  mutual  accommodation  acceptances  to  be  given,  and  to  be  exchanged 
before  Ibey  have  been  negotiated,  the  names  remaining  on  them: — the  parties 
may  circulate  them  so  as  to  give  a  title  to  a  bma  fide  holder,  before  they  became 
due ;  and  wherein  does  this  case  differ  from  that  ?  Therefore  a  bill  is  not  prop- 
erly paid  and  satisfied  according  to  its  tenor  unless  it  be  paid  when  it  is 
due;  and  consequently  if  it  be  satisfied  before  it  is  due,  by  an  arrange- 
ment between  the  drawer  and  acceptor,  that  does  not  prevent  the  acceptor 
from  negotiating  it,  or  an  innocent  indorsee  for  value  from  recovering  upon 
it."  To  same  eflect  see  the  late  case  of  Witte  v.  Williams,  8  Rich.  (S.  C.) 
304,  and  opinion  of  Moses,  C.  J.,  which  disapproves  of  the  conclusion  in  Central 
Bank  v,  Haramelt,  50  N.  Y.  158.  In  the  fiirst  edition  of  this  work  the  author 
stated  the  law  upon  the  authority  of  the  New  York  decision  as  therein  laid 
down.  Examination  of  the  English  authorities,  and  of  the  South  Carolina  case, 
has  satisfied  him  of  the  error;  and  that  the  English  view  is  correct. 

^  Texas  V.  Hardcnberg,  10  Wall.  58;  Davis  v.  Miller,  14  Grat.  1;  Arents  v. 
Commonwealth,  18  Grat.  750 ;  Marsh  v.  Marshall,  53  Pcnn.  St.  30G ;  Kellogg  v. 
Schnaake,  56  jMo.  137;  Kittle  v.  De  Lamater,  3  Neb.  325;  Goodson  v.  Johnson, 
35  Tex.  023.     See  ante,  §  724. 


THE  PHRASE    "BEFORE  MATURITY."  641 

mirably  stated  by  Chief  Justice  Shaw,  who  says :  "  Where  a 
negotial)le  note  is  found  in  circulation  after  it  is  due,  it  car- 
ries suspicion  on  the  face  of  it.  The  question  instantly 
arises,  why  is  it  in  circulation  ?  why  is  it  not  paid?  Here  is 
something  wrong.  Therefore,  although  it  does  not  give  the 
indorsee  notice  of  any  specific  matter  of  defense,  such  as  set- 
off, payment,  or  fraudulent  acquisition,  yet  it  puts  him  on  in- 
quiry ;  he  takes  only  such  title  as  the  indorser  himself  has, 
and  subject  to  any  defense  which  might  be  made  if  the  suit 
were  brought  by  the  indorser."  ^  But  there  is  this  limitation 
to  this  doctrine :  that  if  the  holder  acquired  the  paper  after 
maturity,  from  one  who  became  a  hona  fide  holder  for  value, 
and  without  notice  before  maturity,  he  is  then  protected  by 
the  strength  of  his  transferrer's  title.^ 

§  783.  It  is  said  by  Professor  Parsons  in  respect  to  bills 
on  sight,  and  bills  or  notes  payable  on  demand  :  "  A  reason- 
able time  must  elapse  before  mere  non-payment  dishonors 
the  bill  or  note.  What  this  time  is,  has  not  been  and  cannot 
be  fixed  by  any  definite  and  precise  rule.  One  day's  delay 
of  paper  on  demand  certainly  would  not  dishonor  it ;  five 
years  certainly  would.  And  in  each  case,  how  many  days, 
or  weeks,  or  months  are  requisite  for  this  effect,  must  depend 
upon  the  test,  whether  so  long  a  time  has  elapsed,  that  it 
must  be  inferred  from  the  particular  circumstances  and  the 
general  conduct  of  business  men,  both  of  which  should  be 
considered,  that  the  paper  in  question  must  have  been  in- 
tended to  be  paid  within  this  period,  and  if  not  paid,  must 
have  been  refused."  *  And  ao;ain  the  same  learned  author  ob- 
serves :  "  If  the  paper  be  demanded  and  refused  within  that 
period  before  the  termination  of  which  there  is  no  presump- 
tion of  dishonor,  a  taker  after  such  demand,  and  within  that 
period,  having  no  notice  or  knowledge  of  the  demand  or  re- 
fusal, cannot  be  affected  by  it.  For  example,  suppose  a  note 
on  demand  so  circumstanced  that  the  court  would  say  the 

»  Fisher  v.  Leland,  4  Cush.  45G.        "  See  ante,  §  726,  and  fost,  786,  803,  805. 
'  1  Parsons  N.  &  B.  263,  264. 
Vol.  I.— 41 


C42  EIGHTS   OF   A   BONA  FIDE   HOLDER. 

lapse  of  one  month  is  not  sufficient  to  dishonor  it,  and  the 
lapse  of  two  months  is  sufficient,  and  a  transferee  takes  it  on 
the  twenty-fifth  day  without  notice  or  knowledge  that  on  the 
twenty-fourth  day  it  had  been  demanded  and  refused.  We 
sliould  say  that  the  law  would  allow  him  the  right  of  pre- 
sumins:  non-dishonor  durins:  the  whole  of  that  month,  and 
would  protect  his  rights  accordingly."  ^ 

§  784.  There  is  always  a  presumption  when  the  payee's 
or  an  indorser's  name  is  indorsed  upon  the  bill  or  note,  that 
it  was  done  before  its  matui'ity ;  and  likewise  the  presump- 
tion that  the  holder  required  the  instrument  before  maturity, 
whether  the  legal  title  be  transferable  by  indorsement,  or  by 
delivery  merely.^  Indeed,  the  law  will  presume  in  favor  of 
the  holder,  according  to  many  authorities,  that  the  indorse- 
ment or  assio;nment  was  of  even  date  with  the  instrument 
itself;  ^  but  it  can  rarely  be  the  case  that  any  stronger  or 
more  definite  presumption  will  be  needed  than  that  he 
acquired  it  before  maturity,  as  he  is  then  protected  against 
defenses  available  to  his  transferrer.  We  can  conceive,  how- 
ever, of  cases  in  which  the  further  presumption  that  the  trans- 
fer w\as  of  even  date  might  be  desirable  to  the  holder — as 
where  it  were  proved  that  at  a  certain  time  after  date  of  the 
paper  he  had  notice  of  a  defect  which  would  prevent  his  bet- 
ter title,  if  it  were  not  then  established. 

But  the  presumption  as  to  the  time  of  acquiring  the  in- 
strument is  not  a  strong  one.  The  indorsement  is  almost 
invariably  without  date,  and  without  v/itnesses.  The  trans, 
fer  by  deliveiy  merely  leaves  no  footprint  upon  the  paper  by 
which  the  time  can  be  traced.  And  the  presumption  in  favor 
of  the  holder  as  to  the  time  of  transfer  being  witliout  any 
written  corroborative  testimony,  is  of  the  slightest  nature,  and 
open  to  be  blown  away  by  the  slightest  breath  of  suspicion.* 

'  1  Parsons' N.  &  B.  270;  see  also  Bartrum  v.  Caddy,  9  Ad.  &  E.  275-8; 
Cripps  V.  Davis,  12  M.  &  W.  159,  165. 

^  See  ante,  §  728;  New  Orleans,  &c.  v.  Montgomery,  95  U.  S.  (5  Otto),  16 
(1877). 

'  See  ante,  §  728. 

*  Gibson.  J.,  in  Snyder  v.  Riley,  6  Barr.  1G4;  Hill  v.  Kraft,  29  Pcnn.  St.  186. 


THE  PHRASE   "BEFORE  MATURITY."  G43 

§  785.  The  presumption  that  the  holder  of  a  note  acquired 
it  before  maturity  has  been  held  not  to  apply  where  the  note 
is  payable  in  so  short  a  time  as  one  day  after  date,  on  the 
ground,  as  stated,  that  the  time  iiin  is  so  short  that  it  is  not 
probabh^  tliat  it  would  1)C  put  into  circulation  before  maturity 
— at  least,  not  sufficiently  so  to  raise  a  presumption  in  f^ivor 
of  the  holder;  that  such  paper  is  rather  evidence  of  a  debt 
than  a  promise  made  with  expectation  of  payment  at  the 
time  named,  and  does  not  belong  to  the  class  of  paper  in- 
tended for  negotiation  and  circulation  for  commercial  pur- 
poses.^ But  this  departure  from  the  general  principle,  which 
relieves  the  holder  from  nothing  but  the  burden  of  proof,  is 
not  sanctioned  by  the  law  merchant;  and  although  the  time 
is  brief,  the  execution  of  a  negotiable  instrument  payable  at 
so  brief  a  period  is  in  itself  evidence  of  a  need  of  money  for 
the  period  named.  And  we  know  of  no  reason  why  a  party 
may  not  use  negotiable  instruments  for  a  short  loan  as  well 
as  a  long  one. 

§  786.  Accommodation  paper. — While  it  is  the  general  rule 
that  if  the  paper  be  overdue  at  the  time  of  the  transfer,  that 
circumstance  of  itself  is  notice,  and  he  can  acquire  no  better 
title  than  his  indorser,  yet,  if  the  indorser's  title  were  unim- 
peachable, the  fact  that  the  paper  was  executed  for  accommo- 
dation without  consideration,  and  that  the  indorsee  knew  it, 
is  no  defense  even  when  the  paper  was  overdue  at  the  time 
of  the  indorsement,  it  being  considered  that  parties  to  accom- 
modation paper  liold  themselves  out  to  the  public  by  their 
signatures  to  be  bound  to  every  person  who  shall  take  the 
same  for  value,  to  the  same  extent  as  if  paid  to  him  jx^rson- 
ally.^     If  the  holder  received  the  paper  after  maturity  from 

'  Bcall  V.  Leverett,  33  Ga.  104,  Lyon,  J. 

'  This  doctrine  seems  just,  and  is  sustained  by  numerous  authorities,  though 
not  without  conflict.  Favoring  it,  see  Story  on  Notes,  §  194;  Story  on  Bills 
(Bennett's  ed.),  §§  188,  191  ;  2  Rob.  Prac.  (new  ed.),  253;  Bylcs  on  Bills  (Shars- 
wood's  ed.),  285;  Davis  v.  Miller,  14  Grat.  6;  Sturtevant  v.  Ford,  4  M.  &  G.  101 ; 
4  Scott,  COS;  Charles  v.  Marsden,  1  Taunt.  224;  Lazarus  v.  Cowie,  3  Q.  B,  459 
(43  E.  C.  L.  R.);  Carutlicrs  v.  West,  11  Ad.  &  El.  141.  In  Rtdticid  &  Bigelow's 
Leading  Cases,  216,  217,  it  is  said:  "To  hold  otherwise  would  be  to  encourage 


G44  EIGHTS  OF   A  BONA   FIDE   HOLDER. 

an  indorse!'  who  took  it  bona  fide  before  maturity,  there  is  no 
question  as  to  his  right  to  recover;^  but  if  he  takes  it  after 
maturity  from  the  party  for  whose  accommodation  it  was 
made,  indorsed  or  accepted,  there  is  conflict  of  decision  on  the 
subject ;  ^  but  the  doctrine  of  the  text  is  sustained  by  the 
highest  authority.^ 

§  787.  A  note  payable  by  installments  is  overdue  when 
the  first  installment  is  overdue  and  unpaid,  and  he  who  takes 
it  afterward,  takes  it  subject  to  all  e(j[uities  between  the 
original  parties ;  ^  and  if  any  installment  of  interest  on  the 
note  be  overdue  and  unpaid,  which  fact  is  disclosed  on  the 
face  of  the  note,  the  like  rule  applies.'^  But  where  more  than 
one  note  is  executed  upon  the  same  consideration,  they  ai-e 
not  all  to  be  regarded  as  dishonored  when  one  is  overdue 
and  unpaid. ° 

A  purchaser  of  a  negotiable  instrument,  before  the  close 
of  business  hours,  on  the  last  day  of  grace,  and  before  its  dis- 
honor, has  been  held,  and,  as  we  think,  correctly,  to  be  fully 
protected  as  having  received  it  while  current ;  '^  but  a  con- 
trary view  has  been  taken  in  Massachusetts."  The  effect  of 
a  purchase  pending  suit  is  hereafter  considered.^ 

SECTION  Y. 

WHAT   IS    MEANT   BY    "  PUKCIIASER   WITHOUT   NOTICE." 

§  788.  In  the  fifth  place,  the  holder  must  have  acquired 
the  paper  without  notice  of  its  dishonor.     Sometimes  a  bill 

fraud,  and  to  relieve  the  party  from  the  very  responsibility  -nhich  be  expected  to 
meet,  and  which,  upon  every  principle  of  justice  and  foir  dealing,  he  should  be 
compelled  to  abide  by."     See  ante,  §§  72G,  782. 

'  Howell  V.  Crane,  12  La.  Ann.  12G;  Riegel  v.  Cunningham,  9  Phila.  (Penn.), 
177;  Story  on  Bills,  §  188.     See  ante,  §§  72G-782;  post,  §§  803-805. 

'  Chester  v.  Dorr,  41  N.  Y.  279;  Coghlin  v.  May,  17  Cal.  506. 

'  See  ante,  §  725,  and  note  1,  supra. 

*  Vinton  v.  King,  4  Allen,  502;  Field  v.  Tibbetts,  57  Me.  359;  Hart  v.  Stick- 
ney,  41  Wis.  030  (1877).  "  Hart  v.  Stickney,  41  "Wis.  G30  (1877). 

°  Boss  v.  Hewitt,  15  Wis.  2G0.  '  Crosliy  v.  Grant,  3o  N.  H.  273. 

"  Pine  v.  Smith,  11  Gray,  38.  Tt  did  not  appear  in  this  case  whetlier  or  not 
the  transfer  was  during  business  hours,  nor  did  the  court  seem  to  attach  any  im- 
portance to  the  inquiry.  '  See  §  1199,  Vol.  II. 


WHAT   IS   MEANT   BY    "  TURCHASER   WITHOUT   NOTICE."   045 

payable  at  so  many  days  after  sight,  or  after  a  certain  event, 
is  presented  for  acceptance,  and  dishonored  before  the  time 
of  payment  by  non-acceptance ;  and  in  snch  cases,  the  party 
acquiring  it  with  notice  of  such  dishonor  stands  upon   the 
same  footing  as  one  who  acquires  it  after  maturity,  and  is 
chargeable  in   like  manner  with  constructive  notice  of  any 
flaw  in  the  right  or  title  of  his  transferrer/     Sometimes  the 
instrument  bears  upon  its  face  the  marks  of  its  dishonor  for 
non-acceptance,  and  in  snch  cases  it  bears,  as  has  been  said, 
"a  death  wound  apparent  on  it."  ^    If  it  has  been  dishonored 
for  non-payment  when  payable  on  demand  or  at  sight,  the 
like  rule  applies;  Init  it  is  only  when  the  bill  or  note  is  pay- 
able at  a  day  certain  that  the  purchaser  can  perceive,  by  the 
very  fact  that  it  is  overdue,  that  it  has  l)een  dishonored.   The 
United  States  Supreme  Court  has  observed  on  this  subject 
that  "  a  person  who  takes  a  bill  which,  upon  the  face  of  it, 
was  dishonored,  cannot  be  allowed  to  claim  the  privileo-es 
which  belong  to  a  bona  fide  holder.     If  he  chooses  to  receive 
it  under  the  circumstances,  he  takes  it  -with  all  the  infirmities 
belonging  to  it,  and  is  in  no  better  condition  than  the  person 
from  \vhom  he  received  it."  ^    And  the  doctrine  was  enforced 
in  another  case,  where,  in  speaking  of  a  promissory  note  so 
marked  as  to  show  for  whose  benefit  it  was  to  be  discounted, 
and  that  discount  had  been  refused,  the  same  tribunal  held 
that  all  those  dealing  in  paper  "  with  such  marks  on  its  face 
must  be  presumed  to  have  knowledge  of  what  it  imported.""* 
§  789.  Notice  of  fraud,  defect  of  titJe^and  iUegcditij. — In  the 
sixth  place,  in  order  to  stand  upon  a  better  footing  than  his 
transferrer,  the  holder  must  acquire  the  instrument  without 
notice  of  fraud,  defect  of  title,  illegality  of  consideration,  or 
other  fact  which  impeaches  its   validity  in  his  transferrer's 


'  Crossly  v.  Ham,  13  East,  498. 

'  Goodman  v.  Harvey,  4  Ad.  &  El.  870;  Byles  [*100],  283. 

=>  Angle  V.  N.  W.  &c.  Ins.  Co.  92  U.  S.  (2  Otto),  341-2;  Andrews  v.  Pond,  13 
Pet.  Go. 

*  Fowler  v.  Brantly,  14  Pet.  318;  Angle  v.  N.  W.  &c.  Ins.  Co.  92  U.  S.  (2 
Otto),  342. 


646  EIGHTS  or  A  i)o>;a  fide  hoi.dek. 

hands ;  and  the  word  notice  in  this  connection  siirnifies  the  same 
as  knowledge.  Knowledge  of  fraud  or  illegality  impeaches 
the  hona  fides  of  the  holder,  oi-  at  least  destroys  the  superiority 
of  his  title,  and  leaves  him  in  the  shoes  of  the  transferrer.^ 
And  any  fraud  upon  the  transferrer  incapacitates  the  trans- 
feree, or  one  acquiring  from  him  with  notice,  from  recovering 
against  the  transferrer.^  If  notice  of  fraud  be  communicated 
to  the  holder  before  he  pays  for  the  paper,  although  the  con- 
tract has  been  entered  into,  he  cannot  stand  u})on  the  foot- 
ing of  bona  fide  holder  without  notice,^  and  if  he  has  paid  a 
part  of  the  amount  agreed  upon  when  he  receives  notice  of 
fraud,  he  will  only  be  protected  to  that  extent,  and  no  more.^ 
Actual  notice,  of  the  defect  is  not  required,  where  the  evi- 
dence of  the  infirmity  consists  of  matters  apparent  on  the 
face  of  the  instrument.  •  Constructive  notice  in  such  cases  is 
held  sufficient,  upon  the  ground,  that,  when  a  party  is  about 
to  perform  an  act  which  he  has  reason  to  believe  may  affect 
the  rights  of  third  persons,  an  inquiry  as  to  the  facts  is  a- 
moral  duty,  and  diligence  an  act  of  justice.^ 

§  T90.  Notice  of  accommodation  paper. — It  is  to  be 
observed,  however,  that  knowledge  of  the  mere  want  of 
consideration  as  between  the  original  parties  will  not  alone 
prevent  the  purchaser  from  becoming  a  bona  fide  holder 
and  occupying  a  better  position  than  his  transferrer.  Ac- 
commodation paper  is  daily  placed  in  market  for  discount  or 
sale,  and  an  indorsee  or  purchaser  who  knows  that  a  bill  or 
note  still  current  was  drawn,  made,  accepted,  or  indorsed 
without  consideration  is  as  much  entitled  to  recover  as  if  he 
had  been  ignorant  of  the  fact,^  and  even  whei'e  he  acquires  it 

'  Ilanaucr  v.  Doane,  12  Wall.  342;  Fisher  v.  Lelaml,  4  Cusli.  456;  Norvell  v. 
Iludgins,  4  Muuf.  496;  Kasson  v.  Smith,  8  Wend.  4o7;  Skikling  v.  Warren,  15 
Johns.  270;  Ilarrisburg  Bank  v.  Meyer,  6  Serg.  &  R.  537;  Ryland  v.  Brc-wn,  2 
Head,  270. 

^  Lenheim  v.  Fay,  27  Mich.  70.  '  Crandell  v.  Vickery,  45  Barbour,  156. 

*  Dresser  v.  Misso.  &c.  R.  R.  Co.  93  U.  S.  (3  Otto),  93;  see  anU,  §  757. 

'  Angle  V.  N.  AV.  &c.  Ins.  Co.  92  U.  S.  (2  Otto),  342;  see  Vol.  II.  §  1408. 

"Thatcher  v.  West  River  Nat.  Bank,  19  Mich.  190;  Jones  v.  Berryhill,  25 
Iowa,  289;   Grant  v.  Ellicott,  7  Wend.  227;   Powell  v.  Waters,  17  Johns.  176; 


WHAT  IS   MEANT   BY    "J'L'RCHASER   WITHOUT   NOTICE."    047 

overdue.^  Nor  is  it  a  good  ground  of  defense  against  a  hona 
fide  holder  for  value  that  he  was  informed  tliat  the  note  was 
made  or  the  bill  accepted  in  consideration  of  an  executory 
contract,  unless  he  was  also  informed  of  its  breach.'^  If  he 
has  such  knowledge  he  cannot  recover.^  And  if  any  one  pur- 
chase accommodation  paper  with  knowledge  that  tlie  terms 
and  conditions  on  which  the  accommodation  was  given  have 
been  violated,  he  is  not  a  hona  fide  holder  as  against  the 
party  who  lent  his  name  for  accommodation.*  The  defense 
must  not  only  show  that  the  paper  was  diverted  from  its 
purpose,  but  also  that  such  diversion  was  known  to  the  liolder 
when  he  receives  it,  misapplication  not  being  such  fraud  as 
shifts  the  burden  of  proof.^ 

§  791.  Tlie  rule  in  New  York  is  diflferent,  and  there  it  is 

Grandin  v.  Leroy,  2  Paige,  509;  Bank  of  Ireland  v.  Bercsford,  6  Dow.  237; 
Mentross  v.  Clark,  2  Sandf.  115;  Cronise  v.  Kellogg,  20  111.  11;  Charles  v.  Mars- 
den,  1  Taunt.  224.  In  Thatcher  v.  West  River  Nat.  Bank,  19  Mich.  202,  Chris- 
tiaucy,  J.,  said:  "The  want  of  consideration,  and  the  assurance  of  Sprague  that 
the  note  would  be  taken  care  of,  do  not  atfect  the  right  of  the  bank  as  indorsee, 
though  taking  it  with  notice.  Merc  accommodation  paper  is  generally,  at  least, 
without  consideration,  and  such  assurances,  express  or  implied,  are  always  given 
or  relied  upon  when  such  accommodation  paper  is  given.  Such  facts  might  con- 
stitute a  good  defense  as  against  the  party  for  whose  accommodation  it  is  given, 
but  to  allow  them  to  defeat  a  recovery  by  an  indorsee  who  advances  money  upon 
it — when  that  U  the  purpose  for  which  it  is  given — would  defeat  the  very  pur- 
pose for  which  such  paper  is  made,  and  render  the  transaction  absurd." 

'  See  ante,  §§  726,  782,  78G ;  post,  §§  803,  805. 

'  Patten  v.  Gleason,  106  Mass.  439;  Davis  v.  McCready,  17  N.  Y.  230;  Croix 
V.  Sibbett,  15  Penn.  St.  238;  Bend  v.  Wietze,  12  Wis.  611. 

In  Harris  v.  NichoUs,  26  Ga.  413.  it  is  held  that  failure  of  consideration  may 
be  pleaded  against  a  transferee  who  took  the  note  with  knowledge  of  the  con- 
tract, and  that  the  consideration  was  liable  to  fall.  The  doctrine  of  the  text, 
however,  seems  sound  in  reason  and  authority. 

'  Wagner  v.  DIedrich,  50  Mo.  484;  Coffman  v.  Wilson,  2  Mete.  (Ky.)  542; 
Bonman  v.  Van  Kuren,  29  Wis.  218. 

*  Small  v.  Smith,  1  Den.  583;  Thompson  v.  Posten,  1  Duvall,  415;  Daggett 
V,  Whiting,  35  Conn.  372;  Fetters  v.  Muncie  Nat.  Bank,  34  Ind.  251;  Ilickerson 
V.  Raiguell,  2  Ileisk.  329;  Evans  v.  Kynicr,  1  B.  &  .\d.  528;  Roberts  v.  Eden. 
1  Bos.  &  P.  398;  Buchanan  v.  Findlcy,  9  B.  &  C.  738;  Key  v.  Flint,  8  Taunt. 
21 ;    Hidden  v.  Bishop,  5  R.  I.  29. 

'  Stoddard  v.  Kimball,  6  Cush.  469;  Robertson  v.  Williams,  5  Munf.  331; 
Gray  v.  Bank  of  Kentucky,  29  Penn.  St.  365;  Clark  v.  Thayer,  105  Mass.  216; 
Mohawk  Bank  v.  Corey,  1  Hill,  513. 


648  KIGHTS  OF  A  BONA  FIDE  HOLDER. 

held  that  a  diversion  is  such  fraud  as  to  sliift  the  burden  of 
proof  upon  the  holder.^  But  the  principle  of  the  text  is,  we 
think,  in  conformity  with  the  current  and  weight  of  authority 
and  the  true  theory  of  the  law  merchant.  The  fraud  which 
shifts  the  burden  of  proof  must  be  in  the  consideration,  or 
representations  used  in  obtaining  the  execution  of  the  instru- 
ment, and  not  an  after  breach  of  trust  in  diverting  it  from 
the  uses  for  which  it  was  intended. 

§  792.  What  amounts  to  diversion  of  accommodation  2Kip€r. 
— It  is  immaterial  that  paper  executed  or  indorsed  for  ac- 
commodation is  not  used  in  precise  conformity  with  agree- 
n^ent,  when  it  does  not  appear  that  theaccommo(hition  party 
had  any  interest  in  the  manner  in  which  the  paper  was  to 
be  applied.  No  change  in  the  mere  mode  or  plan  of  raising 
the  money,  though  not  applied  to  the  purpose  intended  by 
the  accommodation  party,  will  constitute  a  misappropriation. 
In  order  to  constitute  a  misappropriation,  there  must  be  a 
fraudulent  diversion  from  the  original  object  and  design; 
and  it  is  now  well  settled  that  where  a  note  is  indorsed  for 
the  accommodation  of  the  maker,  to  be  discounted  at  a  par- 
ticular bank,  it  is  no  fraudulent  misappropriation  of  the  note, 
if  it  is  discounted  at  another  bank  or  used  in  the  i)ayment  of 
a  debt  or  otherwise,  for  the  credit  of  the  maker.  If  the  note 
has  effected  the  substantial  purpose  for  which  it  was  de- 


'  Farmers'  &  Citizens'  National  Bank  v,  Noxon,  45  N.  Y.  702 ;  Grocers'  Bank 
V.  Penfiekl,  14  N.  Y.  S.  C.  (7  llun),  279;  see  Moore  v.  Ryder,  05  N.  Y.  439; 
Edwards  on  Bills,  319,  321.  In  Wardell  v.  Howell,  9  Wend.  170,  the  note  was 
indorsed  for  accommodation  of  the  maker,  to  be  used  in  renewal  of  a  former  note 
due  at  a  bank.  It  was  transferred  by  the  maker  as  collateral  security  for  another 
debt,  which  negotiation  is  held,  in  New  York,  not  to  constitute  the  creditor  a  lona 
fide  holder  for  value.  Sutherland,  J.,  said:  "  AVliere  a  note  has  effected  tlie  sub- 
stantial purpose  for  which  it  was  designed  by  the  parties,  an  accomniodation  in- 
dorser  cannot  object  that  is  was  effected  in  the  precise  manner  ccratemplated  at 
the  time  of  its  creation.  *  *  But  where  a  note  has  been  diverted  from  its  ori- 
ginal destination,  and  fraudulently  put  in  circulation  by  the  maker  or  his  agent, 
the  holder  cannot  recover  upon  it  against  an  accommodation  indorser,  without 
showing  that  he  received  it  in  good  faith,  in  the  ordinary  course  of  trade,  and 
paid  for  it  a  valuable  consideration."  Spencer  v.  BuUou,  18  N.  Y.  331 ;  Schcpp 
V.  Carpenter,  51  N.  Y.  604. 


WHAT  IS  MEA^'T  BY    "PURCHASER  WITHOUT  NOTICE."   G49 

signed  by  the  parties,  an  accommodation  maker  or  indorser 
cannot  object  that  the  accommodation  was  not  effected  in  the 
precise  manner  contemplated,  where  there  is  no  fraud,  and 
the  interest  of  the  indorser  is  not  prejudiced.^ 

§  793.  Tims,  where  a  bill  was  indorsed  for  accommoda- 
tion, for  the  purpose  of  enalding  the  maker  to  get  the  note 
discounted  at  a  particular  bank,  and  the  maker  used  it  to 
take  up  notes  on  another  bank,  the  Court  said:  "Within  the 
proper  legal  sense  of  the  term,  there  has  been  no  diversion  of 
the  note  from  the  purpose  for  which  it  was  made  and  in- 
dorsed. The  indorsers  lent  their  names  for  the  purpose  of 
giving  the  maker  credit,  generally,  and  without  any  concern 
with  the  use  which  should  be  made  of  that  credit."  '^  Nor 
would  it  be  a  misappropriation  to  discount  a  note  with  a 
private  person  thai:  was  intended  to  be  discounted  at  a  par- 
ticular bank,  the  proceeds  being  applied  to  the  purpose 
intended.^ 

And  so  where  a  bill  was  indorsed  for  accommodation,  to 
enable  one  to  raise  money,  and  he  applied  it  to  the  payment 
of  a  pre-existing  debt,  it  was  held  immaterial,  Downey,  J., 
saying:  "The  accommodation  party  must  have  some  interest 
in  the  application  of  the  money,  otherwise  he  is  not  in  con- 
dition to  contend  successfully  that  there  has  been  a  misappli- 
cation of  it,  or  of  the  security  on  which  it  was  to  be  raised."  ^ 
It  has  been  said,  in  Pennsylvania,  by  Black,  C,  J.:  "The 
maker  of  an  accommodation  uote  cannot  set  up  the  want  of 
consideration  as  a  defense  against  it  in  the  hands  of  a  third 
person,  though  it  be  there  as  collateral  security  merely.  He 
who  chooses  to  put  himself  in  the  front  of  a  negotiable  in- 

»  Duncan  &  Sherman  v.  Gilbert,  29  N.  J.  L.  R.  (5  Dutch.)  521 ;  Briggs  v. 
Boyd,  37  Vt.  538;  Purchase  v.  Mattison,  6  Duer,  87;  Wardell  v.  Howell,  9  Wend. 
170.     See  Schepp  v.  Carpenter,  51  N.  Y.  604;  Reed  v.  Trentman,  53  Ind.  438. 

=  MohaAvk  Bank  v.  Corey,  1  Hill,  513. 

'  Powell  V.  Walters,  17  Johns.  17G;  Bank  of  Chenango  v.  Hyde,  4  Cow.  567. 

*  Quinn  v.  Hard,  43  Vt.  375;  Fetters  v.  Muncie  National  Bank,  34  Ind.  254; 
sec  Schepp  v.  Carpenter,  51  N.  Y.  602.  But  it  has  been  held  otherwise  where 
the  paper  was  made  payable  to  the  party  to  whom  it  was  to  be  discounted,  and 
was  passed  to  another  for  a  pre-existing  debt.  Farmer.^,'  &n.  Bank  v.  Ilatl)  iway, 
36  Vt.  539. 


050  RIGHTS   OF   A   BONA   FIDE   HOLDER. 

strument,  for  the  beuefit  of  his  friend,  must  abide  the  conse- 
quence, and  has  no  more  right  to  comphiin  if  his  friend 
accommodates  himself  by  pledging  it  for  an  old  de])t,  than 
if  he  had  used  it  in  any  other  way."  ^  In  accordance  with 
these  principles,  an  accommodation  indorser  cannot  complain 
that  a  creditor  of  the  holder,  with  whom  the  latter  has  de- 
posited as  collateral  security  for  his  own  debt,  has  sold  the 
note  to  a  hoiia  fide  purchaser  for  value,  in  violation  of  the 
rights  of  the  payee  and  depositor;  for  if  the  payee  could 
pledge  the  note  as  collateral  security  the  subsequent  sale 
does  not  increase  the  indorser's  liability.^  In  Iowa,  D.  <fe  E,. 
executed  a  note  to  J.  or  bearer.  The  note  was  joint,  but  D. 
was  in  fact  a  surety.  The  understanding  was  that  R.  was  to 
negotiate  the  note  to  J.  for  a  yoke  of  cattle,  and  execute  a 
chattel  mortgage  to  D.  to  indemnify  him.  R ,  instead,  traded 
the  note  to  L.  for  a  yoke  of  cattle,  the  latter  knowing  that 
the  note  was  designed  to  be  negotiated  to  J.  for  a  yoke  of 
cattle,  and  suspecting  D.  was  a  surety,  but  having  no  knowl- 
edge that  he  was  to  have  the  chattel  mortgage.  It  was  held 
that  D.  was  liable  to  R.  on  the  note.'' 

§  794.  Where,  however,  the  note  is  designed  to  be  dis- 
counted for  the  purpose  of  taking  up  other  paper  of  the  person 
giving  the  accommodation,  or  was  otherwise  intended  for  his 
benefit,  the  failure  to  have  it  discounted  would  be  a  misap- 
pi'opriation,*  and  if  the  bank  refused  to  discount  it,  the 
holder  should  return  it  to  the  accommodation  maker  or  in- 
dorser.^ AYlien  there  is  a  full  consideration  for  acceptance 
of  a  bill,  it  matters  not  whether  it  be  applied  according  to 
original  agreement,  or  to  another  purpose.^ 


'  Lord  V.  Ocean  Bank  30  Penn.  St.  384;  see  also  Kimbro  v.  Lytic,  10  Yerg. 
417;  Rutland  Bank  v.  Buck,  5  Wend.  66.  In  this  case,  a  person  signed  a  note 
as  surety  for  accommodation  of  other  parties,  the  note  to  be  discounted  at  a  cer- 
tain bank.  The  bank  refused  to  discount  it,  and  it  was  passed  o(T  by  the  prin- 
cipals as  collateral  for  the  ptiyment  of  a  judgment.  Held,  no  misappropriation. 
But  see  Merchants'  Nat.  Bank  v.  Comstock,  55  N.  Y.  24. 

''  Dawson,  v.  Goodyear,  43  Conn.  548.  '  Laub  v.  Iludd,  37  Iowa,  618. 

*  Wardwell  v.  Howell,  9  Wend.  170;  Moore  v.  Ryder,  65  N.  Y.  440. 

'■"  Kasson  v.  Smith,  8  Wend,  437;  Denniston  y.  Bacon,  10  Johns.  198. 

•  Moore  v.  Ward,  1  Hilt.  337. 


WHAT  IS  MEANT   BY    "rURCUASEK  WITHOUT  NOTICE."   G51 

§  795.  Express  and  implied  notice. — It  is  quite  certain 
tbat  if  the  notice  or  knowledge  of  the  transferrer's  defective 
title  be  express,  it  ^vill  destroy  the  purchaser's  better  position ; 
for  if  he  is  actually  informed  of  the  infirmity — as  when  he  is 
told  by  the  maker  that  it  is  without  consideration,  and  that 
it  will  not  be  paid — he  errs  willingly  if  he  perseveres  in  nego- 
tiating for  the  paper,  and  has  no  claim  whatever  for  peculiar 
protection.^  But  express  notice  is  not  indispensable.  The 
circumstances  of  the  transaction  may  be  of  such  a  character 
as  to  intimate  strongly  a  defect  in  the  title,  and  if  they  are 
such  as  to  invite  inquiry  they  will  suffice,  provided  the  jury 
think  that  abstinence  from  inquiry  arose  from  a  belief  or 
suspicion  that  inquiry  would  disclose  a  vice  in  the  paper.'^ 
Then  indeed  his  hoiia  fides  would  be  impeached.  But  further 
than  this,  gross  negligence,  wliich  is  not  in  itself  proof  of 
mala  fides,  may  be  so  great  as  to  amount  to  proof  of  notice. 
"  I  agree,"  says  Baron  Parke,  "  that  notice  and  knowledge 
mean  not  merely  express  notice,  but  knowledge  or  the 
means  of  knowledge  to  which  the  party  willfully  shuts  his 
eyes."  ^ 

§  796.  Story  says  that  "  it  will  be  sufficient  if  the  circum- 
stances are  of  such  a  strong  and  pointed  character  as  neces- 
sarily to  cast  a  shade  upon  the  transaction,  and  to  put  the 
holder  upon  inquiry."  ^  But  this  statement  of  the  rule  is  not 
clear  and  satisfactory,  for  it  means  that  if  the  circumstances 
are  of  such  a  nature  as  to  cast  a  shade  of  suspicion  upon  the 
transaction  (and  it  seems  to  us  it  can  mean  nothing  less),  it 
contradicts  the  principle  laid  by  the  author  in  the  same  para- 
graph, that  suspicious  circumstances,  and  gross  negligence  as 
to  inquiry  into  them,  are  not  sufficient  to  impeach  the  hold- 
er's title.     And  it  is  remarkable  that  this  very  proposition 

'  Norvill  V.  Iludgins,  4  Munf.  49G ;  Dogan  v.  Dubois,  2  Rich.  Eq.  85. 

'  See  ante.  §  777  et  seq. 

'  May  V.  Chapman,  16  Mces.  &  W.  355;  Hamilton  v.  Vought.  oi  N.  J.  Law, 
187;  Edwards  v.  Thomas,  66  Mo.  486,  SlierwoDd,  C.  J. :  "Neither  courts  nor 
juries  are  allowed  to  shut  their  eyes  to  natural  and  rational  inferences,  clearly 
deducible  from  proven  facts." 

*  Stoiy  on  Promissory  Notes,  §  197. 


G52  PvIGnXS  OF  A   BONA  FIDE  HOLDER. 

of  Story  has  been  taken  Ly  one  authority  as  concurrent  with 
the  view  of  Gill  v.  Cubitt,  heretofore  commented  on  ;^  while 
another  follows  it  as  adopting  the  very  contrary  precedent.^ 
And  the  more  correct  opinion,  as  it  seems  to  us,  is,  that  the 
circumstances  must  be  so  pointed  and  emphatic  as  to  amount 
to  ^^vooi  oi  mala  fides  in  the  abstinence  of  inquiry,  or  sucli  as 
to  h^  ;prima  facie  inconsistent  w^ith  any  other  view  than  that 
there  is  something  wrong  in  the  title,  and  thus  amount  to 
constructive  notice.  In  other  words,  we  would  say  that  if 
the  circumstances  are  of  such  a  charactei"  as  to  create  such  a 
distinct  legal  presumption  2Cii^  pnma  facie  proof  of  fraud,  or 
of  some  equity  between  prior  parties,  it  would  operate  as 
legal  information  and  constructive  notice  to  the  transferee. 
This  rule  fixes  a  criterion  for  judgment  which  is  definite,  and 
seems  to  us  the  one  which  should  be  adopted.^  The  proof  of 
the  existence  of  the  circumstances  amounting  to  implied  no- 
tice must  be  clear.  As  said  by  Woodbury,  J. :  "  It  must 
clearly  appear  that  the  indorsee  was  aj)prised  of  such  circum- 
stances as  would  have  avoided  the  note  in  the  hands  of  the 
indorser."  ^ 

§  797.  Tlie  mere  statement  of  the  consideration  in  a  hill 
'or  note  does  not  put  the  bolder  upon  inquiry  whether  or  not 
it  really  passed,  or  has  failed  in  any  respect.  It  is  rather  as- 
suring than  otherwise,  for  it  is  evidence,  if  the  note  be 
genuine,  that  it  was  given  for  value ;  and  the  specification 
of  w'hat  value  can  no  more  challenge  the  holder's  investiga- 
tion than  the  omission  of  such  specification.^     In  legal  effect 

Bayno,  53  Mo.  533  {fost,  p.  600,  note  1),  wliich  seems  inconsistent  with  the  case 
above  cited. 

'  Hamilton  v.  Marks.  52  Mo.  80  (1873);  see  ante,  §  775.     But  see  Ilorton  v. 

'  Grei-.aux  v.  Wheeler,  (J  Tex.  52G  (1851). 

'  In  Missouri  it  was  said  in  the  recent  case  of  Ilorton  v.  Bayiie.  53  Mo.  533, 
tliat  "unless  there  be  such  a  combination  of  suspicious  incidents  as  would  in 
legal  contemplation  afford  ground  for  the  presumption  that  the  purchaser  of  the 
paper  was  aware  at  the  time  of  its  acquisition  of  some  equity  between  the  orig- 
inal parties  thereto,"  he  woukl  not  be  affected  by  them. 

*  Perkins  v.  Challis,  1  N.  H.  254. 

"  Ilereth  v.  Merchants'  Nat.  Bk.  34  Ind.  380;  Bank  of  Commerce  v.  Barrett, 
38  C<a.  120;  Dohcrty  v.  Perry.  38  Ind.  15;  !^ee  ante,  §§  41,  51. 


WHAT  IS  MEA^T  BY    "PURCHASEIi  WITHOUT  NOTICE."   C53 

it  does  not  qualify  the  jvipcr  in  any  manner.^  But  in  North 
Carolina,  where  the  note  was  expressed  to  be  for  "  the  Rocky 
Swamp  tract  of  land,"  those  words  were  held  to  put  the 
holder  on  inquiry,  and  to  fix  him  with  notice  that  it  could 
not  be  collected  unless  a  title  to  the  land  were  made.  "  In 
this  way,"  said  the  court,  ''  significance  is  given  to  the  word^j 
referred  to,  otherwise  they  must  be  ti-eated  as  idle  and  super- 
fluous."'^ And  it  has  been  held- that  a  party  taking  a  note, 
knowing  the  consideration,  is  subject  to  any  defense  arising 
out  of  it.^  But  this  cannot  be,  and  has  been  held  not  to  be 
law.*  Where  a  note  to  an  insurance  company  bears  on  its 
face  the  memorandum  "  on  i^olicy.  No.  33,386,"  it  is  nowise 
affected,  although  the  policy  contains  a  provision  for  allow- 
ance as  set-off  of  notes  due  the  company.^  In  New  York 
where  the  expressed  consideration  of  a  note  was  "  one  knit- 
ting machine,  warranted,"  it  was  held  that  breach  of  a  parol 
contract  warranting  the  article  could  not  be  pleaded  against 
a  bona  fide  holder  before  maturity,  Boardman,  J.,  saying : 
"  Giving  to  the  words  the  broadest  meaning  possible  they  do 
not  imply  that  there  has  been  a  breach  of  the  warranty. 
They  cannot  be  construed  as  notice  to  the  purchaser  of  a  de- 
fense to  the  note  in  the  hands  of  the  payee.  If  they  do,  it 
must  be  because  the  law  will  presume  a  breach  wherever 
there  is  a  warranty.  That  would  be  preposterous."  **  No- 
tice that  a  note  was  given  for  a  certain  patent  right  lias  been 
held  insufficient  to  put  the  purchaser  on  inquiry.'^ 

§  798.  The  fact  that  one  who  takes  a  promissory  note  in 


'  Beardslee  v.  Horton,  3  Mich.  5G0;  Doherty  v.  Perry,  38  Ind.  15. 
'  Rand  v.  State,  6-15  N.  C.  175. 

'  Thrall  v.  Horton,  44  Vt.  386;  see  Harris  v.  Nichols,  26  Ga.  414,  as  to  case 
where  party  knows  consideration  to  be  doubtful. 

*  Borden  v.  Clark,  2G  Mich.  410;  Sackctt  v.  Kellar,  22  Ohio  St.  554. 

*  Taylor  v.  Curry,  109  Mass.  36;  see  §§  41,  51. 

*  Loomis  V.  Monry,  15  N.  Y.  S.  C.  313  (1876). 

'  Borden  v.  Clarke,  26  Mich.  412;  Miller  v.  Finley,  26  Mich.  255.  Campbell, 
J. :  "  Whatever  may  have  been  the  experience  of  our  people  with  itinerant  patent 
vendors,  it  cannot  be  properly  assumed  as  a  fact  that  a  patent  regularly  issued  by 
the  department  lacks  cither  novelty  or  utility.  And  as  fraud  can  never  be  pre- 
sumed without  proof,  the  jury  could  not  i^roperly  be  charged  upon  any  theory, 
supported  by  no  evidence  at  all." 


054       •  KIGHTS  OF    A   BONA  FIDE   HOLDER. 

good  faith  for  value,  and  before  maturity,  knew  that  the 
maker  was  dead,  but  did  not  know  it  was  made  for  accom- 
modation, may  recover  on  it  against  the  maker's  estate,  even 
if  the  indorser  for  whose  accommodation  it  was  made,  put  it 
into  circulation  fraudulently  as  against  the  maker.  And  it 
will  be  assumed  that  he  did  not  know  it  was  made  foi*  accom- 
modation.^ A  father  who  l)ouo;ht  a  note  of  his  dauo;hter,  who 
told  him  that  her  betrothed  had  given  it  to  her,  has  been 
held  a  hona  fide  holder.* 

§  799.  Particular  and  general  notice. — It  is  quite  clear 
and  well  settled  that  the  purchaser  need  not  have  notice  of 
the  particular  fraud,  or  equity  or  illegality,  in  order  to  be 
affected  by  it.  It  is  sufficient  that  there  be  notice,  actual  or 
constructive,  that  there  is  some  fraud,  or  equity  or  illegality 
affecting  the  original  parties.  "Thus*,  if  when  he  took  the 
bill  he  were  told  in  express  terms  that  there  was  something 
wrong  about  it,  without  being  told  what  the  vice  was,  or  it' 
it  can  be  collected  by  a  jury,  from  circumstances  fairly  war- 
ranting such  an  inference  that  he  knew,  or  believed,  or 
thought  that  the  bill  was  tainted  with  illegality  or  fraud, 
such  a  general  or  implicit  notice  will  equally  destroy  the 
title."  ^  So  if  he  knows  that  the  maker  denies  his  liability 
or  refuses  to  acknowledge  it.^ 

§  800.  Puhlic  records. — Parties  negotiating  for  negotiable 
instiuments  are  not  bound  to  take  notice  of  public  records, 
and  litigations,  which  woidd  affect  them  with  notice  were 
they  dealing  with  tlie  subject-matter.  And  therefore  when 
there  is  nothing  on  the  face  of  the  bill  or  note  to  give  notice 
of  any  defects,  the  fact  that  a  deed  of  trust  securing  its  pay- 
ment contains  recitals  which  show  that  equities  or  oH'sets 
exist  between  the  original  parties  does  not  weaken  the  posi- 
tion of  a  hona  fide  holder  without  actual  notice.^  And  if  it 
be  not  overdue,  the  fact  that  it  was  in  litigation  at  the  time 
of  transfer  does  not  alTect  the  transferee's  rights ;  nor  will  a 

'  Clark  V.  Thayer,  105  Mass.  217.  '  Bcnoin  v.  Paquin,  40  Vt.  199. 

'  Byles  (Sharswood's  ed.)  [*119J,  238;  citing  Oakley  v.  Ooddcon. 

*  Boyce  v.  Geyer,  2  Mich.  N.  I\  71.  '  3Iiiull  v.  Read,  20  Ala.  736. 


WHAT   IS    MEANT   BY    "rUUCIlASHR   WITHOUT   NOTICE."   G55 

decree  when  rendered,  as  a  general  rule,  affect  them,  tlie  doc- 
ti'iiie  of  lis  pendens  not  applying  to  negotiable  instruments.^ 
But  when  transferred  overdue  pending  litigation,  it  is  subject 
to  the  issue  of  the  suit,  as  it  is  then  subject  to  all  equitable 
defenses.^  Thei-e  is  this  also  to  be  specially  noted  :  It'  under 
the  laws  of  the  State  where  the  note  is  payable,  the  defendant 
is  compelled  by  due  process  of  law  to  pay  the  note  to  an- 
other party — even  though  the  plaintiff  be  a  bo?ia  fide  holder 
without  notice — he  cannot  recover.  This  not  unfrequently 
happens  when  the  maker  is  compelled  by  garnishee  or  trustee 
process  to  pay  the  amount  of  the  note  to  a  creditor  of  the 
payee ;  and  in  such  case  an  indorsee  of  the  payee  cannot 
recover  of  the  maker  notwithstanding  he  acquired  the  note 
for  value  l)efore  maturity.^  Mere  proof  of  an  advertisement 
in  a  newspaper  cautioning  parties  against  purchasing  a  bill 
or  note,  even  when  made  in  the  place  of  residence  of  the  pur- 
chaser, it  is  not  sufficient  itself  to  show  notice  on  his  part  of 
any  fraud  affecting  its  validity/ 

§  801.  Notice  of  fraud,  or  defect  of  title,  or  of  defense 
valid  between  prior  pai-ties  may  be  derived  from  circum- 
stances, and  be  as  effectual  as  personal  observation,  or  hear- 
ing of  the  f^icts  in  question.  Thus  where  the  assignee  of  a 
note,  at  the  time  of  assignment,  requests  and  receives,  as 
security  from  the  transferi-er,  a  conveyance  of  land  for  the 
purchase  money  of  which  the  note  is  given,  with  a  provision 
in  the  deed  that  the  assignee  is  to  comply  with  the  terms  of 
the  contract  of  sale  to  the  ju-ior  purchaser,  the  assignee  will 
be  charsceable  with  notice  of  the  character  of  the  note;' 

§  802.  Notice  to  agent. — It  is  a  general  principle  of  law 
that  notice  to  an  agent  is  notice  to  the  principal,  and  there- 


'  Day  V.  Zimmerman,  68  Penn.  St. ;  Hill  v.  Kraft,  29  Pecn,  St.  186  ;  Wintons 
V.  Wfstfeldt,  22  Ala.  T60;  Kellogg  v.  Faucher,  23  Wis.  21;  Re  Great  Western 
Tel.  Co.  5  Biss.  333. 

=  Kellogg  V.  Fancher,  23  Wis.  21. 

'  Simon  V.  Huot,  1.5  N.  Y.  S.  C.  (8  Hun),  378  (1876).  See  also  Hull  v.  Blake. 
13  Mass.  153;  .VIeriam  v.  Rnndlett,  13  Pick.  511 ;  Trubee  v.  Alden,  13  N.  Y.  S.  C. 
(6  Hun),  75;  2  Parsons  on  Cout.  60G-60S. 

*  Kellogg  V.  French,  14  Gray,  354.  '  Packwood  v.  Gridley,  39  111.  388.    "^ 


G5G  RIGHTS  OF  A  BONA  FIDE  HOLDER. 

fore  if  the  holder  in  taking  the  bill  employs  an  agent,  though 
lie  be  unaffected  with  notice  to  himself  personally,  yet  no- 
tice to  the  agent  so  employed,  express  or  implied,  is  notice 
to  the  holder.^  And  notice  to  a  subagent  whose  appointment 
has  been  authorized  by  the  principal  is  equally  notice  to  the 
principal.^  But  this  rule  is  subject  to  the  qualification  that 
the  knowledge  of  the  agent,  in  order  to  affect  his  principal, 
should  either  have  been  acquired  in  the  same  transaction,  or 
at  least  so  recently  as  that  it  may  be  presumed  to  have  re- 
mained in  his  memory;  and  it  must  be  knowledge  of  a  fact 
material  to  the  transaction,  and  which  it  would  be  the  duty 
of  the  agent  to  communicate  to  his  principal.^  That  the  prin- 
cipal is  bound  by  such  knowledge  or  notice  as  his  agent  ob- 
tains in  negotiating  the  particular  transaction  is  everywhere 
conceded.  Constructive  notice  to  an  agent  is  not  to  be  ex- 
tended.* 

SECTION  YL 

WHEN   PDKCIIASER   OK   HOLDER   STANDS    ON    SAME   FOOTING   AS  HIS  TRANS- 
FERRER. 

§  803.  "VVe  have  seen  under  what  circumstances  the  pur- 
chaser of  a  negotiable  instrument  may  acquire  a  better  right 
and  title  tlian  his  transferrer.  It  is  to  be  observed  further,  that, 
as  a  general  rule,  the  purchaser  can  never  be  placed  on  a  worse 
footing  than  his  transferrer,  although  he  himself  could  not 
in  the  first  instance  have  acquired  the  vantage  ground  occu- 
pied by  such  transferrer.  And,  therefore,  even  if  he  have 
notice  that  there  was  fraud  in  the  inception  of  the  paper,  or 
that  it  was  lost  or  stolen,  or  that  the  consideration  has  failed 


*  Liverniore  v.  Blood,  40  Mo.  48;  Lawrence  v.  Tucker,  7  Greenl.  195;  Bank 
V.  Whitehead,  10  Watts,  397;  Geer  v.  Higgins,  8  Kan.  520;  Wiley  v.  Knight,  37 
Ala.  336 ;  Vamum  v.  Milford,  4  McLean,  93 ;  Patten  v.  Merchants'  Ins.  Co.  40  N. 
H.  375;  2  Kent  Com.  [*G30],  849;  Angcll  and  Ames  on  Corporations,  247;  Byles 
on  Bills  (Sharswood's  ed.)  [*120],  226,  227;  Story  on  Agency,  §  140. 

'  Boyd  V.  Vanderkemp,  1  Barb.  Ch.  Rep.  273. 
»  'I'h'e  Distilled  Spirits,  11  Wall.  366  (1870). 

*  Wyllie  V.  Pollen,  32  L.  J.  Ch.  782. 


WHEN  PURCHASER  STANDS   SAME  AS  TRANSFERRER.      G57 

between  some  anterior  parties,  or  the  paper  be  overdue  and 
dishonored,  he  is,  nevertlieless,  entitled  to  recover,  provided 
liis  immediate  indorser  was  a  hoMi  fide  holder  for  value  un- 
affected by  any  of  these  defenses.  As  soon  as  the  paper 
comes  into  the  hands  of  a  holder,  unaffected  by  any  defect,  its 
character  as  a  negotiable  security  is  established ;  and  the 
power  of  transferring  it  to  others,  with  the  same  immunity 
which  attaches  in  his  own  hands,  is  incident  to  his  legal 
right,  and  necessary  to  sustain  the  character  and  value  of  the 
instrument  as  propert}^,  and  to  protect  the  bona  fide  holder 
in  its  enjoyment.^  To  prohibit  him  from  selling  as  good  a 
right  and  title  as  lie  himself  has,  would  destroy  the  very  ob- 
ject for  which  they  are  secured  to  him — would  indeed  be 
paradoxical.  And  it  has  been  justly  said  that  this  doctrine 
"  is  indispensable  to  the  security  and  circulation  of  negotiable 
instruments,  and  is  founded  on  the  most  comprehensive  and 
liberal  principles  of  jDublic  policy."  ^  Nor  is  it  a  hardship 
to  the  maker  or  acceptor  of  the  instrument.  For,  as  said  by 
Beck,  C.  J.,  in  Iowa :  "  The  maker  of  the  note  would  be  liable 
to  the  transferrer ;  his  condition  is  made  no  harder  by  the 
note  coming  into  the  hands  of  one  having  notice  of  its  infirm- 
ities."^ Like  principles  prevail  in  courts  of  equity  in  re- 
spect to  parties  acquiring  defective  titles  to  estates.^ 


'  Commissioners  v.  Clark,  94  U.  S.  (4  Otto),  285 ;  Riley  v.  Schawhacker,  50 
Ind.  593;  Cromwell  v.  County  of  Sac,  96  U.  S.  (6  Otto),  51 ;  HoflFman  v.  Bank  of 
Milwaukee,  13  Wall.  181;  Ileretli  v.  Merchants'  National  Bank,  34  Ind.  380; 
Momyer  v.  Cooper,  35  Iowa,  257;  Simonds  v.  Mcrritt,  33  Iowa,  537;  Peabody 
V.  Rees,  18  Iowa,  571;  Howell  v.  Crane,  12  La.  Ann.  126;  Ilascall  v.  Whitmore, 
19  Me.  102;  Smith  v.  Hiscock,  14  Me,  449;  Woodman  v.  Churchill,  52  Me.  58; 
Roberts  v.  Lane,  64  Me.  108;  Ilogan  v.  Moore,  48  Ga.  156;  Woodworth  v.  Hun- 
toon,  40  111.  131;  Cotton  v.  Sterling,  10  La.  Ann.  283;  Bassett  v.  Avery,  15  Ohio 
St.  299  ;  Boyd  v.  McCann,  10  Md.  118;  Watson  v.  Flanagan,  14  Tex.  354;  Pren- 
tice V.  Zane,  2  Grat.  262;  Ilaly  v.  Lane,  2  Atk.  183;  Robinson  v.  Reynolds,  2  Q. 
B.  196  ;  Lickbarrow  v.  Mason,  2  T.  R.  63;  Chalmers  v.  Lanier,  1  Camp.  383;  Cook 
V.  Larkin,  10  La.  Ann.  507;  Masters  v.  Tbberson,  18  L.  J.  C.  P.  348;  8  C.  B.  100 
(65  E.  C.  L.  R.);  Roscoe  on  Bills,  §  111;  Kyd.  277;  Byles  (Sharswood's  ed.)  236. 
255;  Johnson  on  Bills,  80;    see  ante,  §§  726,  782,  786. 

'  Story  on  Promissory  Notes,  §  191 ;  see  also  Story  on  Bills.  188  ;  1  Parsons, 
N.  «&B.  161. 

»  Simon  v.  Mcrritt,  33  Iowa,  537.  *  Story's  Eq.  Juris.  §§  409,  410. 

Vol.  I.— 42 


G58  EIGHTS   OF   A   BONA   FIDE   HOLDER. 

§  804.  As  illustrations  of  thi^  doctrine,  it  has  been  held 
in  Louisiana,  where  the  courts  held  that  Confederate  notes 
were  an  illegal  consideration,  that  the  purchaser  for  value  of 
a  negotiable  note  given  for  a  loan  of  Confederate  money, 
could  recover  against  the  maker,  notwithstanding  he  knew 
the  nature  of  the  consideration  when  he  took  it — the  party 
who  transferred  it  to  him  having  acquired  it  bona  fide,  and 
without  such  notice.^  So  in  Indiana,  the  plaintiff,  who  knew 
when  he  acquired  the  note  that  the  defendant  was  induced 
by  fraud  to  give  it  for  a  worthless  patent,  was  held  entitled 
to  recover,  his  immediate  indorser  not  having  possessed  such 
knowledge  when  he  acquired  it.^ 

§  805.  But  this  rule  is  subject  to  the  single  exception 
that  if  the  note  were  invalid  as  between  maker  and  payee, 
the  payee  could  not  himself  by  purchase  from  a  bona  fide 
holder,  become  a  successor  to  his  rights ;  it  not  being  essen- 
tial to  such  bona  fide  holder's  protection  to  extend  the  prin- 
ciple so  far/  And  the  like  exception  is  made  by  courts  of 
equity  in  determining  the  rights  of  persons  having  defective 
titles  to  estates.'*     If  the  payees  of  the  note  were  the  agents 

'  Cotton  V.  Sterling,  20  La.  Ann.  282. 

^  Hereth  v.  Merchants'  National  Bank,  34  Ind.  380. 

•Sawyer  v.  Wiswell,  9  Allen,  42;  Kost  v.  Bender,  25  Mich.  516  (1872), 
Cooley,  J.:  "I  am  not  aware  that  this  rule  has  ever  been  applied  to  a  purchase 
by  the  original  payee,  nor  can  I  perceive  that  it  is  essential  to  the  protection  of 
the  innocent  indorsee,  that  it  should  be.  It  cannot  be  very  important  to  him, 
that  there  is  one  person  incapable  of  succeeding  to  his  equities,  and  who  conse- 
quently would  not  be  likely  to  become  a  purchaser.  If  he  may  sell  to  all  the 
rest  of  the  community,  the  market  value  of  his  security  is  not  likely  to  be  af- 
fected by  the  circumstance  that  a  single  individual  cannot  compete  for  its  pur- 
chase, especially  when  we  consider  that  the  nature  of  negotiable  securities  is 
6ucli  that  their  market  value  is  very  little  influenced  by  competition.  Nor  do  I 
perceive  that  any  rule  or  principle  of  law  would  be  violated  by  permitting  the 
maker  to  set  up  this  defense  against  the  payee,  when  he  becomes  indorsee,  with 
the  same  effect  as  he  might  have  done  before  it  had  been  sold  at  all,  or  that 
there  is  any  valid  reason  against  it."     Seeawie,  §  176. 

*  In  Story's  Equity  Jurisprudence,  §§  409,  410,  it  is  said  :  "  This  doctrine  in 
both  of  its  branches  has  been  settled  for  nearly  a  century  and  a  half  in  England, 
and  it  arose  in  a  case  in  which  A.  purchased  an  estate  with  notice  of  an  incum- 
brance and  then  sold  it  to  B.,  who  had  no  notice,  and  B.  afterward  sold  it  to 
C,  who  had  notice,  and    the  question  was  whether    the    incumbrance    bound 


AVIIEN   rURCITASER   STANDS   SAME   AS   TRANSFERRER.      030 

of  the  real  party  in  interest  they  could  not  >3ecome  the  owners 
of  the  note  so  as  to  be  held  purchasers  without  notice  of  the 
transaction  in  which  the  defense  inhered.^ 

§  806.  As  to  the  defenses  against  which  a  bona  fide  holder 
is  not  ^protected. — There  are  some  defenses  which  are  as  avail- 
able ap:ainst  a  hona  fide  holder  for  value,  and  without  notice, 
as  against  any  otlier  party.  They  are  those  which  go  to 
show  that  the  instrument  was  absolutely  and  utterly  void, 
and  not  merely  voidable,  (1)  by  reason  of  the  incapacity  of 
the  party  assuming  to  contract ;  or,  (2)  by  reason  of  some 
positive  interdiction  of  law;  oi*  (3)  by  reason  of  the  want 
of  consent  of  the  party  sought  to  be  bound  to  the  particular 
contract. 

Thus  (1)  if  the  maker  of  the  note  were  an  infant,  a  mar- 
ried woman,  a  lunatic,  or  a  person  under  guardianship,  the 
signature  would  impart  no  validity  to  it,  and  the  hona  fide 
holder  could  not  recover  against  him,  or  her,  however  igno- 
rant of  the  incapacity  when  he  took  the  paper. 

§  807.  (2)  So  if  the  statute  law  pronounces  the  contract 
evidenced  by  the  l)ill  or  note  to  be  void,  because  made  upon 
a  gambling,  usurious,  or  other  illegal  consideration,  it  is  an 
absolute  nullity ;  and,  although  in  form  negotiable,  no  cur- 
rency ill  the  market,  and  no  degree  of  innocence  or  ignorance 
on  the  part  of  the  holder  can  impart  any  validity  to  it.^  But 
although  the  party  executing  such  bill  or  note  cannot  be 
bound  even  to  a  hona  fide  holder,  the  indorser  will  be  liable 
upon  his  indorsement,  which  warrants  its  validity,  and  is  a 

the  estate  in  the  hands  of  C.  The  then  Master  of  Rolls  thought  that 
although  the  equity  of  incumbrance  was  gone  while  the  estate  was  in  the 
hands  of  B.,  yet  it  was  revived  upon  the  sale  to  C.  But  the  Lord  Keeper  reversed 
the  decision,  and  held  that  the  estate  in  the  hands  of  C.  was  discharged  of  the 
incumbrance,  notwithstanding  the  notice  of  A.  and  C."  Harrison  v.  Firth,  Prec. 
Ch.  61. 

'  Boit  v.  Whitehead,  50  Ga.  76. 

"Town  of  Eagle  V.  Kohn,  84  111.293;  Hatch  v.  Burroughs,  1  Woods,  439; 
Bayley  v.  Taber,  5  Mass  286;  Aurora  v.  West,  23  Ind.  88;  Vallett  v.  Parker,  6 
Wend.  615;  Taylor  v.  Beck,  3  Hnud.  316;  Weed  v.  Bond,  21  Ga.  lO.");  Hall 
v.  Wilson,  16  Barb.  548;  Ramsdell  v.  Morgan,  16  Wend,  574;  see  an'.e,  §§  197, 
198. 


GGO  RIGHTS  OF  A  BONA  FIDE  H0LD3R. 

separate  and  independent  contract.^  And  in  many  localities 
negotiable  instruments  executed  upon  gaming  or  usurious  ^ 
considerations  are  upon  the  same  footing  as  those  executed 
for  other  illegal  considerations — that  is,  void  between  the 
parties,  but  valid  in  the  hands  of  a  hona  fide  holder. 

§  808.  Sometimes  the  statute  declares  a  note  void  only 
as  between  original  parties,  and  in  such  cases  the  hona  fide 
purchaser  is  not  affected  by  the  illegality ;  ^  and  when  the 
instrument  w^as  executed  upon  an  illegal  consideration, 
especially  if  illegal  by  statute  (but  not  absolutely  avoiding 
the  instrument),  it  throws  upon  the  holder  the  burden  of 
proving  lona  fide  ownership  for  value.'*  But  a  failure  of 
consideration  does  not  throw  this  burden  upon  him.^  And 
in  all  cases  where  the  statute  does  not  declare  the  instrument 
void,  bona  fide  ownership  for  value  being  proved,  the  holder 
is  entitled  to  recover.® 

§  809.  (3)  So  where  the  party  has  never  in  fact  signed 
the  instrument  as  it  then  stands,  as,  for  instance,  where  it 
was  forged  in  its  inception,  and  is  not  genuine,"^  or  was  sub- 
sequently materially  altered.*^  In  such  cases  the  hona  fide 
holder  cannot  enforce  it,  for  the  defendant  lias  only  to  say: 
"  This  is  not  my  contract,"  "  non  hcec  in  feeder  a  venV  So  if 
executed  by  one  acting  as  agent  of  the  principal,  but  exceed- 
ing his  authority,  the  hona  fide  holder  cannot  recover  unless 
the  principal  were  in  fault  in  inducing  him  to  believe  that 

'  See  ante,  §  67J  et  seq,  ^  Haight  v.  Joyce,  2  Cal.  64. 

=  Paton  V.  Coit,  5  Mich.  (1  Cooley),  505;  see  ante,  §  198. 

*  Paton  V.  Coit,  5  Micli.  (1  Cooley),  505 ;  Wyat  v.  Cumpbcll,  1  Mood.  &  M. 
80;  Bailey  v.  Bidwcll,  13  Mecs,  &  W.  74;  Noitham  v.  Latouche,  4  Car.  &  P.  140; 
Harvey  v.  Towers,  6  Exch.  056;  Smith  v,  Braine,  16  Q.  B.  201 ;  Fitch  v.  Jones, 
32  Eng.  L.  &  Eq.  134;  Vallett  v.  Parker,  6  Wend.  015;  Story  on  Bills,  §  193; 
Doe  V.  Burnham,  11  Fost.  426;  Johnson  v.  Meeker,  1  Wis.  430;  Norris  v.  Lang- 
ley.  19  N.  H.  423;  Bottomley  v.  Goldsmith,  36  Mich.  27. 

'  Wilson  V.  Lazier,  11  Grat.  478,  and  cases  cited;  see  ante,  §§  165,  198,  and 
post,  §  810  et  seq. 

'  Williams  v.  Cheney,  3  Gray,  215;  Hubbard  v.  Chapin,  2  Allen,  328;  Story 
on  Promissory  Notes,  §  192. 

^  See  Chapter  XLII,  on  Forgery,  Vol.  2. 

«  See  Chapter,  XLIII,  on  Alteration,  Vol.  2. 


BURDEN   OF   TROOF   AS   TO   BONA   FIDE   OWNERSHIP.        GGl 

the   agent  had  authority.'     So  if   the    party   signed  under 
duress  lie  would  not  be  bound.'' 


SECTION  Yir. 

THE    BURDEN    OF   PROOF    AS   TO   BONA    FIDE   OWNERSHIP, 

§  SIO.  We  come  now  to  consider  how  the  holder  of  a 
negotiable  instrument  must  proceed  to  establish  his  right  to 
a  recovery  against  the  parties  thereto.  And  first,  it  is  to  be 
observed  that  as  between  him  and  his  immediate  predecessor, 
or  party  between  whom  and  himself  a  privity  exists,  he 
stands  upon  the  same  footing  as  the  payee  of  a  note  against 
the  maker.  Fraud,  illegality,  want  or  failure  of  considera- 
tion may  be  pleaded  against  him  by  such  immediate  party 
as  freely  as  if  the  instrument  were  not  negotiable ;  and  the 
only  difference  is,  that  the  negotiable  instrument  imports  a 
valid  consideration  not  only  as  between  the  original  parties, 
but  also  as  between  the  immediate  parties  to  its  transfer, 
and  that  the  burden  of  proof  devolves  upon  the  party  who 
impeaches  such  consideration.^ 

§  811.  As  to  anterior  parties  to  the  transfer  of  the  instru- 
ment, the  rule  is,  as  between  them  on  the  one  part  and  the 
holder  on  the  other,  altogether  different.  They  are  not  in 
privity  with  him,  and  they  cannot  set  up  against  him  de- 
fenses which  might  be  valid  as  between  them  and  any  party 
prior  to  him,  unless  he  is  affected  by  such  defenses  through 
inalafides^  notice,  or  otherwise  having  taken  the  paper  with- 
out value,  or  without  the  usual  course  of  business;  which 
circumstances  have  been  already  discussed.  But  still,  cir- 
cumstances of  defense,  valid  as  against  prior  parties,  may 
affect  his  position  in  respect  to  the  measure  of  proof  neces- 
sary to  establish  that  he  is  not  affected  by  them.     And  the 


'  Andover  Bank  v.  Grafton,  7  N.  H.  398;  Wcatliered  v.  Smith,  9  Tex.  622  ; 
Fearn  v.  Filica,  7  Man.  &  G.  514;  The  Floyd  Acceptance,  7  Wall.  COO, 
=■  See  Chapter  XXVI.  Section  VII [. 
'  Sec  ante,  Cliapter  VII,  on  Cou^idcratiou,  Sec.  I. 


662  RIGHTS   OF   A   BONA   FIDE   HOLDER. 

course  of  legal  procedure  in  presenting  sucV.  proof  may  be 
stated  to  be  as  follows : 

§  812.  First.  The  mere  possession  of  a  negotiable  instru- 
ment, produced  in  evidence  by  the  indorsee,  or  by  the  as- 
signee where  no  indorsement  is  necessary,  imports  prima 
facie  that  he  acquired  it  hona  fide  for  full  value,  in  the  usual 
course  of  business,  before  maturity,  and  without  notice  of 
any  circumstance  impeaching  its  validity ;  and  that  he  is  the 
owner  thereof,  entitled  to  recover  the  full  amount  against  all 
prior  parties.  In  other  words,  the  production  of  the  instru- 
ment and  proof  that  it  is  genuine  (where  indeed  such  proof 
is  necessary),  ^:)?'/7?i« /am  establishes  his  case ;  and  he  may 
there  rest  it.^  Bills  and  notes  payable  to  bearer  do  not  differ 
in  this  respect  from  others,  and  the  bearer  is  entitled  to  all 
the  presumptions  that  apply  to  an  indorsee  in  his  favor.^ 
But  the  presumption  of  hona  fide  ownership  does  not  apply 
where  the  instrument  is  not  payable  to  bearer,  unless  it  be 
indorsed  specially  to  the  holder,  or  in  blank.^  The  holder, 
however,  could  not  recover  against  subsequent  parties,  as 
his  possession  of  the  bill  or  note  would  be  prima  facie  evi- 
dence that  he  had  paid  it  to  some  subsequent  party,  to  whom 
he  was  liable.  Thei-efore,  where  A.  brought  suit  against  B. 
on  a  note  made  by  C.  payable  to  A.,  and  by  A.  indorsed  to 
B.,  and  l)y  B.  indorsed  back  to  A.,  it  was  held  A.  could  not 
recover  against  B.^  But  S23ecial  circumstances,  showing  that 
it  had  been  indorsed  back  to  A.  for  a  valid  consideration, 
would  enable  him  to  recover  against  B.*^  And  if  a  j^rior  in- 
dorser  offered  a  note  for  discount  on  his  own  account,  the 
transaction  would  import  that  the  subsequent  indorsement 
was  made  for  the  accommodation  of  the  pi'ior  indorser,  and 

»  Brown  v.  Spofford,  95  U.  S.  (5  Otto),  478  (1877) ;  Collins  v.  Gilbert,  94  U.  S. 
(4  Otto),  753;  Commissioners  v.  Clark,  94  U.  S.  (4  Otto),  285  ;  Vallett  v.  Parker,  6 
W^end.  615;  Davis  v.  Bartlett,  12  Ohio  St.  544;  Holme  t.  Karsper,  5  Binn.  469; 
McCann  v.  Lewis,  9  Cal.  246;  Hall  v.  Allen,  37  Ind.  541;  Horton  v.  Bayne,  52 
Mo  531 ;  Palmer  v.  Nassau  Bank,  78  111.  380. 

^  Faulkner  v.  Ware,  34  Ga.  372. 

3  See  Chapter  XXXVir,  on  Action,  vol.  2,  Sec.  IV;  Dorn  v.  Parsons,  56  Mo.  601. 

^  Palmer  v.  Wiiitney,  21  Ind.  61.  '  Ibid. 


BURDEN   OF   PROOF   AS   TO   BONA   FIDE   OWNERSHIP.        CC3 

the  party  discounting  it  could  recover  against  him.^  Posses- 
sion of  a  note  by  the  personal  representative  of  the  deceased 
payee,  payable  to  the  decedent,  and  unindorsed,  would  he, 
evidence  of  ownership;^  and  so  possession  of  a  bill  by  a 
drawer  payable  to  his  own  order.^  Possession  of  a  bill  or 
note  unindorsed  by  the  payee  would  not  be.* 

§  813.  It  is  not  competent  for  the  defendant  to  deny  that 
the  plaintiff  is  the  owner  and  holder  of  a  note  upon  which 
he  brings  suit  as  such,  without  traversing  the  signature,  the 
indorsement,  or  the  delivery  of  the  note ;  and  in  such  case, 
evidence  is  inadmissible  to  prove  that  the  plaintiff  never 
owned  the  note,  never  employed  counsel,  and  had  no  interest 
in  the  suit.^ 

§  814.  Second.  That  countervailing  proof  that  the  in- 
strument was  executed  without  consideration  as  between  the 
original  parties — as,  for  instance,  where  it  was  executed  for 
accommodation  as  between  them,  or  that  the  consideration, 
originally  valid,  has  subsequently  failed — does  not  impair 
the  holder's  superiority  of  position,  and  he  may  still  rest  his 
case  upon  the  instrument  itself,  from  wdiich  it  will  still  be 
presumed  that  he  acquired  it  in  a  manner  entitling  him  to 
stand  upon  the  vantage  ground  of  a  bona  fide  holder  for 
value.®     Nor  will  proof  of  mere  misapplication  of  the  instru- 

■  MaulcUn  v.  Branch  Bank,  2  Ala.  502. 

«  Scoville  V.  Laudon,  50  N.  Y.  686. 

'  Merritt  v.  Duncan,  7  Heiskell.  156.     See  ante,  §§  781,  753. 

*  Gibson  v.  ]Miller,  29  Mich.  355.     See  ante,  %  781  a. 

*  Way  V.  Richardson,  3  Gray,  412. 

*  Commissioners  v.  Clark,  9-i  U.  S.  (4  Otto),  285;  Collins  v.  Gilbert,  94  U.  S. 
(4  Otto),  757;  Duerson's  Adm'r  v.  Alsop,  27  Grat.  248;  Goodman  v.  Siinouds,  20 
How.  343;  Bank  of  Pittsburg  v.  Neal,  22  Id.  96;  Murray  v.  Lardner,  2  Wall. 
110;  Wilson  v.  Lazier,  11  Grat.  478;  Ross  v.  Bedell,  5  Duer,  402;  Fletcher  t. 
Cushee.  32  Me.  587;  Ellicott  v.  Martin,  6  Md.  509;  Knight  v.  Pugh,  4  Watta  & 
S.  445;  Grenaux  v.  Wheeler,  6  Tex.  515;  Mathews  v.  Poythress,  4  Ga.287;  Hole- 
man  V.  Hobson,  8  Humph.  127;  Cook  v.  Helms,  5  Wis.  107;  Magec  v.  Badger,  34 
N.  Y.  (7  Tiff.)  247;  and  Belmont  Branch  Bank  v.  Uoge,  35  N.  Y.  (8  Titf.)  65, 
overruling  Pringle  v.  Phillips,  5  Sand.  157:  Whitaker  v.  Edmonds,  1  Mood.  & 
R.  306;  Mills  v.  Barber,  1  Mecs.  &  W.  425;  Low  v.  Chifney,  1  Bing.  N.  C.  267  ; 
Smith  V.  Biaiuc,  14  Q.  B.  244 ;  Baxter  t.  Ellis.  57  Me.  180 ;  Story  on  Bill  (Bennett's 
ed.),  §  193;  Cummings  v.  Thomson,  18  Minn.  252  (:1872);  Sloan  v.  Union  Bank- 


GG4  RIGHTS  OF  A  BONA  FIDE  HOLDER. 

mont,  Avbere  it  has  subserved  its  substantial  purpose,  shift 
the  burden  of  proof,  as  has  been  ah"eady  indicated.^ 

§  815.  Third.  There  may  be  at  this  juncture  a  shifting 
of  the  burden  of  proof  from  the  defendant  to  the  plaintiflT, 
for  the  principle  is  well  established  that  if  the  maker  or 
acceptor,  who  is  primarily  liable  for  payment  of  the  instru- 
ment, or  any  party  bound  by  the  original  consideration, 
proves  that  there  was  fraud  or  illegallity  in  the  inception  of 
the  instrument;  or  if  the  circumstances  raise  a  strong  sus- 
picion of  fraud  or  illegality,  the  owner  must  then  respond 
by  showing  that  he  acquired  it  bona  fide  for  value,  in  the 
usual  course  of  business,  while  current,  and  under  circum- 
stances which  create  no  presumption  that  he  knew  the  facts 
which  impeach  its  validity.  This  pi'inciple  is  obviously  sal- 
utary, for  the  presumption  is  natural  that  an  instrument  so 
issued  would  be  cpiickly  transferred  to  another ;  and  unless 
he  gave  value,  which  could  be  easily  proved  if  given,  it 
would  perpetrate  gi-eat  injustice,  and  reward  fraud  to  permit 
him  to  recover.^     "In  the  nature   of  things'*  it  is  remarked 


ing  Co.  67  Penn.  St.  479;  Davis  v.  Bartlett,  12  Ohio  St.  537  (1861);  Grocers' 
Bank  v.  Penfield,  14  N.  Y.  S.  C.  (7  Ilun),  279;  Mecliauics',  «&c.  Bank  v.  Crow,  GO 
N.  Y.  85.     See  anle,  §§  165  et  seq. 

'  Ante,  §§  790,  791;  Holme  v.  Karsper,  5  Binn.  469,  Tilghman,  C.  J.,  saying: 
"  In  the  first  instance,  it  is  presumed  that  every  man  acts  fairly.  It  lies  on  the  de- 
fendant, therefore,  to  sliow  some  probable  ground  of  susi)icion,  before  the  plaint- 
iff is  expected  to  do  anything  more  than  produce  the  note  on  which  lie  founds 
his  action.  But  this  being  done,  it  is  reasonable  that  tlie  liolder  should  be  called 
on  to  rebut  the  suspicions.  All  that  is  asked  of  him  is  to  show  that  he  acted 
fairly,  and  paid  value." 

»  Commissioners  v.  Clark,  94  U.  S.  (4  Otto),  285;  Collins  v.  Gilbert,  94  U.  S. 
(4  Otto),  761;  Duerson  v.  Alsop,  27  Grat.  249;  Fitch  v.  Jones,  32  E.  L.  &  Eq. 
134;  Smith  v.  Braine,  3  Id.  380;  16  Q.  B,  244;  Smith  v.  Sac  County,  11  Wall. 
139;  McCliutick  v.  Cummins,  2  M'Lean,  98;  Vathir  v.  Zane,  6  Giat.  246;  Hut- 
chinson V.  Bogg.  28  Penn.  St.  294;  Perrin  v.  Noyes,  39  Me.  384;  Sistermans  v. 
Field,  9  Gray,  331 ;  WoodhuU  v.  Holmes,  10  Johns.  231 ;  McKesson  v.  Stanberry, 
3  Ohio,  N.  S.  156;  Thompson  v.  Armstrong,  7  Ala.  256;  Ross  v.  Driukard,  35 
Ala.  434;  Devlin  v.  Clark,  31  Mo.  22;  Kelly  v.  Ford,  4  Iowa,  140;  Hall  v.  Feath- 
erstone,  3  Hurl.  &  N.  284;  Bailey  v.  Bidwell,  13  M.  &  W.  73;  Story  on  Bills, 
§  193;  Byles  on  Bills  (Sharwood's  ed.)  222;  Perkins  v.  Prout,  47  N.  H.  387;  Har- 
bison V.  Bank  of  Indiana, 28  Ind.  133;  Fuller  v.  Ilutchings,  10  Cal.  526;  Boyd  v. 
Melvcr,  11  Ala.  822;  Ilorton  v.  Bayne,  52  Mo.  531;  Cummings  v.  Thompson,  18 


BURDEN   OF  PROOF  AS  TO  BONA   FIDE   OWNERSHIP.        GG5 

by  Staples,  J.,  in  a  late  Virginia  case,  "  it  is  impossible  to 
lay  down  any  fixed  unvarying  rule,  as  to  the  ciicumstances 
which  will  be  deemed  sufficient  to  throw  upon  the  holder  the 
burden  of  showing  that  he  has  given  value  for  the  note.  The 
courts  must  determine  in  each  whether  the  transaction  is  of 
such  a  character  as  to  rel)ut  the  presumption  usually  arising 
from  the  possession  of  the  instrument."  Long  delay  which 
continued  until  the  death  of  an  indorser  whose  estate  was 
sought  to  be  charged,  coupled  with  a  variety  of  peculiar  cir- 
cumstances, was  held  in  the  particular  case  to  rebut  the  pre- 
presumption  in  the  holder's  fiivor,  and  to  require  of  him 
proof  that  he  gave  value.^ 

The  holder  is  not  bound,  however,  to  show  that  he  acted 
cautiously  in  inquiring  into  the  history  of  the  instrument  in 
proving  his  bona  fides.  If  the  defendant  plead  that  the  paper 
was  made  on  an  illegal  consideration,  and  that  the  plaintiff 
gave  no  value,  and  the  plaintiff  put  the  whole  plea  in  issue, 
it  will  be  sufficient  for  the  defendant  to  prove  the  illegality, 
and  the  plaintiff  must  then  prove  the  consideration.  And  in 
case  of  fraud,  the  Inuxlen  will  be  equally  cast  upon  the  plaint- 
iff of  proving  consideration,  if  the  defendant  prove  so  nmch 
of  the  plea  as  alleges  that  he,  the  defendant,  was  defrauded 
of  the  bill.'- 

§  816.  In  Virginia,^  it  appeared  that  J.  E.  Johnson  met 
Platoff  Zane  in  Philadelphia,  and  induced  him  to  purchase 
certain  lots  situated  in  South  St.  Louis,  an  addition  to  the  city 
of  St.  Louis,  Missouri,  Johnson  represented  them  to  be  of 
great  value,  and  likely  to  become  a  part  of  that  city,  and  that 
he  could  make  an  unencumbered  title  to  the  purchaser.  Con- 
fiding in  these  representations,  Zane  executed  his  promissory 
notes  for  about  $14,000,  and  Johnson  assigned  one  of  said 
notes  for  $652  40  to  John  L.  Vathir,  who  brought  suit  upon 
it,  and  recovered  judgment  against  Zane.     Zane  obtained  an 

Minn.  246;  Sloan  v.  Union  Banking  Co.  67  Penn.  St.  470;  Roberts  v.  Lane,  64 
Me.  108;  Spcrry  v.  Spaulding,  45  Cal.  544;  Redington  v.  Wood,  45  Cal.  406. 

'  Duorson's  Adm'r  v.  Alsop,  27  Grat.  240  (1876). 

^  Byles  on  Bills,  223.  '  Vathir  v.  Zane,  6  Grat.  246. 


666  EIGHTS  or  a  bona  fide  holder. 

injunction  to  this  judgment ;  and  it  appeared  that  Johnson's 
representations  as  to  the  value  of  the  lots  were  false;  and  be- 
sides that,  he  could  make  no  title  to  them,  it  having  reverted 
to  the  city  of  St.  Louis  in  default  of  his  payment  of  the  pur- 
chase money.  Said  Allen,  J. :  "  As  a  general  rule,  the  in- 
dorsement of  a  negotiable  note  is  of  itself,  fvima  facie 
evidence  that  the  indorsee  has  paid  value  for  it.  But  when 
the  payee  has  procured  the  note  by  fraud,  this  general  pre- 
sumption is  rebutted,  and  the  holder  cannot  recover  without 
proving  that  he  has  paid  value.  The  reason  on  whicli  this 
exception  to  tlie  general  rule  rests  is  briefly  stated  by  Parke 
B.,  in  Bailey  v.  Bid  well,  13  Mees.  <fe  Wels.  73  :  '  It  certainly,' 
he  says, '  has  been  the  universal  understanding  since  the  later 
cases,  that  if  the  note  were  proved  to  have  been  obtained  by 
fraud,  or  affected  by  illegality,  that  afforded  a  presumption 
that  the  person  who  had  been  guilty  of  the  illegality  would 
dispose  of  it,  and  would  place  it  in  the  hands  of  some  other 
person  to  sue  upon  it ;  and  that  such  proof  casts  upon  the 
holder  the  burden  of  showing  that  he  was  a  lona  fide  holder 
for  value.'  ^ 

"  Nor  is  the  requisition  for  such  proof  confined  to  cases  in 
which  the  note  was  put  into  circulation  by  fraud,  as  where 
it  was  lost  or  stolen.  In  the  case  of  Rogers  v.  Morton,  12 
Wend.  484,  the  note  was  voluntarily  given  for  an  assumed 
balance,  on  a  settlement  of  accounts.  The  balance  was  in 
part  made  up  by  a  charge  for  a  draft,  of  whicli  the  creditor 
was  never  holder;  and  proof  of  this  fraud  committed  on  the 
makers  at  the  time  the  note  was  given,  was  held  sufficient  to 
throv/  upon  the  plaintiffs  the  burden  of  showing  that  they 
were  lona  fide  holders  for  value."  ^  It  was  held  incumbent 
on  Vathir  to  give  proof  accordingly  to  this  view. 

§  817.  In  another  case  it  appeared  that  Rector  sold  to 
Wilson  &  Mills,  with  general  warranty,  real  estate  in  Wash- 
ington county,  Ohio,  and  received  in  part  payment  the  note 

■  See  Mouroe  v.  Cooper,  5  Pick.  412;  Rogers  v.  Morton,  12  Wend.  484;  Holme 
V.  Karsper,  5  Binn.  409. 

"  See  also  Thomas  v.  Newton,  2  Carr.  k  P.  600. 


BURDEN   OF  PROOF  AS  TO   BONA  FIDE  OWNERSIIIT.        oG7 

of  Wilson,  wliicb  he  transferred  as  a  gift  to  the  trustees  of 
"Kector  College,  in  Taylor  county,  Virginia.  Previous  to  the 
assignment,  Kector  had  mortgaged  the  real  estate  aforesaid 
to  the  OLiio  Life  and  Trust  Company,  and  it  had  been  sold, 
and  so  the  consideration  liad  entirely  failed. 

The  trustees  of  the  college  assigned  the  note  to  Wright 
&  Baldwin,  who  sold  it  to  William  Lazier,  who  indorsed  it 
to  another  party,  and  was  sued  upon,  and  paid  it.     The  bill 
prayed  that  the  contract  for  the  sale  of  the  land  might  be 
rescinded,  and  the  note  canceled.    Daniel,  J.,  said  :  "  There  is 
no  evidence  of  fraud  in  the  origin  or  negotiation  of  the  note ; 
and  the  mere  failure  of  consideration  does  not  impose  on 
the  innocent  holder  the  onus  of  showing  the  consideration 
he  gave  for  the  note."     In  note  to  Chitty  on  Bills,  10th  Am. 
ed.,  p.  648,  we  have  a  report  of  the  case  of  W^hitaker  v. 
Edmonds,  1  Mood.  &  Rob.  366.     In  that  case,  Paterson,  J., 
said  :  "  Since  the  decision  of  Heath  v.  Sansom,  2  Bar.  &  Ad. 
291  (22  Eng.  C.  L.  R.  78),  the  consideration  of  the  judges 
has  been  a  good  deal  called  to  the  subject ;  and  the  prevalent 
opinion  among  them  is  that  the  courts  have  of  late  gone  too 
far  in  restricting  the  negotiability  of  bills  and  notes.     If, 
indeed,  the  defendant  can  show  that  there  has  been  some- 
thing of  fraud  in  the  previous  steps  of  the  transfer  of  the 
instrument,  that  throws  upon  the  plaintiff  the  necessity  of 
showing  under  what  circumstances  he  became  possessed  of 
it.      So  fiir  I  accede  to  the  case  of  Heath  v.   Sansom,  for 
there  were,  in  that  case,  circumstances  raising  a  suspicion  of 
fraud  ;  but  if  I  added  on  that  occasion  that,  even  independ- 
ently of  these  circumstances  of  suspicion,  the  holder  would 
have  been  bound  to  show  the  consideration  which  he  gave 
for  the  bill,  merely  because  there  was  an  absence  of  con- 
sideration as  between  the  previous  parties  to  the  bill,  I  am 
now  decidedly  of  opinion  that  such  doctrine  was  incorrect."  ^ 
In  England  it  has  been  held,  that  where  the  drawer  of  a 
bill,  which  he  indorsed  in  blank,  delivered  it  to  W.  to  get  it 


Wilson  V.  Lazier,  11  Grat.  478. 


668  EIGHTS   OF  A  BONA  FIDE   nOLDER. 

discounted  for  him,  and  W.  went  off  with  the  bill  promising 
to  get  and  bring  liim  the  money,  but  never  returned  with  the 
bill  or  the  money,  and  the  drawer  never  heard  of  the  bill  un- 
til called  upon  by  H.  to  pay  it,  it  was  held  that  H.  must 
prove  that  he  gave  value  in  order  to  recover  on  the  bill.^ 

§  818.  It  is  to  be  observed,  however,  that  the  fraud 
which  shifts  the  burden  of  proof  upon  the  holder  of  the 
note,  and  renders  it  necessary  for  him  to  establish  hona  fide 
ownership  for  value,  must  be  a  fraud  committed  upon  the 
maker;  and  fraud  against  the  payee  or  any  intermediate 
holder  is  insufficient.^ 

§  819.  Fourth.  That  when  the  holder  responds  by  show- 
ing that  he  did  acquire  the  instrument  hona  fide^  for  value, 
in  the  usual  course  of  business,  while  it  was  current,  and  un- 
der circumstances  which  do  not  operate  as  consti'uctive  notice 
of  the  fjicts  which  impeach  the  original  validity,  the  defend- 
ant must  then  prove  that  he  had  actual  notice  of  such  facts ; 
otherwise  the  holder's  right  to  a  recovery  against  him  is  per- 
fected. This  principle  is  obviously  correct,  for  to  require  the 
plaintiff  to  show  absolutely  that  he  had  no  knowledge  of 
facts  would  be  to  burden  him  with  the  necessity  of  proving 
an  impossible  negative.^ 


'  Hall  V.  Featherstone,  3  Hurl.  &  Norm.  284;  Ducrson  v.  Alsop,  27  Grat.  249. 

""  Kinney  v.  Kruse,  27  Wis.  183;  sec  Atlas  Bank  v.  Doyle,  9  R.  I.  76. 

•  Davis  V.  Bartlett,  12  Ohio  St.  541  (1861).  In  this  case,  Sutlifif,  C.  J.,  said: 
"  The  case  of  Monroe  v.  Cooper,  5  Pick.  412,  is  also  relied  upon  by  the  defend- 
ants in  this  case  as  an  authority.  That  was  an  action  by  the  indorsee  upon  a  ne- 
gotiable note  against  the  members  of  a  partnership  company,  by  whom  the  note 
purported  to  be  made.  Two  of  the  three  partners  appeared,  and  pleaded  the 
general  issue,  and,  on  the  trial,  offered  to  prove  that  the  note  was  made  by  the 
other  partner,  who  had  made  default  in  the  case,  for  his  own  benefit,  and  not 
for  the  benefit  or  on  account  of  the  company  or  with  the  knowledge  of  tlie  other 
partners;  but  as  the  defendants  did  not  offer  to  prove,  alt>o,  that  the  note  was 
due  when  indorsed  to  the  plaintiff,  or  that  he  had  knowledge  of  the  facts,  the 
judge,  on  the  trial  of  the  case,  was  of  the  opinion  that  the  facts  so  proposed  to 
be  proved  did  not  amount  to  a  defense,  and  excluded  the  proof.  The  Supreme 
Court,  in  revising  this  opinion,  by  Wilde,  J.,  held  that  the  defendants  had  the 
right  to  prove,  if  they  could,  that  fraud  was  practiced  in  the  inception  of  the 
note,  or  that  it  was  fraudulently  put  in  circulation.  And  x\\Q  judge  adds :  '  This 
fact  being  established,  will  throw  upon  the  plaintiff  the  burden  of  proof,  to  show 


BURDEN   OF  PROOF   AS  TO   BONA  FIDE  OWNERSHIP.        GG9 

that  he  came  by  tlio  possession  of  the  note  fairly  and  without  any  knowledge  of 
the  fraud.'  There  can  be  no  doubt  that  the  judgment  of  the  Supreme  Court,  in 
this  case  also,  was  strictly  correct;  and  by  the  burden  of  proof  to  sliow  ])033e«9iou 
of  the  note  fairly  and  without  knowledge  of  the  fraud,  be  only  meant  that  upon 
the  defendants  proving  the  note  to  have  been  fraudulently  executed  and  put  in 
circulation,  that  it  was  incumbent  upon  the  plaintiff  to  prove  that  he  received 
the  negotiable  paper  before  due  in  the  usual  course  of  trade,  upon  a  valuable 
consideration,  the  remark  of  Judge  Wilde  is  strictly  correct,  and  consonant  with 
the  authorities  to  which  he  refers;  but  if  liis  remark  is  to  be  understood  as  inti- 
mating that  the  rule  in  such  a  case  imposes  any  further  burden  upon  the  plaintifl' 
than  to  prove  he  purchased  and  received  the  transfer  of  the  negotiable  paper  be- 
fore due,  in  the  usual  course  of  trade,  lona  fide,  and  upon  a  valuable  considera- 
tion, it  is  not  only  not  sustained  by,  but  is  opposed  to,  the  authorities  to  which 
he  refers." 


CHAPTER  XXV. 

HOLDER  OF  BILL3  AND  NOTES  TRANSFEKRED  TO  IIIM  AS  COL- 
LATERAL security;  and  holder  of  bills  and  NOTES 
SECURED    BY    MORTGAGE. 


SECTION  Y. 

KIGHTS     AND    DUTIES     OF     HOLDER    OF    A     NEGOTIABLE     INSTKUMENT    A  8 
COLLATERAL     SECURITY     FOR    A    DEBT. 

§  820.  Bills  and  notes  are  frequently  transferred  and 
pledged  as  collateral  securities  for  debts  of  tbe  pledgor,  and 
many  questions  have  arisen  as  to  the  rights  of  the  various 
parties  concerned  in  such  transactions.  And  whether  or  not 
the  indorsee  or  pledgee  becomes  a  honia  pie  holder,  and  is 
protected  against  defenses  which  would  be  available  against 
the  indorser  or  pledgor,  is  often  difficult  to  determine. 
Great  contrariety  of  opinion  is  found  in  the  decisions  on  the 
subject.  But  by  keeping  in  view  a  few  well  fixed  principles, 
we  think  that  every  case  which  can  arise  maybe  satisfactorily 
solved. 

§  821.  In  the  frst  place,  it  should  be  determined  whether 
or  not  the  j)arty  holding  the  instrument  has  the  form  of  the 
legal  title.  If  the  instrument  be  transferable  by  delivery 
(by  being  payable  to  bearer,  or  bearing  an  indorsement  in 
blank),  he  is  then  its  ijrima  facie  proprietor  and  owner.  If 
it  be  payable  to  order  and  unindorsed,  he  then  holds  only 
the  equitable  title,  and  cannot  claim  the  rights  of  an  indorsee.^ 

§  822.  In  the  second  place,  if  the  holder  be  an  indorsee, 
or  a  transferee  by  delivery  of  a  bill  or  note  payal)le  to  bearer, 
let  it  be  ascertained  whether  or  not  he  is  merely  the  agent 
of  the  real  owner  or  has  himself  an  interest  in  the  instru- 


'  See  ante,  §§  741  et  seq. 


HOLDER  OF   INSTRUMENT  AS  COLLATERAL   SECURITY.     071 

ment ;  whether  or  not  he  has  a  bare  authority  or  an  authority- 
coupled  with  an  interest.  If  he  were  only  authorized  to 
collect  the  proceeds  for  the  indorser,  or  transferrer  Ly  de- 
livery, and  then  to  apply  the  proceeds  to  the  payment  of  a 
debt  due  to  himself,  this  would  not  give  him  an  interest  in 
the  paper  itself.  It  would  be  much  the  same  as  if  he  were 
to  a])])ly  the  proceeds  to  the  payment  of  some  other  debt 
due  from  the  principal ;  nor  could  he  have  the  rights  of  a 
principal  instead  of  agent,  unless  there  has  been  an  actual 
assignment  to  him.^  For  if  he  is  agent  of  the  owner,  any 
defense  available  against  the  owner  is  available  against  him ; 
and  this  even  in  the  case  where  the  owner  owes  his  agent 
more  than  the  amount  of  the  paper.^ 

§  823.  If  it  turn  out  that  the  holder  is  agent,  the  prin- 
cipal may  revoke  that  agency  at  any  time  and  recall  the  paper 
from  his  hands.  And  he  cannot  set  up  then,  as  we  have 
seen,  any  better  right  than  his  principal.  The  test  question 
then  is  simply  this :  has  there  been  a  change  in  the  legal 
rights  of  the  parties?  If  so  the  transfer  is  irrevocable  with- 
out the  holder's  consent.  If  so  there  has  been  a  considera- 
tion for  the  transfer — either  of  damage  to  the  holder,  or  of 
l)enefit  to  the  transferrer.  And  if  so  the  holder  is  a  pledgee 
and  bona  fide  proprietor  of  the  paper,  and  is  entitled  to  re- 
cover upon  it  even  against  those  who  might  have  made  a  de- 
fense against  his  pledgor — at  least  to  the  extent  of  the  debt 
of  which  the  instrument  is  collateral  security. 

In  California,  where,  by  the  provisions  of  the  law  in  force, 
the  riglit  to  proceed  against  a  debtor  by  attachment  was  for- 
feited by  taking  such  a  collateral,  the  pledgee  of  a  negotiai)le 
instrument  was  held  to  be,  by  that  circumstance — if  none 
other — a  holder  for  value,  and  protected  against  equitable 
defences.^ 

We  will  now  enter  more  minutely  into  the  various  rami- 

'  2  Parsons  N.  &  B.  42,  43. 

'  Solomons  v.  Bank  of  England,  13  Enst,  135,  note;  Lowndes  v.  Anderson,  1 
Rose,  99, 

'  Naglee  v.  Lyman,  14  Cal.  455;  Payne  v.  Bensley,  8  Cal.  2G0. 


G72  BILLS  AND  NOTES  AS   SECURITY,    AND   SECURED. 

fications  wliicli  this  question  assumes,  applying  the  test  above 
stated. 

§  824.  (1)  III  the  first  jylace^  as  to  collateral  fo?'  deht  con- 
tracted at  the  time. — AVhen  the  bill  or  note  of  a  third  party, 
payable  to  order,  is  indorsed  as  collateral  security  for  a  debt 
contracted  at  the  time  of  such  indorsement,  the  indorsee  is  a 
hona  fide  holder  for  value  in  the  usual  course  of  business,  and 
is  entitled  to  protection  against  equities  and  offsets  and  other 
defenses  available  between  antecedent  parties — provided,  of 
course,  that  the  bill  or  note  transferred  as  collateral  security 
is  itself  at  the  time  not  overdue.  And  the  same  principle 
applies  where  the  collatei'al  bill  or  note  is  payable  to  bearer, 
and  is  transferred  to  the  creditor  by  delivery.  This  doctrine 
rests  upon  clear  grounds.  There  is  an  evident  present  con- 
sideration for  the  transfer  of  the  collateral  bill  or  note;  a 
present  change  in  the  legal  rights  of  the  parties.  And  the 
text-writers,  supported  by  an  almost  unbroken  train  of  de- 
cisions, agree  that  the  indorsee  is  entitled  to  protection  to  the 
extent  of  the  debt  secured.^ 

§  825.  (2)  In  the  second  j^lace^  as  to  collateral  for  debt 
not  yet  due. — When  the  debt  is  not  yet  due  and  the  collateral 
bill  or  note  is  indorsed  as  security,  and  there  is  an  agreement 
for  delay  until  the  collateral  shall  mature,  such  agreement  by 
the  creditor  constitutes  a  consideration  and  makes  him  a 
holder  for  value. 

If  the  collateral  had  its  maturity  fixed  at  a  time  later  than 
the  maturity  of  the  debt,  there  would  be  no  implied  agree- 
ment for  delay,  because  the  occasion  for  delay  would  not 
have  arisen.  And  the  presumption  would  be  that  the  in- 
dorsement of  the  collateral  was  merely  intended  to  add  by 

'  Bowman  v.  Van  Kuren,  29  Wis.  219;  Lyon  v.  Ewiug,  17  Wis.  70  (18G3); 
Curtis  V.  Mohr,  18  Wis.  619  (18G4);  Jenkins  v.  Schaub,  14  Wis.  1;  Slotts  v. 
Byers,  17  Iowa,  303;  Griswold  v.  Davis,  31  Vt.  890  ;  Chicopee  Bank  v.  Chapcn,  8 
Mete.  40  ;  Louisiana  State  Bank  v.  Gaennie,  21  La.  Ann.  551 ;  Munn  v.  McDonald, 
10  Watts,  270;  Williams  v.  Smitb,  2  Hill,  301;  Ferdon  v.  Jones,  2  E.  D.  Smith, 
106 ;  Bank  of  New  York  v.  Vanderliorst.  32  N,  Y.  553  ;  Watson  v.  Cabot  Bank, 
5  Sand.  423;  State  Savings  Associations  v.  Hunt,  17  Kan.  532  ;  Mechanics'  Ass'n 
V.  Ferguson,  29  La.  549. 


HOLDER  OF  INSTRUMENT  AS  COLLATERAL  SECURITY.       673 

its  security  to  the  assurance  that  the  debt  wouhl  he  paid. 
This  pi'esiimption  would  be  all  the  stronger  if  the  collateral 
matured  before  the  debt.  And  it  has  led  to  the  opinion 
that  such  an  indorsee  would  not  be  a  holder  for  value.  "  If," 
says  Redfield,  C.  J.,  in  Atkinson  v.  Brooks/  "  one  holds  a  debt 
due  six  months  hence,  and  his  debtor,  as  a  mere  volunteer 
service,  indorses  a  current  note  or  bill  as  collateral  security, 
the  collateral  being  due  in  three  months,  it  could  not  be 
made  to  appear  that  such  transaction,  before  the  indorsee  had 
been  at  any  pains  in  the  matter,  was  a  contract  upon  con- 
sideration. The  prior  debt  not  being  due,  the  creditor  could 
forego  nothing,  and  the  debtor  receive  no  advantage  from 
the  transaction.  And  the  agreement  to  apply  the  collateral 
upon  a  debt  not  yet  due — being  without  consideration — 
would  probably,  in  the  first  instance,  be  revocable  at  will ; 
and  so  also  as  long  as  the  parties  remained  in  the  same  situa- 
tion." 

§  826.  This  reasoning  is  wrong,  but  withal,  does  not  seem 
to  us  conclusive.  If  it  is  the  intention  of  the  debtor  to  trans- 
fer the  title  to  and  property  in  the  instrument  at  the  time 
when  he  so  makes  it  collateral  security,  we  should  say  that 
the  pre-existing  indebtedness  would  be  a  sufiicient  considera- 
tion. It  is  well  established  that  a  transfer  of  a  bill  or  note 
in  payment  of  a  pre-existing  debt  is  upon  a  sufficient  con- 
sideration if  made  when  the  debt  is  due,  and  we  can  see  no 
good  ground  for  distinguishing  the  two  cases.  When  the 
indorsee  receives  title  to  the  collateral,  he  has  imposed  upon 
him  the  strict  responsibilities  and  duties  of  a  holder.  If  he  fails 
to  take  due  steps  for  the  collection  of  the  paper  by  making 
prompt  demand,  and  giving  notice  of  dishonor,  the  indorsers 
are  discharged,  and  the  loss  pro  tanto  of  the  debt  secured 
devolves  upon  him.^  Besides,  he  is  in  the  nature  of  things 
lulled  into  security  by  possession  of  the  collateral,  and  after 
transferrins:  it  to  him  we  do  not  think  it  would  be  in  the 
power  of  the  indorser  to  recall  it.     A  debt  barred  by  liraita- 

'  26  Vt.  564  (1854) ;  see  also  Bowman  v.  Van  Kuren,  29  Wis.  218. 
'  Jenuison  v.  Parker,  7  ilicli.  355. 
Vol.  I. —43 


G74  BILLS  Ai^D  NOTES  AS  SECURITY,  AND  SECURED. 

tion  is  a  good  consideration  for  a  new  promise  to  pay  it;  a 
retraction  of  that  promise  cannot  be  made.  And  a  debt  still 
current  should  be  esteemed  as  well  a  good  consideration  for 
a  conditional  appropriation  to  its  payment  by  anticipation. 
Nor  is  it  true  that  the  creditor  could  forego  nothing,  and  the 
debtor  receive  no  advantage  from  the  transaction.  The  latter 
receives  the  advantage  of  shifting  the  duties  and  responsibil- 
ities of  holder  on  the  indorsee,  and  the  former,  if  indeed  he 
actually  foregoes  nothing,  is  certainly  under  inducement  to 
fore«o  that  watchfulness  and  concern  about  his  debtor  which 
he  would  otherwise  exercise — and  even  if  he  foregoes  nothmg 
the  advantage  to  the  debtor  is  suflicient.  Prior  parties  cannot 
justly  complain  when  suit  is  brought  that  defenses  available 
ao-ainst  the  payee  or  prior  holder  are  excluded.  By  the  very 
form  of  their  contract  they  have  put  it  on  the  world  to  cir- 
culate like  cash — baiTing  the  gates  behind  it  and  shutting 
out  such  defenses.  And  if  the  creditor  has  taken  them  by 
their  word  they — not  he — should  sutler.  The  question  seems 
to  us  simply  one  of  intent.  If  the  holder  takes  the  paper 
only  as  an  agent,  he  simply  steps  in  the  shoes  of  his  trans- 
ferrer; but  if  he  takes  it  as  the  proprietary  holder,  he  takes 
its  burdens  and  benefits  in  full. 

In  New  York  it  is  held  that  something  must  be  paid  in 
money  or  property,  or  some  subsisting  debt  satisfied  or  sus- 
pended, or  some  new  responsibility  incurred,  in  consequence 
of  the  transfer  of  the  paper,  in  order  to  protect  the  purchaser 
against  equities,^  and  that  receiving  the  paper  as  collateral 
security  for  a  precedent  debt  is  insutficient. 


'  Bay  V.  Coddington,  20  Johns.  637;  Wardell  v.  Howell,  9  Wend.  174.  In 
Grocer's  Bank  v.  Penfiekl,  14  N,  Y.  S.  C.  (7  Han),  281,  the  j)ayce  of  notes  made 
for  his  accommodation  indorsed  them  to  a  bank  to  secure  a  bahmce  due.  The 
Court  held  that  an  agreement  for  an  extension  of  time  -was  implied  ;  that  the 
preceding  debt  -was  suspended;  and  tliat  although  tiie  bank  parted  witii  neither 
money  nor  property  for  the  note,  it  could  recover  against  the  maker  as  a  honajide 
holder  for  value.  Moore  v.  Ryder,  65  N.  Y.  441,  Earl,  C,  saying:  "In  case  the 
holder  has  not  parted  with  any  value  or  incurred  any  binding  obligation,  or 
changed  his  position  to  his  detriment  on  the  faith  thereof,  he  cannot  recover 
therein  against  the  party  wronged  or  defended." 


HOLDER  OF  IKSTRUMENT  AS  COLLATERAL  SECURITY.       075 

§  827.  (3)  In  the  third 2yhtce^  when  pre-existing  deht  is  no- 
vated, or  other  securities  suireridered.—ln  the  next  place,  when 
a  pre-existing  debt  has  matured,  and  the  creditor  surrenders  se. 
curities  formerly  held  an<l  receives  the  collateral  bill  or  note  in 
their  stead  ;  or  the  debtor  renews  the  debt  by  executing  a  new 
bill  or  note  and  transfers  the  collateral  bill  or  note  as  security 
to  the  creditor — then  the  latter  receives  it  in  the  usual  course 
of  business  upon  a  present  consideration,  and  is  a  bo?ia  fide 
holder  in  the  full  sense  of  the  term.  A  leading  case  on  this 
point  is  that  of  Goodman  v.  Simonds.^  There  it  appeared 
that  upon  a  settlement  of  a  pre-existing  debt  prior  securities 
were  surrendered,  atul  the  collateral  bill  transferred  as  secu- 
rity for  two  new  notes,  at  sixty  and  seventy-five  days  respect- 
ively, their  maturity  being  twelve  or  fifteen  days  before  the 
maturity  of  the  bill.  Clifford,  J.,  said:  "When  the  settle- 
ment was  made  the  new  notes  were  given  in  payment  of  the 
prior  indebtedness,  and  the  collaterals  previously  held  were 
surrendered  to  the  defendant,  and  the  time  of  payment  was 
extended  and  definitely  fixed  by  the  terms  of  the  noter^j, 
showing  an  agreement  to  give  time  for  the  payment  of  a  debt 
already  overdue,  and  a  forbearance  to  enforce  remedies  for 
its  recovery;  and  the  implication  is  very  strong  that  the 
delay  secured  by  the  arrangement  constituted  the  ])rincipal 
inducement  to  the  transfer  of  the  bill.  Such  a  suspension  of 
an  existing  demand  is  frequently  of  the  utmost  importance 
to  a  debtor,  and  it  constitutes  one  of  the  oldest  titles  of  the 
la^v  under  the  head  of  forbearance,  and  has  always  been  con- 
sidered a  sufficient  and  valid  consideration.'-^  The  surrender 
of  other  instruments,  although  held  as  collateral  security,  is 

'  20  How.  343  (1857).  In  Pennsylvania  unless  the  holder  pays  something  for 
tlie  bill  or  note  he  is  not  deemed  entitled  to  protection  as  a  bona  fide  holder  for 
value,  and  the  fact  that  he  renews  a  debt,  and  takes  the  bill  or  note  as  collateral 
security,  does  not  protect  him.  Sec  Koger  v.  Keystone  Nat.  Bank,  83  Penn.  St, 
•348;  and  cases  cited,  Cuuunings  v.  T.oyd,  83  Penn.  St.  373;  Knox  v.  Clifford.  38 
Wis.  G51;  Heath  v.  Silvertiiorn  Lead  Mining  Co.  39  Wis.  147. 

■-■  Etting  V.  Vanderlyn,  4  Johns.  237;  :\Iorton  v.  'urn,  7  Ad.  &  El  19:  Baker 
V.  Walker,  14  Mees.  &  Wels.  4G5;  Jennison  v.  Stafford,  1  Cush.  IGS;  Walton  v. 
Jlascall,  13  Mees.  &  Wels.  45:<;  Whoekr  v.  Slocuni,  IG  Pick.  G2. 


G7C  BILLS  AND  NOTES  AS  SECURITY,  AND  SECURED. 

also  a  good  consideration  ;  and  this,  as  well  as  the  former 
proposition,  is  now  generally  admitted,  and  is  not  open  to 
disjmte."^ 

It  seems  now  to  be  agreed,  that  if  there  was  a  present 
consideration  at  the  time  of  the  transfer,  independent  of  the 
previous  indebtedness,  that  a  party  acquiring  a  negotial)le 
instrument  before  its  maturity  as  a  collateral  security  to  a 
pre-existing  debt,  without  knowledge  of  the  facts  which  im- 
peach the  title  as  betweeen  the  antecedent  parties,  thereby 
becomes  a  holder  in  tlie  usual  course  of  business,  and  that 
his  title  is  complete,  so  that  it  will  be  unaffected  by  any  prior 
equities  between  other  parties — at  least  to  the  extent  of  the 
previous  debt  for  which  it  is  held  as  collateral.^  And  the 
better  opinion  seems  to  be  in  respect  to  parol  contracts,  as  a 
general  rule,  that  there  is  but  one  measure  of  the  sufficiency 
of  a  consideration,  and  consequently  whatever  would  have 
given  validity  to  the  bill  as  between  the  original  parties  is 
sufficient  to  uphold  a  transfer  like  the  one  in  this  case.  We 
are  not  aware  that  the  principle,  as  thus  limited  and  quali- 
fied, is  now  the  subject  of  serious  dispute  anywhere,  and  that 
is  amj)ly  sufficient  for  the  decision  of  this  cause.  Whether 
the  same  conclusion  ought  to  follow  where  the  transfer  was 
without  any  other  consideration  than  what  flows  from  the 
nature  of  the  contract  .at  the  time  of  delivery,  and  sucb  as 
may  be  inferred  from  the  relation  of  debtor  and  creditor  in 
respect  to  the  pre-existing  debt,  is  still  tlie  subject  of  earnest 
discussion,  and  has  given  rise  to  no  small  diversity  of  judicial 
decision.  It  seems  it  is  regarded  as  sufficient  in  England,  ac- 
cording to  a  recent  case.^     A  contrary  rule  2:>revails  in  New 

'  Dupeau  v.  Waddiugton,  6  "Whar.  220;  Hornblower  v.  Prond,  2  Barn.  &  Aid. 
327;  Rideout  V.  Bristow,  1  Cromp.  &  .Jer.  231;  Bank  of  Salina  v.  Babcock,  21 
Wend.  499;  Youngs  v.  Lee,  2  Kern.  551. 

-  White  V.  Springfield  Bank,  3  Sand.  (S.  C.)  222 ;  New  York  M.  Iron  Works 
V.  Smith,  4  Ducr,  362. 

'  In  Poirier  v.  Morris,  20  Eng.  L.  &  Eq.  103,  Lord  Campbell,  C.  J.,  said : 
♦'  There  is  nothing  to  make  a  difference  between  this  and  a  common  case  where 
a  bill  is  taken  as  security  for  a  debt,  and  in  that  case  an  antecedent  debt  is  a  suf- 
ficient consideration."     Cramptou,  ,T.,  said:  '' Whetlmr  the  bill  was  a  collateral 


HOLDER  OF  INSTRUMENT  AS  COLLATERAL  SECURITY.      G77 

York,  according  to  several  decisions,  and  also  in  Tennessee.^ 
It  is  settled  that  it  is  a  sufficient  consideration  in  Massachu- 
setts, Vermont  and  New  Jersey ;  and  such  was  the  opinion 
of  the  late  Justice  Story,  in  Swift  v.  Tyson,  and  in  his  valua- 
ble treatise  on  "Bills  of  Exchange."^ 

§  828.  In  a  recent  English  case^  where  the  defendant  in- 
dorsed to  the  plaintiff  a  bill,  of  which  he  was  indorsee,  as 
collateral  security  for  a  debt  of  greater  amount,  then  due,  the 
residue  of  which  he  paid  in  cash,  and  the  plaintiff  failed  to 
make  presentment  or  to  give  notice,  it  was  held  that  he  had 
lost  recourse  upon  his  indorser,  both  upon  the  bill  and  upon 
the  original  debt.  Byles,  J.,  said :  "That  as  they  had  the 
rights,  so  they  had  the  duties  of  holders."  Willis,  J.,  said : 
"  The  bill  may  be  taken  for  or  on  an  account  of  the  debt,  but 
with  an  understanding  that  the  party  receiving  it  is  to  have 
the  option  of  suing  for  the  debt  before  the  maturity  of  the 
bill." 

Adopting  the  view  of  Byles,  J.,  we  might  say  as  well, 
that  "  as  the  indorsee  has  the  duties,  so  he  has  the  rights  of  a 
holder."  And  as  those  duties,  as  indicated  by  Willis,  J.,  do 
not  depend  upon  whether  or  not  there  is  a  suspension  of  the 
original  debt,  neither  should  the  rights  of  the  holder  turn 
upon  thiat  question. 

§  829.  (4)  III  the  fourth  place,  luhen  there  is  no  novation  of 
preexisting  debt,  and  no  securities  surrendered. — When  the 


security,  or  whether  it  has  the  effect  of  suspending  the  payment  of  the  antecedent 
debr,  is  quite  immaterial," 

'  Coddingtou  v.  Bay,  20  Johns.  637;  Stalker  v.  McDonald,  6  Hill.  93  :  Napier 
V.  Elam,  5  Yerg.  108. 

*  Stoddard  v.  Kimball,  G  Cush.  469;  Story  on  Bills,  §  192;  Chicopee  Bank  v, 
Chapen,  8  Mete.  40;  Blanchird  v.  Stevens,  3  Cash.  102;  Atkinson  v.  Brooks,  26 
Vt.  569;  Allaire  v,  Hartshorue,  1  Zab.  605;  Prentiss  v.  Graves.  33  Barb.  021; 
Ontario  Bank  v.  Worthingtou,  12  Wend.  593;  Prentice  v.  Zane,  2  Grat.  262; 
Bertrand  v.  Barkman,  8  Eng.  (Ark.)  150;  CuUum  v.  Branch  Bank,  4  Ala.  21; 
Roxborough  v.  Messick,  6  Ohio  St.  443;  Cook  v.  Helms,  5  Wis.  107;  Payne  v. 
Bonsley,  8  Cal.  260;  Park  Bank  v.  Watson,  3  Hand,  490  (42  N.  Y.V,  Brown  v. 
Leavitt,  31  N.  Y.  113;  Fenby  v.  Pritchard,  2  Sand.  151 ;  Ayrault  v.  McQueen,  32 
Barb.  305;  Palmer  v.  Richards,  1  Eng.  L.  &  Eq.  529. 

="  Peacock  v.  Purcell,  14  C.  B.  N.  S.  728. 


078  BILLS   AND   KOTES   AS   SSCURITY,    AND   SIX'URED. 

pre-existing  debt  has  fallen  due,  and  there  is  no  novation  of  it 
by  the  execution  of  a  new  security,  and  no  surrender  of  other 
securities  held  for  its  payment,  the  question  whether  or  not 
the  bill  or  note  then  transferred  as  collateral  is  received  npon 
a  consideration  in  the  usual  course  of  business,  may  be  more 
difficult  of  solution.  If  there  is,  then,  an  express  agreement  on 
the  part  of  the  creditor  to  forbear  suit  until  the  collateral 
should  mature,  or  until  he  should  have  endeavored  to  realize 
from  it,  there  is  no  doubt  that  the  case  would  then  come 
within  the  principle  of  Goodman  v.  Simonds,  and  that  the 
agreement  to  delay  would  constitute  the  transferee,  a  holdei- 
for  value  in  the  usual  course  of  business.  And  it  has  been 
so  held  in  many  cases,^  and  recognized  as  a  sound  principle 
in  others.^  As  said  by  Redfield,  C.  J. :  ^  "  The  ti'ansaction 
possesses  both  the  cardinal  ingredients  of  a  valuable  con- 
sideration ;  it  is  a  detriment  to  the  promisee,  and  an  ad- 
vantage to  the  promisor.  And  it  is  no  satisfactory  answer 
to  say,  that  the  party  who  takes  such  bill  or  note  is  in  the 
same  condition  he  was  before.  This  is  by  no  means  certain. 
He  has  for  the  time  foregone  the  collection  of  his  debt,  and 
in  such  matters  time  is  of  the  essence  of  the  transaction. 
And  the  debtor  thereby  gains  time — it  may  be  more  or 
less — but  of  necessity,  some  time  is  thereby  gained;  and  in 
such  matters  this  is  always  accounted  an  advantage,  and  is 
often  of  the  most  vital  consequence  to  the  debtor."  The 
doctrine  was  enunciated  with  great  force  by  Story,  J.,  in 
Swift  V.  Tyson,*  though  the  question  was  not  there  distinctly 
presented,  as  it  is  in  the  case  just  quoted. 

§  830.  But  when  the  collateral  bill  or  note  is  simply 
indorsed  by  the  debtor  to  the  creditor,  who  holds  his  over- 
due paper,  and  no  express  agreement  is  entered   into,  the 

'  Atkinson  v.  Brooks,  26  Vt.  574  (1854);  Manning  v.  McClure.  3G  111.  498; 
Benman  v.  Milli-:on,  58  111.  36  ;  Worcester  Nat.  Bank  v.  Cheney,  5  C.  111.  Sept. 
Term,  1878;  The  Reporter,  Dec.  4,  1S78,  p.  710;  Paulette  v.  Brown,  40  Mo.  54 
(1867).     See  ante,  §  827. 

=  Swift  V.  Tyson,  16  Pet.  1  (1842).  '  Atkinson  v.  Brooks,  20  Vt.  574. 

*  IG  Pel.  1. 


HOLDER  OF  INSTRUMENT  AS  COLLATERAL  SECURITY.       079 

question  wlietlior  or  not  the  indorsee  is  a  holder  for  value 
has  been  thought  to  turn  upon  the  question,  whether  or  not 
there  is  an  implied  suspension  of  the  prior  debt  until  the 
collateral  should  become  due.^  If  there  is  an  agreement  foi- 
forbearance  of  the  prior  debt,  it  is  as  binding  when  implied 
as  when  expressed  in  terms ;  and  in  the  United  States,  as 
well  as  in  Enirland,  the  doctrine  is  settled,  that  the  indorsee 
of  the  bill  or  note  of  a  third  party,  who  takes  it  on  account 
of  a  precedent  debt,  takes  it  by  implication  as  conditional 
payment,  and  the  antecedent  debt  is  not  extinguished  but 
suspended  until  the  bill  or  note  given  in  conditional  payment 
has  fallen   due.^     When  the  new  bill  or  note  so  received 


'  Manning  v.  McClure,  36  111.  489. 

'  See  Chapter  XXXIX,  on  Conditional  and  Absolute  Payment,  vol.  2,  sec. 
1269  et  seq.  ;  Blanchard  v.  Stevens,  3  Cusli.  168  (1849).  The  Court  thought  that 
the  note  was  taken  in  payment  of  a  pre-existing  debt,  but  said,  per  Dewey,  J. : 
"If,  however,  the  case  hiid  been  one  of  a  note  taken  as  collateral  security,  it  is 
difficult  for  us  to  perceive  any  sound  reason  for  a  different  result.  All  of  the  cases, 
those  of  the  New  York  court  inclusive,  concur  in  this,  that  if  the  party  receiving 
the  note,  parts  with  anything  valuable,  he  is  entitled  to  enforce  th3  payment  of 
the  note,  irrespective  of  the  equities  as  between  the  original  parties.  But  may  you 
not  as  well  show  a  legal  consideration  by  showing  forbearance  to  act  as  by  show- 
ing an  act  done  ?  A  damage  to  the  promisee  is  all  that  is  necessary  to  show  a 
consideration  for  a  promise;  and  ought  not  the  same  rule  to  apply  in  protection 
of  a  note  transferred  to  him  ?  If  the  party  had  not  received  the  note  as  collateral 
security,  he  might  have  pui-sued  other  remedies  to  enforce  the  security  or  pay- 
ment of  his  debt.  He  might  have  obtained  otlier  securities  or  perhaps  payment 
in  money.  It  is  a  itillacy  to  say,  that,  if  the  plaintiffs  are  defeated  in  their  attempt 
to  enforce  the  payment  of  these  notes,  they  are  in  as  good  a  situation  as  they 
would  have  been  if  the  notes  had  not  bjen  transferred  to  them.  That  fact  is  as- 
sumed, not  proved,  and  from  the  very  nature  of  the  case,  is  matter  of  entire  uncer- 
tainty. The  convenience  and  safety  of  thov^e  dealing  in  nogotiable  paper  si-em  to 
require  and  justify  the  rule  that  when  a  person  takes  a  negotiable  note  not  over- 
due or  apparently  dishonored,  and  without  notice,  actual  or  otherwise,  of  want 
of  consideration  or  other  defense  thor.,  to,  whether  in  payment  of  a  precedent  debt, 
or  as  collateral  security  for  a  debt,  the  holder  would  have  the  legal  right  to  en- 
force the  same  against  the  parties  thereto,  notwithstanding  such  dcrcuse  might 
not  have  been  eflfectual  as  lietween  the  original  parties  thereto." 

In  Manning  V.  McClure,  36  III.  498,  Lawrence,  J.,  said:  "It  is  said  that  the 
po.sition  of  the  indorsee,  in  cases  of  this  kind,  is  not  ditlerent  from  that  of  a  gen- 
eral assi"-nce  for  the  benefit  of  creditors.  What  we  have  already  said  shows 
wherein,  in  our  opinion,  the  ditTerence  consists.  In  the  case  of  a  general  assign- 
ment, there  is  no  ground  for  presuming  forbearance  as  one  of  the  objects,  or  any 
implied  agreement  to  forbear  on  the  part  of  the  creditors.     Indeed,  these  general 


680  rJLLS   AND   NOTES  AS   SECURITY,    AND   SECURED. 

falls  due,  the  creditor  may  briug  suit  upon  the  original  debt 
or  upon  the  new  bill  or  note,  or  upon  both,  at  his  election ; 
so  that  the  new  bill  or  note  is  a  collateral  in  any  case,  unless 
there  be  an  express  agreement  or  a  special  usage,  as  in  some 
of  the  States,  that  the  acceptance  of  the  new  bill  or  note 
shall,  ^:>rm«/rt6'e^6,  extinguish  the  debt. 

§  831,  But  this  implication,  that  the  precedent  debt  is 
suspended  until  the  matuiity  of  the  collateral  bill  or  note, 
only  arises  in  cases  where  the  latter  is  equaP  or  greater  in 

assignments  are  ordinarily  made  without  the  wish  or  knowledge  of  the  creditors, 
and  where  tlie  object  is  not  fraud,  it  is  generally  to  secure  an  equal  distribution 
of  the  assets.  The  assignee  is  a  mere  trustee,  to  collect  what  may  be  due  the 
assignor,  for  the  benefit  of  his  creditors. 

''We  have  stated  why,  in  our  opinion,  the  equity  is  with  the  indorsee,  to 
wit,  that  by  the  almost  universal  usage  of  the  world  of  commerce,  a  transaction 
of  this  sort  is  understood  by  the  parties  to  imply  further  forbearance  on  the  pre- 
existing debt,  and  thus  the  indorsee  is  lulled  into  a  false  security  by  means  of  an 
instrument  which  the  person  sought  to  be  held  liable  has  made  and  put  in  cir- 
culation. 

"We  have  only  to  add,  that  the  line  of  decisions  which  v/e  follow  contributes 
to  that  stability  in  negotiable  paper  which  is  so  important  a  consideration  in  a 
mercantile  community.  To  accomplish  this  has  been  the  constant  tendency  of 
judicial  decisions,  from  the  time  of  Chief  Justice  11  jlt  to  the  present  day.  The 
value  of  this  stability  to  commerce  is  acknowledged  by  all  courts,  and  by  all 
writers  upon  mercantile  law.  It  is  easy  to  see  how  much  it  strengthens  credit 
and  facilitates  the  multitudinous  transactions  of  a  commercial  people. 

'•  We  are  led,  then,  by  what  we  consider  the  equities  between  the  parties,  and 
l)y  the  acknowledged  policy  of  giving  stability  to  negotiable  paper,  to  hold  that 
the  indorsee  of  such  pajier,  before  its  maturity,  taking  it  as  payment  or  security 
for  a  pre-existing  debt,  and  without  any  express  agreement,  shall  be  deemed  a 
holder  for  a  valuable  consideration,  in  the  ordinary  course  of  trade,  and  shall 
hold  it  free  from  latent  defenses  on  the  part  of  the  maker."  See  also  Worcester 
National  Bank  v.  Cheney,  S.  C.  Illinois,  Sept.  Term,  1878,  approving  the  text. 

Contra,  Bowman  v.  Van  Kuren,  29  Wis.  220,  Dixon,  C.  J.:  "We  forbear  to 
express  any  opinion,  further  than  that  the  mere  transfer  of  the  collateral  raises 
no  presumption  of  a  stipulation  for  further  time  to  pay  a  pre-existing  debt,  which 
will  operate  to  defeat  the  equities  of  the  maker  or  indorser,  as  the  same  existed 
before  the  transfer  was  made;  which  is  all  it  is  necessary  to  decide  in  this  ciise. " 
In  Tennessee,  it  is  held  that  the  transfer  of  negotiable  paper  before  maturity  as 
collateral  for  a  mature  debt,  is  not,  in  the  due  course  of  trade,  and  that  if  it  were 
paid  before  such  transfer,  the  holder  cannot  recover.  Fdchardson  v.  Rice,  S.  C. 
of  Tenn.  April,  1878;  Central  Law  Journal,  vol  7,  No.  12,  Sept.  20,  1878,  p  225, 
citing  Gosling  v.  GrifRn,  which  overrules  Vatterlien  v.  Howell,  5  Sneed.  441. 

'  See  Michigan  State  Bank  v.  Leavenworth,  38  Vt.  209. 


HOLDER  OF  INSTRUMENT  AS  COLLATERAL  SECURITY.       G81 

amount  than  tlie  debt  wliich  it  is  given  to  secure.^  And 
therefore,  where  the  collateral  is  less  in  amount,  there  cannot 
be  any  inferred  consideration  of  forbearance  or  delay  to  con- 
stitute the  holder,  on  that  ground,  a  holder  for  value.  And 
unless  the  becoming  a  party  to  the  bill  is  in  itself  a  con- 
sideration, the  right  of  the  holder,  as  for  value,  cannot  be 
sustained.  This  alone  is,  in  our  judgment,  sufficient.  The 
maker  has  sent  out  a  negotiable  contract  to  pay  the  bearer  or 
indorsee  a  certain  sum.  It  has  been  acquired  before  matu- 
rity for  a  valuable  consideration,  and  the  burden  of  fixing  the 
liability  of  the  indorser  (if  any)  assumed.  The  holder  is 
naturally  lulled  into  security  and  inactivity,  by  crediting  the 
face  of  the  note ;  and  he  should  not  be  made  to  suffer  by 
the  maker  for  confidence  which  his  own  promise  created.  In 
Maryland  this  subject  has  been  fully  considered  and  the 
views  of  the  text  approved.^     In  New  York,  the  holder  of  a, 

*  See  Redfield  v.  Bigelow's  Leading  Cases,  203. 

'  Maitland  v.  Citizens'  National  Bank,  40  Md.  540  (1874).  Alvey.  J.,  after 
quoting  Swift  v.  Tyson,  and  the  New  York  cases,  said  :  "  Subsequently  the  doc- 
trine has  been  mooted  in  the  Supreme  Court  of  the  United  States,  upon  the 
theory  that  the  case  of  Swift  v.  Tyson  did  not  call  for  tlie  decision  of  the  broad 
and  comprehensive  question,  whether  the  holder  of  a  negotiable  note,  received 
simply  as  collateral  security  for  a  pre-existing  debt,  should  be  regarded  as  a  holder 
for  value,  and,  if  received  lona  Jide,  protected  against  antecedent  equities.  In 
the  case  of  Goodman  v.  Simonds,  20  How.  313,  the  question  was  much  discussed, 
and  though  the  facts  of  that  case  did  not  require  the  expression  of  a  direct  opin- 
ion upon  the  subject,  yet  it  is  not  difficult  to  perceive  the  inclination  of  the  court 
in  favor  of  the  principle  of  their  former  decision;  as  they  take  care  to  fortify  it 
by  showing  that  it  is  in  accordance  with  the  decisions  in  England,  and  in  many 
of  the  States  of  tiiis  country.  In  the  later  case  of  McCarty  v.  Roots,  21  How.  432, 
439,  which  arose  on  the  indorsement  of  an  accommodation  bill,  and  where  the 
defendant  pleaded  that  the  bill  has  been  delivered  to  the  plaintitVby  the  indorser 
as  collateral  security  for  a  pre-existing  liability  of  the  indorser,  and  for  no  other 
consideration,  upon  demurrer  to  the  plea,  and  the  demurrer  being  sustained  by 
the  court  below,  the  Supreme  Court  held  the  demurrer  properly  sustained,  and 
expressly  declared  that  the  delivery  of  the  bill  to  the  plaintiff  as  collateral  security 
for  a  pre-existing  debt,  under  the  decision  of  Swift  v.  Tyson  was  legal,  and  con- 
sequently the  plaintifl'was  entitled  to  recover.  The  principle,  therefore,  may  be 
taken  to  be  established  in  the  Supreme  Court,  and,  indeed,  in  the  entire  Federal 
jurisdiction  of  the  country;  as  upon  commercial  questions  the  State  adjudication  8 
are  not  accepted  by  the  Federal  courts  as  binding  rules  of  decision. 

In  this  State,  there  has  been  no  decision  of  the  appellate  court,  going  to  the 


G32  BILLS  AND  NOTES  AS   SECURITY,    AND  SECURED. 

bill  or  note  indorsed  to  him  as  collateral  security  for  a 
pre-existing  debt  of  the  indorser,  is  not  deemed  a  bona  fide 

extent  of  uiaintaining  fully  the  doctrine  of  tbe  cases  in  the  Supreme  Court,  to 
which  we  huve  referred.  In  the  case  of  the  Cecil  Bank  v.  Ileald,  et  ai,  25  Md. 
563,  this  court  held  that  a  loiiajide  holder  of  negotiable  paper,  for  value,  without 
notice,  will  be  j^rotected  against  the  antecedent  equities  existing  between  tl)e 
original  partic>,  and  that  such  holder  is  entitled  to  protection  where  he  has  re- 
ceived the  paper  in  payment  of  an  antecedent  debt,  regarding  such  debt  as  a  val- 
uable consideration;  and  the  case  of  Swift  v.  Tyson  was  so  far  approved,  as  it 
declared  that  the  receiving  of  negotiable  paper  in  payment  of  a  pre-existing  debt, 
is  according  to  the  known  usual  course  of  trade  and  business.  The  court,  how- 
ever, declined  expressing  any  opinion  upon  the  right  of  a  holder  of  a  negotiable 
instrument  received  by  him  as  security  for  a  pre-existing  debt. 

The  case  of  Miller  v.  The  Farmers'  and  Mechanics'  Bank  of  Carroll  Co.,  CO 
Md.  392,  has  been  relied  on  by  the  counsel  of  defendants,  as  maintaining  a  doc- 
trine somewhat  in  variance  with  that  maintained  in  Swift  v,  Tyson.  But  we  are 
not  of  that  opinion.  The  case  of  Miller  v.  The  Bank  was  the  ordinary  case  of  a 
bank  asserting  its  lien  upon  security  in  its  hands  for  the  payment  of  balances  due 
from  its  customers.  According  to  the  law  of  the  land,  the  bank,  a  kind  of  factor 
in  pecuniary  transactions,  was  entitled  to  a  lien  upon  all  the  securities  for  money 
of  its  customers  in  its  hands  for  its  advances  to  such  customers,  in  the  ordinary 
course  of  business,  without  reference  to  the  true  ownership  of  such  securities,  if 
the  bank  was  without  knowledge  upon  the  subject  (Davis  v.  Bowsher,  5  T.  R. 
488;  Collins  v.  Martin,  1  B.  &  P.  648;  Barnett  v.  Brandao,  G  M.  &  Gr.  630);  and 
the  question  was,  whether  the  bank  had  received  the  note  from  its  customer  in  its 
usual  course  of  dealing,  without  notice  of  the  true  ownership,  and  whether  any 
credit  had  been  given  on  the  fixith  of  it. 

There  being,  then,  no  adjudication  in  the  State  to  restrict  the  application  of 
the  principle  as  maintained  in  the  decisions  of  the  Supreme  Court  to  which  we 
have  referred,  we  have  no  hesitation  in  giving  to  it  our  full  approval;  believing 
it  to  be  supported  by  reason  and  the  usual  and  ordinary  course  of  dealing  in  the 
commercial  community,  as  well  as  by  a  decided  preponderance  of  judicial  author- 
ity. Indeed,  so  well  established  is  the  principle,  as  applicable  to  accommodation 
paper,  that  we  find  Mr.  Parsons,  in  his  works  on  Notes  and  Bills,  Vol.  I,  p.  226, 
stating  that  it  is  universally  conceded,  that  the  holder  of  an  accommodatiim  note, 
without  restriction  as  to  the  mode  of  using  it,  may  transfer  it,  either  in  payment 
or  as  collateral  security  for  an  antecedent  debt,  and  the  maker  will  have  no  de- 
fense.    See  also  Lord  v.  Ocean  Bank,  20  Penn.  St.  384. 

Applying  the  principle  just  stated  to  the  case  before  us,  and  there  can  be  no 
doubt  of  the  sufficiency  of  the  consideration  for  the  transfer  of  the  note  to  the 
plaintiff,  whether  it  was  as  collateral  security  for  a  pre-existing  or  a  contempora- 
neous debt,  or  to  secure  future  discounts  or  advances,  or  all  combined.  In  either 
case,  the  consideration  would  be  valuable  in  the  sense  of  the  rule  which  protects 
the  holder  of  negotiable  paper,  and  the  plaintiff  be  entitled  to  the  full  benefit  of 
the  security,  unless  mala  fides,  or  notice  of  such  facts  as  will  impeach  its  title  to 
the  note,  be  shown.  And  this  brings  us  to  the  consideration  of  the  second  ques- 
tion, raised  by  the  prayers  of  the  defendant. 


UOLDER  OF  INSTRUMENT  AS  COLLATERAL  SECURITY.       083 

holder,  eutitled  to  full  protection,  unless  an  agreement  for 
forbearance  be  proved.^ 

§  832.  Amount  and  mode  of  recovery. — When  it  appears 
that  the  l)ill  or  note  was  acquired  by  the  holder  as  collateral 
security  for  a  debt,  and  he  is  deemed  entitled  to  recover  upon 
it,  he  is  still  limited  to  the  amount  of  the  debt  which   it 
secures,  if  there  be  a-valid  defense  against  his  transferrer,  be- 
ing regarded  as,  at  all  events,  a  hona  fide  holder,  and  entitled 
to  stand  upon  a  Letter  footing  only  iwo  tanto?    Thus  such  a 
holder  could  recover  against  an  accommodation  party  no  more 
than  the  consideration  actually  advanced ;  ^  but  in  the  absence 
of  proof  he  will  be  deemed  to  liave  advanced  the  full  amount 
of  the  paper/     In  Maryland,  however,  it  has  been  said  in  re- 
spect to  an  accommodation  note,  which  was  transferred  as 
collateral    security    merely :    "  Such  being  the  case,  it  was 
clearly  incumbent  upon  the  plaintiff  to  show  what  debts  were 
embraced  l)y  the  security,  and  the  amount  due  thereon."^ 
Although  the  debt  secured  by  the  collateral  be  less  in  amount, 
yet  if  there  be  no  defense  to  the  collateral  note,  the  holder 
may  in  general  recover  the  full  amount.*^     If  the  paper  has 
been  pledged  to  a  hona  fide  pledgee  in  fi-aud  of  the  true  owner, 
as  the  pledgee  has  only  a  lien  for  the  amount  of  his  debt, 
the  true  owner  may,  by  paying  that  debt  and  discharging  the 
lien,  repossess  himself  of  the  instrument.'^ 

Tliei'e  is  no  doubt,  we  think,  that  if  the  paper  be  indorsed, 
that  in  payment  of  a  pre-existing  debt,  the  purchaser  is  pro 

'  Merchants'  Nat.  Bank  v.  Comstock,  55  N.  Y.  24 ;  Atlantic  Nat.  Bank  v. 
Franklin,  55  N.  Y.  238;  see  a«.?e,  §  826. 

'  Vallette  V.Mason,  1  Smith  (Ind.)  89;  Williams  v.  Smith,  2  Hill.  301 ;  Allaire 
V.  Ilartshorne,  21  N.  J.  L.  R.  G(35;  Duncan  &  Sherman  v.  Gilbert,  30  N.  J.  L.  R 
(5  Dutch.)  527;  Fisher  t.  Fisher,  98  Mass.  303;  Stoddard  v.  Kimball,  6  Cush. 
4(59;  Chicopee  Bank  v.  Chapin,  8  Mete.  40;  Story  on  Notes  (7th  ed.),  §  195,  note. 

=  Duncan  &  Sherman,  v.  Gilbert.  30  N.  J.  L.  R.  (5  Dutch.)  527;  Atlas  Bank 
V.  Doyle,  9  R.  I.  270 ;  Maitland  v.  Citizens'  Nat.  Bank,  40  Md.  540 ;  Mechanics', 
«fcc.  Bank  v.  Barnett,  27  La.  Ann.  177. 

*■  Duncan  &  Sherman  v.  Gilbert,  30  N.  J.  L.  R.  (5  Dutch.)  527. 

°  Maitland  v.  Citizens'  Nat.  Bank,  40  Md.  540  (1874) ;  Alvey,  J. 

«  Tooke  V.  Newman,  75  111.  215. 

'  Stoddard  v.  Kim'oail,  6  Cush.  4G9;  Chicopce  Bank  v.  Chapin,  8  Mete.  40. 


est  BILLS    AND   NOTES   AS   SECURlTy,    AND   SECURED. 

tected  against  equities/  though  there  are  authorities  which 
hold  otherwise.'^ 

§  833.  In  ordinary  cases  of  pledges  as  collateral  security 
for  debts,  the  pledgee  may  file  a  bill  in  chancery  to  have  a 
judicial  sale,  and  this  has  been  frequently  done  in  the  case  of 
stock,  bonds,  plate,  and  other  chattels ;  or  he  may  himself 
sell  upon  giving  reasonable  notice  to  the  debtor  to  redeem.^ 
Commercial  paper  pledged  as  collateral  security  in  an  excep- 
tion to  this  rule  in  part,  that  is  to  say,  the  holder  is  not  au- 
thorized to  sell  such  paper  so  pledged  in  the  absence  of  a 
special  power  for  that  purpose,  at  either  a  public  or  private 
sale ;  but  he  is  bound  to  hold  and  collect  such  paper  as  it 
falls  due,  and  apply  the  momey  to  the  payment  of  the  debt.^ 
But  he  may,  if  he  chooses,  file  a  bill  in  chancery  to  have  it 
sold  under  the  directions  of  the  court.^  Where  defendant  was 
.sued  as  an  indorser  upon  a  note  containing  a  statement  that 
the  maker  had  deposited  with  the  payee  certain  collaterals 
witli  authority  to  the  latter  to  sell,  without  notice,  in  case  of 
non-payment,  and  these  collaterals  came  to  plaintiff's  hands 
when  it  became  the  holder,  it  was  held  that  the  maker  was 
entitled  to  the  return  of  the  collaterals  when  payment  was 

'  Brown  v.  Leavitt,  31  N.  Y.  113;  Youngs  v.  Lee,  18  Barb.  187;  2  Kern.  511; 
Carlisle  v.  Wishart,  11  Ohio,  172;  Norton  v.  Waite,  20  Me.  175;  BDstwick  v. 
Dodge,  1  Doug.  (Mich.)  413;  Brush  v.  Scribner,  II  Conn.  388;  Barney  v.  Earle, 
13  Ala.  106 ;  Bush  v.  Peckard,  3  Harr.  385;  Dixon  v.  Dixon,  21  Vt.  450  ;  Eman- 
uel V.  White,  34  Miss.  66  ;  Stevens  v.  Campbell,  13  Wis.  315;  Struthers  v.  Ken- 
dall. 5  Weight,  214;  Kellogg  v.  Fancher,  23  Wis.  21;  Holmes  v.  Smyth,  10  Me. 
177;  May  V.  Quimby,  3  Bush.  9G;  Rcddick  v.  Jones,  6  Ired.  107;  McKuight  v. 
Knisley,  25  Ind.  330;  Bank  of  Republic  v.  Canington,  5  R.  I.  515;  Vattcrlien 
V.  Howell,  4  Sneed,  441  (but  see  a?ite,  §  830,  and  note);  King  v.  Doolittle,  1 
Head,  77;  Wormley,  v.  Lowry,  1  Humph.  408;  see  ante,  §  184;  Swift  v.  Tyson, 
16  Pet.  1. 

"  Buiirman  v.  Bayles,  21  N.  Y.  S.  C.  (14  Hun),  008;  Weaver  v.  Borden,  49 
N.  Y.  293. 

•Alexandria,  Loudoun,  &c.  R.  R.  Co.  v.  Burke,  22  Grat.  261;  2  Story  Eq. 
Juris.  §  1008;  2  Kent  Com.  [*582]. 

*  Wheeler  V.  Newbould,  16  N.  Y.  392;  5  Duer,  29;  Alexandria,  &c.  R.  R.  Co. 
V.  Burke,  22  Grat.  262. 

'  Donohoe  v.  Gamble,  38  Cal.  341.  But  qumre?  See  Brown  v.  Ward,  3  Duer, 
660;  Atlantic,  &c.  M.  Ins.  Co.  v.  Boies,  6  Duer,  583;  Wheeler  v.  Newbould,  16 
N.  Y.  392 ;  5  Duer,  29. 


HOLDER  OF  INSTRUMENTS  SECURED    BY   MORTGAGE.       G85 

demaiulcd ;  and  that  a  presentment  to  liini  of  the  note  for 
payment  by  a  notary,  who  was  not  in  readiness  to  procure  or 
surrender  the  collaterals,  in  response  to  the  maker's  demand 
for  them,  was  insufficient  to  charge  an  indorser.^ 


SECTION  II. 

HOLDER   OF    NEGOTIABLE   INSTRUMENTS   SECURED   BY    MORTGAGE. 

§  834.  There  is  no  doubt  that  any  security  for  the  pay- 
ment of  a  l)ill  or  note  passes  by  a  transfer  to  the  transferee.^ 
The  doctrine  has  been  laid  down  by  a  number  of  cases,  and 
is  stated  by  Mr.  Hilliard,  in  his  Treatise  on  Mortgages,  that 
if  a  mortgage  is  given  to  secure  a  negotiable  note,  and  both 
the  mortgage  and  the  note  are  transferred  before  maturity  to 
a  hona  fide  indorsee,  such  indorsee  takes  the  benefit  of  the 
mortgage  as  weir«,s  of  the  note,  clear  of  any  equities  between 
the  original  parties.^  "  It  is  the  debt  which  gives  character 
to  the  morto-ao-e,  and  ffives  the  ricrhts  and  remedies  of  the 
parties  under  it,  and  not  the  mortgage  which  determines  the 
nature  of  the  debt."  * 

But  this  doctrine  is  denied,  on  the  ground  that  the  mort- 
gage is  simply  a  chose  in  action,  and  is  taken  subject  to  the 
accounts  between  mortgagor  and  mortgagee ;  and  while  it  is 
an  incident  to  the  debt,  the  benefit  of  which,  so  far  as  the 
assignor  is  concerned,  passes  wnth  it,  the  assignee  cannot  rely 
on  the  privileged  character  of  the  note  to  insure  him  the  ad- 

'  Ocean  Nat.  Bank  v.  Faut,  50  N.  Y.  474. 

'  See  ante,  §  748. 

'  Hilliiird  on  Moitgaj^cs,  p.  526,  sec.  49,  a;  Reeves  v.  Scully,  Walker  Cli.  248; 
Croft  V.  Bunstcr,  9  Wis.  503;  Cornell  v.  Ilicliens,  11  AVis.  353;  Fisher  v.  Otis,  3 
Chand.  (Wis.)  94;  Martineau  v.  McColluui,  4  Chand.  153;  Cicotto  v.  Gagnicr,  2 
Mich.  381;  Updegraft  v.  Edwards,  45  Iowa,  515;  Preston  v.  Morris,  42  Iowa,  549; 
Farmers'  Nat.  Bank  v.  Fletcher,  44  Iowa,  256;  Duncan  v.  Louisville,  13  Bush. 
(Ky.)  385;  Dutton  v.  Ives,  5  Mich.  515;  Kelrner  v.  Krolick,  30  Mich.  373;  Mur- 
ray V.  Jones,  5v)  Ga.  109,  heU  that  hona  fide  holder  of  the  note,  without  notice,  was 
protected  against  defense,  that  the  mortgage  was  made  by  the  debtor  in  anticipa- 
tion of  bankruptcy,  to  defraud  creditors. 

*  Croft  V.  Buuster,  9  Wis.  510. 


G8G         BILLS  AND  NOTES  AS  SECURITY,   AND   SECURED. 

vantcage  of  the  mortgage.^  The  doctrine  stated  by  Mr. 
Ililliard  seems  to  ns  equitable  and  just,  especially  in  cases 
where  the  morto'aore  uses  such  terms  as  show  an  intention  to 
secure  the  note  to  the  holder.  The  security  of  tlie  mortgage 
may  impart  to  the  paper  its  marketable  value,  as  in  the  case 
of  corpoi'ation  coupon  bonds,  which  rest  mainly  upon  the 
basis  of  such  security  for  their  payment.  And  to  sever  the 
l)asis  of  credit  from  the  obligation  to  pay  would  most  fre- 
quently defeat  the  negotiation  of  these,  or  similar  instru- 
ments, at  anything  like  their  par  value. 

§  834  a.  In  Massachusetts,  where  note  and  mortgage  were 
upon  illegal  consideration  and  void,  it  was  held  that  as  a 
hona  fide  holder  without  notice  could  enforce  the  note,  he 
could  also  enforce  the  mortgage  assigned  with  it,  Metcalf,  J., 
paying:  "We  know  of  no  principle  which  makes  the  mort- 
gage less  valid  than  the  note  in  the  plaintiff's  hands,"  ^  In 
a  case  before  the  United  States  Supreme  Court  where  failure 
of  consideration  between  maker  of  a  note  secured  by  mort- 
gage, was  pleaded  against  enforcement  of  the  mortgage,  it 
was  held  that  the  hona  fide  holder  of  the  note,  without 
notice,  could  enforce  it,  and  Swayne,  J.,  said  :  "  The  contract 
as  regards  the  note  was  that  the  maker  should  pay  it  at 
maturity  to  any  hona  fide  indorsee  without  reference  to  any 
defense  to  wdiich  it  might  have  been  liable  in  the  hands  of 
the  payee.  The  mortgage  was  conditioned  to  secure  the 
fulfillment  of  that  contract."  ^  A  deed  of  trust  stands  on  the 
same  footing  as  a  mortgage ;  and  as  an  incident  and  accessory 
to  the  paper,  the  transfer  of  tlie  latter  carries  with  it  to  the 
transferees  the  benefit  of  the  security.^     The  holder  of  a  bill 


■  Johnson  \.  Carpenter,  7  Minn.  183;  (1863) ;  Walker  v.  Dement,  43  111.  278; 
Hellcf  V.  Meis,  2  Cin.  (Ohio)  287;  Pctillon  v.  Noble,  73  111.  5G7  (1874);  Bryant 
V.  Vix,  83  111.  14  (1876);  see  Morris  v.  White,  28  La.  855  (187G). 

-  Taylor  v.  Page,  6  Allen,  86  (1863). 

"  Carpenter  v.  Longan,  16  Wall.  273  (1872)  ;  Sawyer  v.  Prickett,  19  Wall.  166 
(1873).  See  to  same  effect  Logan  v.  Smith,  Sup.  Ct.  Mo.  3  Cent.  L.  J.  384  (1876) ; 
63  Mo.  455. 

*  New  Orleans,  &c.  v.  Montgomery,  95  U.  S.  (5  Otto),  16  (1877) ;  Potts  v. 
Blackwell,  4  Jones,  (N.  C.  Eq.)  58. 


HOLDER  OF   INSTRUMENTS   SECURED   15 Y   MORTGAGE.      G87 

or  note  secured  l)y  mortgage  or  deed  of  trust  may  proceed 
at  law  and  in  equity  at  the  same  tirae.^  Where  u  mortgage 
was  made  to  secure  the  indorser  of  a  note,  it  was  lield,  in 
Maryland,  that  it  secured  to  the  benefit  of  every  hoita  fide 
liolder ;  and  that  the  mortgagee  could  not  release  the  mort- 
gagor so  as  to  deprive  the  holder  of  its  benefit.^ 

§  834  h.  But  the  doctrine  of  the  text  is  subject  to  this 
limitation:  that  if  the  land  conveyed  by  the  mortgage  was 
subject  to  a  prior  lien  of  a  third  party,  the  indorsee  of  the 
note  would  only  acquire  the  right  to  enforce  his  claim  against 
the  land  subject  to  such  lien  whether  he  had  notice  of  it  or 
not.  This  doctrine  arises  from  the  very  nature  of  such  a  case, 
as  the  indorser  himself  could  not  by  a  negotiable,  or  other 
contract,  supersede  the  pre-existing  rights  of  a  thii'd  person 
not  a  party  to  his  act.^  And  wherever  the  assignee  is  charge- 
able with  constructive  notice  of  an  equity  prior  to  the  mort- 
gage under  which  lie  claims,  he  must  yield  to  it.'*  If  the 
transfer  of  a  note  payable  to  order,  and  of  the  mortgage  to 
secure  it  be  by  delivery  merely,  both  note  and  mortgage  are 
open  to  equities.^ 

§  835.  It  has  been  held  that  where  a  promissory  note  and 
a  mortgage  securing  its  payment  have  been  executed  to  a  cor- 
poration by  A.,  and  such  corporation  executed  to  C.  its  ne- 
gotialde  bond  for  a  sum  equal  to  the  note,  attaching  thereto 
the  note  and  mortgage,  and  reciting  in  the  bond  that  the  cor- 
poration transferred  the  note  and  mortgage  to  C.  as  security, 
and  that  both  shouhl  be  transferable  in  connection  with  the 
bond,  and  not  otherwise;  that  this  was  a  sufficient  indorse- 
ment within  the  law  merchant  to  pass  to  C.  the  legal  title  to 
the  note,  and  that  he  became  thereby  a  bona  fide  holder,  and 
was  entitled  to  protection  against  equitable  defenses  existing 
against  it  in  the  hands  of  the  corporation.*^     Where  a  note  is 


'  Ober  Y.  Gallagher,  93  U.  S.  (3  Otto),  199. 

'  Boyd  V.  Parker,  43  Md.  782;   sec  McCrackcn  v.  Gennan  Fire  Ins.  Co.  Id.  471. 

'  Linville  v.  Savage,  58  Mo.  248 ;  Logan  v.  Smith,  00  Mo.  4o3  (187G). 

*  Sirno  V.  Hammond,  33  losva,  308;  English  v.  Wafles,  13  Iowa,  57. 

*  Crura  v.  Corby,  11  Kansas,  464. 

•Crosby   v.  Roub,  10  Vv^is.  625(1803),  Paiuc,  J.  :   "The   intent  to   pass  the 


088  BILLS  AND  KOTES  AS   SECURITY,    AND   SECURED. 

secured  by  mortgage,  and  there  is  a  provision  in  the  mort- 
gage not  contained  in  the  note,  the  mortgage  will  control.^ 
In  Massachusetts  it  has  been  held  that  if  one  who  holds  by- 
assignment  duly  recorded  a  mortgage  and  a  note  indorsed  in 
blank  purporting  on  its  face  to  be  secured  by  it,  "  the  same 
beino'  collateral  to"  a  certain  note,  assigns  the  mortgage,  and 
afterward  indorses  the  note  for  which  it  was  collateral,  retain- 
ing the  mortgage  note  to  another  by  an  assignment  in  like 
words  duly  recorded,  he  conveys  a  title  to  the  mortgage  debt, 
except  as  against  an  innocent  purchaser  for  value  Avithout 
notice,  and  one  to  whom  he  subsequently  passes  the  mortgage 
note  and  fi-auduleutly  assigns  the  mortgage  upon  a  separate 
paper  as  collateral  security  for  a  loan,  is  not  such  a  pur- 
chaser.^ Where  a  deed  of  trust  given  to  secure  sundry  notes 
maturing  at  different  times,  provides  that  none  of  them  shall 
become  due,  and  that  the  deed  shall  not  be  foreclosed,  till 
the  maturity  of  the  note  made  latent  payable,  the  holder  pur- 
chasing one  of  the  notes,  with  knowledge  of  such  provisions, 
cannot  recover  judgment  until  the  last  note  matures.^ 

title  and  make  the  note  transferable  by  delivery  afterward  as  a  note  payable  to 
order,  and  duly  indorsed  by  the  payee,  is  beyond  question.  And  this  contract, 
like  all  others,  must  take  eflect  according  to  the  intent  of  the  parties,  if  it  is 
suiBcient  in  law  to  express  that  intent.  And  the  fact  that  the  parlies  contracted 
for  an  absolute  liability  by  the  vendor,  evidenced  by  a  distinct  negotiable  instru- 
ment on  the  back  of  the  one  transferred,  cannot,  upon  any  rational  principle,  be 
held  to  distinguish  the  case,  so  far  as  the  mere  question  of  a  transfer  is  concerned, 
from  a  case  where  they  contract  for  no  liability,  or  for  the  conditional  liability 
of  a  indorser,  or  the  absolute  liability  of  a  guarantor.  I  conclude,  then,  that  if 
the  bond  had  been  written  on  the  back  of  the  note,  it  would  have  been  fully 
sufRcient  to  pass  the  legal  title  within  the  law  merchant."  Bange  v.  Flint,  25 
Wis.  546;  see  arde,  §  C89,  and^>os«,  §  855. 

'  Dobbins  v.  Parker,  46  Iowa,  358 ;  see  ante,  §  156. 

'  Strong  V.  Jackson,  123  Mass.  60. 

'  Brownlee  v.  Arnold,  60  Mo.  79. 


CHAPTER  XXVI. 


RIGHTS    OF    A    BOXA    FIDE     HOLDER     OR    PURCHASER    OF    NEGOTI- 
ABLE    INSTRUMENTS     ORIGINATING     IN    FRAUD,    DURESS,    OR 


,       -^  VJ  j..^^.^, 


VIOLATION    OF    AUTHORITY. 


§  836.  There  are  Dumerous  cases  in  wbicli  the  line  of  de- 
marcation between  tlie  fraud  which  does  not  affect  the  hona 
fide  holder  for  value,  and  without  notice,  and  that  which 
utterly  vitiates  tlie  instrument  in  all  hands  whatsoever,  is 
narrow  and  difficult  to  distinguish.  The  distinctions  taken 
are  frequently  very  refined  and  metaphysical ;  but  tlie  test 
questions  to  be  applied,  we  think,  are  these:  (1)  Has  the 
party  sought  to  be  charged  created  an  agency  or  trust,  by 
means  of  which  the  fraud  has  been  committed?  (2)  Has  he 
deliberately  given  the  appearance  of  validity  to  the  instru- 
ment ?  (3)  Has  he  committed  negligence  respecting  it,  by 
means  of  which  an  opportunity  for  the  fraud  has  been  crea- 
ted? And  whenever  either  of  these  questions  can  be  an- 
swered affirmatively  upon  a  fair  consideration  of  all  the  cir- 
cumstances of  the  case,  the  balance  of  equity  is  in  favor  of 
the  hona  fide  holder  for  value,  and  without  notice,  the  axio- 
matic principle  of  law  then  applying,  that  where  one  of  two 
innocent  persons  must  suffer,  the  one  who  creates  the  trust, 
or  does  the  act  from  which  the  loss  results,  must  bear  it. 

SECTION  I. 

HOLDER   OF    NEGOTIABLE  INSTRITMENTS   COMPLETED,  BUT   NOT  DELIVERED. 

§  837.  (1)  The  first  class  of  cases  of  the  description 
above  mentioned  are  those  in  which  a  completed  bill  or  note 
is  obtained  from  the  maker  or  drawer,  without  any  delivery 
on  his  part,  actual  or  constructive.  We  have  seen  that  de- 
livery is  necessary  in   the  case  of  a  bill  or  note,  as  it  is  in 

Vol.  I.— 44: 


090  RIGHTS   OF   A   BONA  FIDE  HOLDER. 

the  case  of  every  other  contract,  in  order  to  consummate  its 
validity  between  the  parties  to  it.  Suppose,  however,  that 
a  bill,  or  promissory  note,  or  bank  note,  has  been  fully  com- 
pleted in  form  and  signed  by  the  drawer  or  maker,  and  be- 
fore delivery  is  stolen  from  the  possession  of  the  party  who 
lias  signed  it,  and  passed  by  the  thief  to  a  bona  fide  holder 
for  value  in  the  usual  course  of  business,  would  the  fact  that 
the  party  signing  had  never  delivered  it  afford  him  a  defense 
against  such  bona  fide  holder  ?  Whether  the  instrument  be 
payable  to  bearer,  or  to  the  order  of  the  thief,  if  it  be  in- 
dorsed by  him,  we  can  see  no  reason  why  the  bona  fide  holder 
should  not  be  entitled  to  recover.  The  want  of  delivery  is 
a  defect  not  apparent  on  the  face  of  the  bill  or  note.  The 
party  has  given  the  appearance  of  validity  to  his  paper.  His 
sio-nature  is  itself  an  assurance  that  his  oblicfation  has  been 
perfected  by  delivery;  and  it  being  necessary  that  the  loss 
should  fall  upon  one  of  two  innocent  parties,  it  should  fall 
upon  the  one  whose  act  had  opened  the  door  for  it  to  enter.^ 
In  Massachusetts,  this  doctrine  has  been  applied  in  favor  of 
the  holder  of  bank  notes  which  were  signed  and  ready  for 
use,  and  which  were  stolen  before  they  had  been  issued  from 
the  vault  of  the  bank  in  which  they  were  deposited;-  and  in 
Illinois,  against  the  maker  of  a  note  who  signed  it  as  a  mere 
matter  of  amusement,  and  from  whom  it  was  stolen  V)y  one 
who  saw  him  sign  it,  and  who  passed  it  to  an  innocent  in- 
dorsee, the  Court  saying,  per  Walker,  J. :  ^  "  The  maker 
evidently  intended  to  sign  such  a  note  as  this,  and  she  knew 
its  contents  when  she  signed  the  instrument.  This  case  does 
not  materially  differ  from  any  other  note  or  bank  bill  which 
may  be  stolen  and  negotiated  after  it  has  been  made."  And 
in  a  later  case,  where  the  maker  drew  his  note  for  $108,  in- 
tendino;  to  insert  a  condition  that  it  should  not  be  valid 
unless  the  plows  for  which  it  was  executed  were  delivered, 

>  Kinyon  v.  Wohlford,  17  Minn.  239. 

"  Worcester  County  Bank  v.  Dorchester,  &c.  Bank,  10  Cusli.  4S8;  sec  Thomson 
on  Bills  (Wilson's  ed.),  92;  1  Parsons  N.  &  B.  114,  and  ^ost,  §  839,  note  1. 
'  Shipley  v.  Carroll,  45  III.  285. 


HOLDER  OF  INSTRUMENTS  COMPLETED.  G91 

and  the  payee  siiatclied  it  from  his  hand,  ran  off,  and  trans- 
ferred it  to  a  bona  fide  holder  for  value,  without  notice,  this 
case  was  re-affirmed,  and  its  principle  applied.^ 

§  838.  There  are  cases  which  take  a  different  view.  Thus 
in  Michigan,  where  the  maker  of  a  note  payable  to  the  order 
of  B.  sio-ned  it  and  left  it  on  a  table  in  a  room  where  his 
sister  and  B.  remained  together,  enjoining  B.  not  to  take  it, 
as  the  negotiation  pending  was  not  concluded  ;  but  B.,  never- 
theless, took  it  and  transferred  it  to  an  innocent  purchaser,  it 
was  held  that  the  maker  was  not  liable,  not  having  been 
guilty  of  "  culpable  negligence."  ^ 

In  this  particular  case  it  would  seem  that  the  maker,  by 
trusting  the  paper  in  the  custody  of  B.,  rendered  himself 
liable  for  the  consequences ;  and  that  the  facts  hardly  justified 
the  conclusion  that  the  maker  was  guilty  of  no  culpable  negli- 
gence. But  if  the  paper  had  been  snatched  from  the  maker's 
hand,  as  in  one  of  the  Illinois  cases  above  cited,  then  having 
trusted  no  one,  having  been  guilty  of  no  negligence,  and  not 
having  deliberately  concluded  the  act  which  imparted  the  ap- 
pearance of  validity  to  it,  it  would  seem  too  extreme  an  exten- 
sion of  the  doctrine  in  favor  of  a  hona  fide  holder  of  a  nego- 
tiable instrument  to  subject  the  maker  to  its  payment.  All 
purchasers  must  incur  some  risk ;  and  to  protect  them,  after 
the  maker  has  done  some  act  which,  in  equity  and  good  con- 
science, should  seal  his  mouth,  is  all  that  seems  to  us  is  neces- 
sary to  guard  their  rights,  without  inflicting  great  injustice 
on  the  innocent  party.  It  is  the  case  of  one  innocent  party 
against  another  equally  so;  and  when  the  latter  has  done 
nothing  to  lower  the  grade  of  his  claim  to  protection,  we  do 
not  see  that  the  former  stands  upon  any  superior  footing. 

§  839.  Where  the  maker  has  perfected  the  instrument, 
and  left  it  undelivered  in  a  safe,  desk,  or  other  receptacle,  it 
should  then  be  at  his  hazard.  Such  pnpers  are  made  for 
use,  and  not  for  preservation.  The  maker  creates  the  risk  of 
their  being  eloigned,  by  keeping  them  on  hand,  and  places 

'  Clarke  v.  Johnson,  54  111.  296.  '  Burson  v.  Huntington,  21  yiich.  415. 


G92  EIGHTS   OF   A   BONA   FIDE    HOLDER. 

them  on  tbe  same  basis  as  negotiable  papers  wliieli  liave 
been  put  upon  tbe  market.  When  once  issued,  tlie  purcliaser 
is  protected  and  the  owner  loses,  even  though  he  had  guarded 
his  property  Avith  bolt  and  bar;  and  if  bankers  and  others 
"who  must  necessarily  be  in  possession  of  negotiable  securities 
in  the  course  of  trade  are  not  protected,  we  can  discover  no 
principle  which  can  be  invoked  to  protect  one  wIjo  holds  his 
own  paper  contrary  to  the  ordinary  wants  and  usages  of 
trade.^ 

§  840.  In  New  York  the  cases  on  this  point  do  not  seem 
to  us  reconcilable.  In  one  case,  where  a  note  for  $120,  made 
payable  to  A.  or  bearer,  for  the  purpose  of  being  given  in 
renewal  of  another,  was  stolen  out  of  the  maker's  desk,  and 
sold  to  the  holder  for  $115,  it  was  held  the  maker  was  not 
liable.  W.  F.  Allen,  J.,  saying:  "The  note  never  had  any 
inception  so  as  to  enable  any  person  to  become  a  hona  fide 
holder  of  it.  It  was  an  imperfect  instrument,  wanting  de- 
livery to  give  it  validity  as  the  promissory  note  of  the  de- 
fendant. The  holder  has  taken  a  blank  piece  of  paper,  not 
a  promissory  note."  ^  But  in  a  later  case,  where  the  note 
was  indorsed  by  the  payee,  for  whose  accommodation  it  was 
made,  and  left  in  his  desk,  and  it  was  eloigned  therefrom  and 
passed  to  a  hova  fide  holder,  for  value,  and  without  notice, 
it  was  held  that  the  fact  it  had  never  been  delivered  as  a 
valid  security  was  no  defense.^ 

'  Tl)i)mson  on  Bills  (Wilson's  cd.),  92;  1  Parsons  N.  &  B.  114,  in  which  it  is 
said:  "11" a  person  sign  notes  in  blank,  and  lock  them  up  in  his  sale,  whence  they 
are  stolen,  filled  up  and  negotiated,  without  fault  or  negligence  on  his  part,  he 
is  not  liable.  Possibly  it  might  be  held  otherwise,  if  he  make  and  sign  a  perfect 
note,  payable  to  bearer,  and  it  be  stolen  under  similar  circumstances;  on  the 
ground  that,  ■when  the  instrument  is  once  perfected  (although  it  has  never  passed 
out  of  the  maker's  hand,  and  consequently  has  had  no  inception  as  a  cuntract), 
it  is  like  money;  and  any  one  who  receives  it  in  good  faith,  and  for  a  valuable 
consideration,  acquires  a  perfect  title." 

''  Hall  V.  Wilson,  IG  Barb.  55G  (1853). 

'  Gould  V.  Segee,  5  Duer,  270  (1850). 


IIOLDRR   OF   INSTRUMENTS  INCOMrLETE.  G!)3 

SECTION  ir. 

HOLDER   OF   NEGOTIABLE    INSTRUMENTS    LN^COMPLETE    AND    UNDELIVERED. 

§  841.  (2)  The  second  class  of  cases  arises  \vlien  an  in- 
complete instrument  has  been  signed  and  stolen,  without  any 
delivery  to  an  ao-ent  in  trust,  or  otherwise,  intervening.  In 
such  cases,  no  trust  for  any  purpose  has  been  created.  No 
instrument  has  been  perfected.  No  appearance  of  validity 
has  been  given  it.  No  negligence  can  be  imputed.  There- 
fore, if  the  blank  be  filled,  it  is  sheer  forgery,  in  which  the 
maker  is  in  nowise  involved,  and  he  is  not  therefore  bound, 
even  to  a  bona  fide  holder  without  notice.^ 

§  842.  In  New  York,  it  has  been  held  that  where  coupon 
bonds  of  a  railroad  corporation,  negotiable  in  form,  and  con- 
taining a  provision  on  their  face  that  "  the  president  of  the 
company  is  authorized  to  fix  by  his  indorsement  the  place  of 
payment  of  the  principal  and  interest,  in  conformity  with  the 
tenor  of  this  obligation,"  and  also  bearing  tlie  following  in- 
dorsement: "I  hereby  agree  that  the  within  bonds  and  the 

interest  coupons  thereto  attached  shall  be  payable  in , 

G.  C.  Young,  president,"  were  not  valid  in  the  hands  of  bona 
fide  holders  for  value,  and  without  notice,  they  having  been 
stolen  from  the  safe  of  the  company  by  the  soldiers  of  the 
United  States,  and  issued  into  the  world  in  this  imperfect 
form.  The  ground  of  the  decision  is  that  the  blank  as  to 
place  of  payment  not  having  been  filled,  was  notice  to  the 
worUl  that  the  instrument  had  not  been  completed,  and  that 
no  one  was  clothed  with  authoi'ity  by  the  president  of  the 
company  to  complete  it.^  In  England,  where  the  defendant 
gave  his  blank  acceptance  to  H,  who  returned  it,  and  it  was 
then  stolen  from  the  chamber  of  the  defendant,  and  C.  filled 
in  his  own  name  and  negotiated  it,  it  was  held  that  a  bona 
fide  holder  could  not  recover.'* 

•  1  Parsons  N.  «&  B.  114;  see  anU,  §  839,  note  1. 

-  Ledwick  v.  McKim,  53  N.  Y.  313  (1873);  S3e  Redlick  v.  Doll,  54  N.  Y.  23G. 
'  Haxendale  v.   Bennett,  L.  R.  3  Q.  B.  D.  525,  47  L.  J.  Q.  B.  G24,  28  W.  R. 
899. 


094  RIGHTS   OF   A  BONA  FIDE  HOLDER. 

SECTION  III. 

HOLDER    OF    NEGOTIABLE    INSTKUMENTS    INTRUSTED    TO    ANOTHER    WITH 

BLANKS. 

^  843.  (3)  The  tliird  class  of  cases  comprises  those  in 
whicL  the  party  sought  to  be  charged  upon  the  negotiable 
instrument  has  been  betrayed  by  his  agent,  or  some  other 
party  to  whom  he  has  instrusted  his  signature  on  a  blank 
paper,  and  who  Las  fraudulently  written  over  it  a  bill  or 
note.  There  is  no  doubt  that  if  the  bill  or  note  were  com- 
plete with  the  exception  that  thei'e  was  a  blank  left  for  the 
sum,  the  parties  who  had  signed,  accepted,  or  indorsed  it 
would  be  bound  to  pay  any  sum  with  which  it  might  be 
filled  up  to  a  bona  fide  holder  without  notice  of  the  limita- 
tion of  authority  to  the  agent  or  other  person  having  it  in 
hand,^  and  it  is  immaterial  that  such  holder  knew  that  it  had 
been  signed,  accepted,  or  indorsed  in  blank,  unless  he  was 
also  cognizant  of  its  being  fraudulently  filled  u]).^  If  be 
knew  when  he  took  the  paper  that  authority  as  to  filling  it 
up  was  exceeded,  he  could  not  recover." 

It  seems,  also,  to  be  well  settled  that  if  the  party  sought 
to  be  charged  has  intrusted  his  blank  signature  to  an  agent 
or  other  person,  and  has  authorized  such  agent  or  other  per- 
son to  fill  the  blank  in  some  form,  for  some  purpose,  that  he 
would  be  bound  to  a  bona  fide  holder  if  the  agent  or  person 
wrote  over  such  signature  a  bill  or  note.  Thus,  where  papers 
indorsed  in  blank  were  left  with  a  clerk,  with  authority  to 
use  them  for  certain  purposes,  and  they  were  fraudulently 
obtained  from  him  and  used  differently,  the  indorser  was 
held  liable.^ 


'  Michigan  Bank  v.  Eldred,  9  Wall. ;  Russell  v.  Langstaffe,  2  Dougl.  514 ;  Violett 
V.  Patton,  5  Cranch,  142 ;  Orrick  v.  Colston,  7  Grat.  189.  In  Fullerton  v.  Sturgis,  4 
Ohio  St.,  A.  and  B.,  as  sureties  of  C,  signed  an  instrument  payable  to  D.  or  order, 
in  blank  as  to  date,  amount,  and  time  of  payment,  and  delivered  it  to  C,  the  prin- 
cipal, with  the  agreement  that  it  should  not  be  filled  up  for  more  tlian  $1,000  or 
$1,500.  0.  filled  it  up  for  $10,000,  and  discounted  it,  and  it  was  held  that  the 
parties  were  bound.  See  Redlick  v.  Doll,  54  N.  Y.  236;  and  see  ante,  §  842,  and 
§§  142,  et  seq. 

•  Huntington  v.  Branch  Bank,  3  Ala.  186. 

'  Clewer  v.  Wynn,  59  Ga.  246. 

'  Putnam  v.  Sullivan,  4  Mass.  45;  see  1  Parsons,  N.  &  B.  114. 


INSTRUMENTS   WRITTEN   OVVAl  BLANK   SIGNATURES.        GO.") 

§  844.  In  all  tliese  cases  tlie  first  test  stated  by  the  text 
obviously  applies.  The  party  souglit  to  be  charged  has 
created  the  agency  or  trust  by  means  of  which  the  fraud  has 
been  committed.  Holding  the  agent  out  to  the  world,  by  con- 
fidino-  his  si<rnature  into  his  hands,  and  accrediting  him  with 
that  "  letter  of  credit  for  an  indefinite  sum,"  ^  he  who  has 
thus  told  others  to  trust  him,  cannot  throw  the  burden  of 
loss  on  them  when  they  have  complied  with  that  request. 
To  hold  otherwise  would  be  to  punish  confiding  innocence, 
and  to  protect  the  authors  of  the  fraud.  In  Maine,  where 
suit  was  brought  by  a  hona  fide  holder  against  the  maker  of 
a  note  who  alleged  that  it  was  a  forgery,  and  his  evidence 
tended  to  show  that  the  instrument  when  delivered  contained 
blanks  unfilled,  which  were  afterwards  fraudulently  filled,  it 
was  held  that  it  was  for  the  jury  to  determine  whether  the 
instrument  was  delivered  as  an  incomplete  paper  with  blanks 
to  be  filled,  and  that  if  it  was  so  delivered  for  any  purpose, 
the  person  receiving  it  had  implied  authority  to  fill  the  blanks, 
and  the  maker  would  be  liable  thereon  to  a  holder  in  good 
faith.'^  So  where  the  maker  of  a  note  for  $300  lett  a  blank 
between  "hundred"  and  "dollars,"  and  "twenty"  was  in- 
serted so  as  to  make  the  note  for  $320,  a  hona  fide  holder 
was  held  entitled  to  recover,  the  maker  having  afi*orded  the 
opportunity  of  alteration.^  ('ases  of  this  kind  are  elsewhere 
more  fully  cited  and  discussed.* 

SECTION  lY. 

HOLDER  OF  NEGOTIABLE  INSTRUMENTS  WRITTEN  OVER  BLANK  SIGNATURES. 

^  §  845.  (4)  The  fourth  class  of  cases  comprises  those  in 
^vhich  the  signature  of  the  party  has  been  written  on  a  blank 
paper,  and  no  authority  has  been  given  to  the  persona  in 
whose  hands  it  is  intrusted,  or  to  whose  it  may  come,  to  write 
any  contract  over  it ;  as,  for  instance,  if  such  signature  were 
written  on  the  flyleaf  of  a  book  loaned  to  such  person,  or  in 
an  album,  or  were  left  with  him  ior  any  legitimate  purpose, 

'  See  ante,  §  142.  '  Abbott  v.  Rose,  62  Me.  194. 

»  Yocum  V.  Smith.  63  111.  3-21. 

*  See  vol.  II,  Chapter  XLIII,  on  Alteration,  Sec.  VF,  §§  1405  to  1409  inchisive. 


GOG  EIGHTS  OF  A  BONA   FIDE   HOLDER. 

such  as  to  be  used  as  a  means  of  identifying  the  writer's  band- 
writing  ;  and  in  such  cases,  if  a  bill  or  note  be  written  over 
the  blank  signature,  the  party  would  not  be  bouud.^  Thus, 
where  the  party  wrote  his  name  on  a  blank  paper,  and  it  was 
taken  from  his  table  by  another,  who  caused  a  note  to  be 
written  over  it,  and  jiut  in  circulation,  these  views  were  taken, 
Collier,  C.  J.,  saying: 

"  If  a  recovery  were  allowed  upon  such  a  state  of  facts, 
then  every  one  who  ever  indulges  in  the  idle  habit  of 
writing  his  name  for  mere  pastime,  or  leaves  sufficient  space 
bet\veen  a  title  and  his  subscription,  might  be  made  a 
bankrupt  by  having  promises  to  pay  money  written  over  his 
Bignature."  ^ 

§  84G.  In  these  cases,  no  trust  or  agency  was  reposed  in 
the  holder  of  the  blank.  No  appearance  of  validity  was 
given  to  the  paper  as  a  note.  And  it  could  hardly  be  said 
that  the  party  w^as  guilty  of  any  negligence  in  exercising  his 
right  to  do  so  simple  a  thing  as  the  mere  writing  of  his 
name,  when  he  attached  no  words  to  it  to  give  it  any  sig- 
nificance. In  Iowa,  the  doctrines  above  stated  have  been 
adopted,  and  there,  in  a  case  where  A.  wrote  his  name  on  a 
piece  of  blank  paper,  and  sent  it  to  B.,  who  w^as  his  agent 
respecting  certain  matters,  in  order  that  he  might  use  it  in 
identifying  his  signature,  and  B.  had  a  note  printed  over  it, 
and  passed  it  to  C.  betbre  maturity,  in  the  usual  course  of 
business,  it  was  held  that  the  latter  could  not  recover.^ 


'  Caulkins  v.  Whisler,  29  Iowa,  495 ;  Nance  y.  Lary,  5  Ala.  370. 

'  Nance  v.  Lary,  5  Ala.  370. 

'  Caulkins  v.  Whisler,  29  Iowa,  495,  in  which  case  Beck,  J.,  said:  "The  case 
diflfcrs  materially  in  its  facts  from  the  case  cited  in  support  of  plaintiff's  right  to 
recover.  In  these  cases  blanks  were  filled  up  contrary  to  the  directum  of  tlie 
maker  or  without  his  antliority.  But  in  all  of  such  cases  the  makers  intended 
to  execute  an  instrument  which  should  be  binding  upon  them.  Blanks  were 
filled  up  contrary  to  the  authority  given  by  the  makers,  or  in  some  other  way 
the  instruments  were  made  so  that  they  did  not  correspond  witli  the  intention  of 
the  makers;  but  in  all  such  cases  there  were  makers  aud  instruments,  and  through 
the  frauds  of  those  to  whom  the  instruments  were  intrusted,  they  were  thus 
made  to  be  of  ditfe*-ent  eflfect  than  was  designed  by  the  makers.  In  these  cases 
it  is  correctly  held,  that  while  tlie  parties  pei-petrating  the  fraud  in  some  cases 


INSTRUMENT  PROCURED  BY   IMPOSITION.  G97 

SECTION  Y. 

HOLDER   OF   NEGOTIABLE   INSTRUMENTS   PROCURED   BY  IMPOSITION    ON    IN- 
FIRM   OR    ILLITERATE    PERSONS. 

§  847.  (5)  The  fifth  class  of  cases  are  those  in  v/hich 
some  natural  infirmity  or  defect  of  education  has  been  im- 
posed upon,  and  the  party  deceived  into  signing  a  note  under 
the  impression  that  it  was  for  a  different  amount,  or  was  a 
contract  of  a  different  character.  Thus,  if  a  note  were  fraud- 
ulently or  falsely  read  to  a  blind  man,  and  he  were  to  sign  it 
believing  it  to  have  been  correctly  read ;  ^  or  if  the  party 
were  unable  to  read,  and  signed  a  note  under  the  assurance 
that  it  was  an  asrreement  of  a  different  kind,  we  should  have 
a  new  clement  entering  into  the  consideration  of  his  liability. 
In  such  cases  the  want  of  faculties  to  detect  the  fraud  shields 
the  party  from  its  consequences,  and  the  authorities  justly 
exonerate  him. 

He  has  created  no  agency  or  trust.  He  has  not  inten- 
tionally or  knowingly  given  the  appearance  of  v^alidity  to  the 
paper.  •  It  cannot  be  said  that  he  has  acted  negligently,  be- 
cause his  infirmities  prevented  that  diligence  which  men  of 
ordinary  faculties  and  of  education  possess. 

may  have  been  guilty  of  forgery,  yet  the  makers  were  bound  upon  the  instruments 
as  against  holders  in  good  faith  and  for  value. 

"  The  reason  is  obvious.  The  maker  ought  rather  to  suftor  on  account  of  the 
fraudulent  act  of  one  to  whom  he  intrusts  his  paper,  or  who  is  made  agent  in 
respect  to  it,  than  an  innocent  party.  The  law  esteems  him  in  fault  in  thus  put- 
ting it  in  the  power  of  another  to  perpetrate  the  fraud,  and  requires  him  to  bear 
the  loss  consequent  upon  this  negligence.  In  the  case  under  consideration  no 
fault  can  be  imputed  to  defendant.  He  did  not  intrust  his  signature  to  the  posses- 
sion of  the  forger  for  tlie  purpose  of  binding  himself  by  a  contract.  He  conferred 
no  power  upon  the  party  who  committed  the  crime  to  use  it  for  any  s\ich  purpose. 
He  was  not  guilty  of  negligence  in  thus  giving  it,  for  it  is  not  unusal,  in  order  to 
identify  signatures,  and  for  other  purposes,  for  men  thus  to  make  their  auto- 
graphs. The  defendant  cannot  be  regarded  as  being  so  far  in  fault  in  the  trans- 
action that  he  ought  to  bear  the  loss  resulting  from  the  crime."  See  Kline  v. 
Guthrie,  42  Ind.  227 ;  Deturler  v.  Besh.  44  Ind.  70. 

'  Putnam  v,  Sullivan,  4  Mass.  45,  Parsons,  C.  J.,  saying:  "That,  perhaps,  if  a 
blind  man  had  a  note  falsely  and  fraudulently  read  to  him,  and  he  indorsed  it 
supposing  it  to  be  the  note  read  to  him,  he  would  not  be  liable  as  indorsee,  be- 
cause he  is  not  guilty  of  any  laches."  See  Scliuylkill  County  v.  Copley,  G7  Penn. 
St.  3SG  (a  bond). 


G9S  KICnTS  OF  A  BOX  A  FIDE  HOLDER. 

§  848.  In  New  York/  where  a  bona  fide  holder  for  value, 
and  without  notice  of  any  defect,  brought  suit  on  a  promissory 
note,  the  defendant  offered  to  prove  in  evidence  that  he  was 
unable  to  read,  and  that,  when  he  signed  the  note,  it  was 
represented  to  him,  and  he  believed  that  it  was  a  certain 
other  contract,  offered  to  be  also  produced  in  evidence,  and 
which  purported  to  be  of  an  entirely  different  character. 
The  Supreme  Court  of  New  York  (overruling  tlie  decision 
of  the  lower  court)  held  that  the  evidence  was  admissible,  and 
presented  a  sufficient  defense,  Talcott,  J.,  saying :  "  A  bona 
fide  holder  of  commercial  paper,  for  value  and  before  maturity, 
is  protected,  in  many  cases,  against  defenses  wdiich  are  per- 
fectly available  against  the  original  parties,  such  as  that  the 
signature  was  obtained  by  false  and  fraudulent  representa- 
tions ;  that  the  paper  has  been  diverted  ;  that  a  blank  bill  or 
acceptance  has  been  filled  up  for  a  greater  amount  than  the 
party  to  whom  it  was  delivered  was  authorized  to  insert,  <fec. 
But,  in  all  these  cases,  the  party  intended  to  sign  and  put  in 
circulation  the  instrument  as  a  negotiable  security;  where 
this  is  the  case,  he  is  bound  to  know  that  he  is  furnishing  the 
means  whereby  third  parties  may  be  deceived  and  innocently 
led  to  part  with  their  property  on  the  faith  of  his  signature, 
and  in  ignorance  of  the  true  state  of  facts.  But  while  this  is 
a  rule  of  great  convenience  and  propriety,  there  are  and  must 
be  some  limits  to  its  application,  some  defenses  as  to  which 
even  a  bona  fide  purchaser  purchases  at  his  peril.  *  *  * 
The  true  distinction  was  tersely  stated  by  Bovill,  C.  J.,  in 
Foster  v.  McKinnon  (38  Law  Journal  Eep.  N.  S.  310),  inter- 
rupting counsel  arguendo^  who  was  stating  the  proposition 
that  where  the  plaintiff  proves  he  is  a  bona  fide  liolder  for 
value,  it  is  immaterial  that  the  signature  of  the  defendant 
was  obtained  by  fraud."  "  That,"  said  the  Chief  Justice,  "  is 
where  the  defendant  intended  to  put  his  name  to  an  instru- 
ment which  was  a  bill."  In  another  New  York  case  evidence 
was  given  tending  to  show  that  the  note  was  signed  by  the 

'  Whitney  v.  Snyder,  2  Lans.  (N.  Y.)  477.     See  Chapman  v.  Rose,  56  N.  Y. 
137;  andj^os^,  §850. 


INSTRUME^■TS   EXECUTED  UNDER  MISTAKE.  009 

maker  at  his  own  liouse ;  that  he  and  two  of  Lis  sons  were 
present  who  could  read  ;  that  defendant  attempted  to  read 
the  paper,  but  did  not  understand  it  well,  and  that  it  was 
then  read  over  by  the  person  presenting  the  paper,  an  entire 
stranger  to  the  defendant  and  his  family,  and  was  signed  by 
defendant.  The  note  was  held  by  a  bona  Jide  holder,  and  the 
defendant  claimed  to  have  signed  it  under  the  belief  that  it 
was  a  contract  to  act  as  agent  for  a  patent  cultivator.  It  was 
held  that  the  case  turned  on  the  question  of  the  defendant's 
negligence  ;  tliat  it  w\as  improper  in  the  inferior  court  to 
direct  a  verdict  for  the  plaintiff;  and  that  whether  the  maker 
was  negligent  or  not  was  a  question  of  fact  for  the  jury.* 

§  849.  In  Wisconsin,  where  a  German,  unable  to  read  or 
write  the  English  language,  Avas  induced  to  sign  a  note  on  the 
fraudulent  representation  that  it  was  a  contract  of  agency  re- 
specting a  patent  machine ;  he  was  likewise  protected  against 
a  bona  fide  holder,  on  the  ground  that  he  had  no  intention  of 
signing  a  note,  and  was  guilty  of  no  negligence  in  affixing  his 
signature.^  So  it  "was  held,  in  the  same  State,  that  where  the 
maker  of  a  note  was  induced  by  fraud  to  sign  a  negotiable 
note,  supposing  it  to  be  non-negotiable,  notwithstanding 
laches  on  his  part,  he  was  not  bound  to  a  bona  fide  holder.^ 
But  this  case  seems  to  go  too  far. 

SECTIOi^  VI. 

HOLDER   OF   NEGOTIABLE   INSTKFMENTS    EXECUTED   UNDEK    MISTAKE     AND 

MISREPRESENTATION. 

§  850.  (6)  The  sixth  class  of  cases  are  those  in  which  the 
party  possesses  the  ordinary  faculties  and  knowledge,  and  is 
betrayed  into  signing  a  bill  or  note  by  the  assurance  that  it  is 
an  instrument  of  a  different  kind.  It  is  generally  agreed  that 
if  the  party  is  guilty  of  any  negligence  in  signing  the  paper 

»  Fenton  v.  Robinson,  11  N.  Y.  S.  C.  (4  Hun),  252. 

'  Walker  v.  Ebert,  29  Wis.  190  (1871);  to  same  effect  see  Puffer  v.  Smith, 
57  111.  527;  Griffiths  v.  Kellogg,  39  "Wis.  29U  (187G);  see  also  First  Nat.  Bank  v. 
Lierman,  5  ISTeb.  247;  Van  Brunt  v.  Singley,  85  111.  281. 

'  Kellogg  V.  Steiner,  29  Wis.  C27  (1871);  see  also  Butler  v.  Cams,  37  Wis.  61 
(1875). 


700  KIGUTS  OF  A  BONA  FIDE  HOLDER. 

he  is  bound  ;^  and  the  act  itself,  it  seems  to  us,  can  hardly 
be  committed  without  negligence.  A  man  has  no  right  to 
have  eyes  and  see  not ;  or  ears  and  hear  not ;  and  while  the 
law  should  protect  those  who  suffer  from  the  want  of  the 
senses  in  their  proper  development,  or  ordinary  education,  it 
should  not  permit  those  who  have  both  capacity  and  educa- 
tion to  throw  the  burden  of  their  failure  to  use  them  upon 
innocent  third  parties.  In  such  cases  we  should  say  the  act 
of  signing  the  paper  without  intending  to  do  so,  as  a  general 
rule,  imported  negligence  "per  se,  and  rendered  the  party  lia- 
ble. If  he  has  full  and  unrestricted  means  of  ascertaining 
the  true  character  of  the  instrument  before  sio-nino^  it,  but 
necjlectinfic  to  avail  himself  of  such  means  of  information,  and 
relying  on  others'  representations,  he  signs  and  delivers  a 
negotiable  paper,  instead  of  a  different  paper,  which  he  in- 
tended to  sign,  he  cannot  be  heard  to  impeach  it,  when  it  has 
been  passed  to  a  hona  fide  holder.^  In  accordance  with  this 
doctrine,  it  was  held  in  Iowa  that  where  one  Matting  was 
induced  to  sign  a  promissory  note  tinder  the  false  representa- 
tion that  it  was  a  contract  of  agency,  respecting  a  certain 

'  Chapman  v.  Rose,  44  How.  Pr.  (K  Y.)  3G4;  56  N.  Y.  137  (1874),  Johnson,  J.: 
"In  such  case  the  rule  is,  tlrit  he  is  bound  by  the  act  of  him  whom  he  has  trust- 
ed, in  favor  of  a  holder  in  good  faith."  See  Central  Law  Journal,  July  2d,  1875, 
p.  423;  see  post,  §  851;  Fenton  v.  Robinson,  11  K  Y.  S.  C.  (4  Ilun),  202;  Put- 
nam V.  Sullivan,  ante,  §  847;  Ross  v.  Dolaud,  29  Ohio  St.  473;  Nebekcr  v.  Cut- 
singer,  48  Ind.  436. 

*  Douglass  v.  Matting,  29  Iowa,  498,  Beck,  J.  said:  "The  defendant  trusted 
the  one  witli  whom  he  was  dealing  with  the  preparation  of  the  instrument.  The 
instrument  as  prepared  was  not  what  defendant  had  agreed  to  sign,  but  was 
voluntarily  executed  by  him.  Tlie  act  of  the  agent  was  a  fraud  wliereby  the  de- 
fendant was  induced  to  make  the  note,  and  not  the  false  making  of  it,  which  is 
necessary  to  constitute  a  forgery.  *  *  *  Nq^  it  would  be  manifestly  mijust 
to  permit  the  maker,  while  admitting  the  genuineness  of  his  signature,  to  defeat 
the  note,  on  the  ground  that,  through  his  own  culpable  carelessness  while  dealing 
with  a  stranger,  he  signed  the  instrument  wnthout  reading  it  or  attempting  to 
ascertain  its  true  contents.  The  law  will  favor  as  between  the  holder  and  maker 
in  such  a  case,  the  more  innocent  and  diligent.  The  maker  had  it  in  his  power 
to  protect  himself  from  the  fraud,  but  failed  to  do  so.  When  the  consequences 
of  this  act  are  about  to  be  visited  upon  him,  he  seeks  to  make  another  bear  it,  on 
The  ground  that  he  was  defrauded  through  his  own  gross  negligence.  He 
can  Certainly  claim  protection  neither  on  the  ground  of  his  innocence  or  dili- 
gence. 


INSTRUMENTS  EXECUTED  UNDER  MISTAKE.  701 

patent  seeder  and  cultivator,  he  was  bound  to  a  bona  fide 
holder.^ 

Again,  in  Iowa,  where  a  party's  signature  was  fraudulent- 
ly obtained  to  a  printed  form  or  blank,  under  pretense  of 
getting  an  order  for  a  machine,  and  the  payee  filled  it  up  as 
a  negotiable  note  for  $75,  payable  to  T.  II.,  or  bearer,  the  like 
decision  was  rendered."^  In  New  York,  similar  views  now 
prevail;'  and  in  Illinois,  where  the  maker  of  a  note  for  $180 
signed  it  without  reading  it,  under  representations  that  it 
contained  a  condition  that  it  should  not  be  paid  until  a  cer- 
tain number  of  hay-loading  devices  were  sold,  he  was  held 
bound  to  the  hona  fide  holder,  upon  the  same  principles.'' 

"  The  rule  contended  for  by  the  appellee  would  tend  to  destroy  all  confidence 
in  commercial  paper.  It  is  better  that  defendant,  and  others  who  so  carelessly 
affix  their  names  to  paper,  the  contents  of  which  are  unknown  to  them,  shoiihi 
suffer  from  the  fraud  which  tlieir  recklessness  invites,  than  that  the  character  of 
commercial  paper  should  be  impaired,  and  the  business  of  the  country  interfered 
■with  and  unsettled." 

'  Shirts  V.  Overjohn,  GO  Mo.  305;  Fredericks  v.  Clemens,  Id.  313;  Citizens' 
Nat.  Bank  v.  Smith,  55  N.  II.  31)3. 

■  ]\IcDonald  v.  Muscatine  National  Bank,  27  Iowa,  319  (1869),  Cole,  J.,  saying: 
"This  conclusion  is  based  upon  the  fact,  as  shown  by  plaintiff's  own  evidence, 
that  the  signature  of  the  plaintiff  was  placed  to  the  blank  instrument,  and  it  was 
delivered  and  intrusted  by  him  to  the  payee,  lor  some  purpose.  In  such  case  the 
rule  may  well  be  applied." 

'  Chapman  v.  Ro^^e,  5G  N.  Y.  137  (1874),  overruling  same  case  in  44  How. 
Prac.  R.  364  (1873),  and  explaining  Whitney  v.  Snyder,  2  Lans.  477;  Fcnton  v. 
Robinson,  11  N.  Y.  S.  C.  (4  Hun,)  354,  see  ante,  §  84S.  See,  to  same  effect, 
Shirts  V.  Overjohn  (Supreme  Court  of  Missouri,  May,  1875,  Central  Law  Journal, 
July  2d,  1875,  p.  423;,  60  Mo.  315;  Frederichs  v.  Clemens,  Id.  813. 

*  Leach  v.  Nichols,  55  111.  373,  McAllister,  J. :  "  The  case  of  Foster  v.  McKin- 
non,  decided  in  the  English  Common  Pleas,  in  July,  1869.  and  reported  in  38  Law 
Journal  Reports,  New  Series,  p.  310,  is  one,  where  the  plainiift"  was  an  indorsee 
of  a  bill  of  exchange  for  £3,C00,  and  sued  the  defendant  as  indorscr.  The  plaint- 
iff was  a  holder  for  value  before  maturity,  and  without  notice  of  the  fraud.  Cal- 
low, the  acceptor  of  the  bill,  testified  that  he  produced  the  bill  to  the  defendant 
(a  gentleman  far  advanced  in  life),  for  him  to  put  his  signature  on  the  back,  after 
that  of  one  Cooper,  who  was  payee  and  first  indorser  of  the  bill,  Callow  not  say- 
ing it  was  a  bill,  but  told  the  defendant  the  instrument  was  a  guaranty.  The 
defendant  did  not  see  the  face  of  the  bill  at  all,  but  the  bill  was  of  the  usual 
Shape,  and  bore  a  bill  stamp,  the  impress  of  which  stamp  was  visible  at  the  back 
of  the  bill.  The  defendant  signed  his  name  after  Cooper,  he,  the  defendant,  as 
the  witness  stated,  believing  the  document  to  be  a  guaranty  only.  The  Lord 
Chief  Justice  told  the  jury,  that  if  the  indorsement  was  not  the  defendant's  signa- 
ture, or  if,  being  his  signature,  it  was  obtained  upon  a  fraudulent  representation 


702  EIGHTS  OF  A   BONA  FIDE  HOLDER. 

So  in  Missouri,  the  lona  fide  holder  was  sustained  in  his 
right  to  recover  where  the  maker  signed  a  negotiable  note, 
though  supposing  it  was  a  receipt  for  plows.  In  this  case  he 
was  also  deemed  bound  by  a  subsequent  ratification.^     Now, 

that  it  was  a  guaranty,  and  the  defendant  signed  it  without  knowing  that  it  was 
a  hill,  and  under  the  belief  that  it  was  a  guaranty,  and  if  the  defendant  was  not 
guilty  of  any  negligence  in  so  signing  the  paper,  the  defendant  was  entitled  to  a 
verdict.  Tlie  jury  found  for  the  defendant.  A  rule  nisi  was  obtained  for  a  new 
trial,  and  the  cause  was  fully  argued,  and  carefully  considered  by  the  court,  upon 
examination  of  all  the  authorities  which  could  l>e  found  bearing  upon  the  ques- 
tion. The  instruction  was  sustained  by  the  whole  court,  in  a  veiy  elaborate 
opinion,  delivered  by  Byles,  J.,  who  says:  'It  seems  plain,  on  principle  and  on 
authority,  that  if  a  blind  man,  or  a  man  who  cannot  read,  or  a  man  who  for  some 
reason  (not  implying  negligence)  forbears  to  read,  has  a  written  contract  falsely 
read  over  to  him,  the  reader  misreading  to  such  a  degree  that  the  written  contract 
is  of  a  nature  altogether  diflfeient  from  the  conti-act  pretended  to  be  read  from 
the  paper,  which  the  blind  or  illiterate  man  afterward  signs,  then,  at  least  if  there 
be  no  negligence,  the  signature  so  obtained  is  of  no  force,  and  it  is  invalid,  not 
merely  on  the  ground  of  fraud,  where  fraud  existed,  but  on  the  ground  that  the 
mind  of  the  signer  did  not  accompany  the  signature  ;  in  other  words,  that  he 
never  intended  to  sign,  and,  therefore,  in  contemplation  of  law,  never  did  sign 
the  contract  to  which  his  name  is  appended.  The  authorities  appear  to  support 
this  view  of  the  law.  In  Thoroughgood's  Case,  2  Rep.  90,  it  was  held,  that  if  an 
illiterate  man  have  a  deed  falsely  r.ad  over  to  him,  ami  he  then  seals  and  delivers 
the  parchment,  that  parchment  is,  nevertheless,  not  his  deed. 

" '  In  a  note  to  Thoroughgood's  Case,  2  Rep.  90,  in  Frazer's  edition  of  Coke's 
Reports,  it  is  sug.;estcd  that  the  doctrine  is  not  confined  to  the  condition  of  an 
illiterate  grantor,  and  a  case  in  Kelway's  Reports,  p.  70,  is  cited  in  support  of 
this  observation.  On  reference  to  that  case,  it  appears  that  one  of  the  judges 
did  there  observe,  that  it  made  no  difference  whether  the  grantor  were  lettered 
or  unlettered.  That,  however,  was  a  case  where  the  grantee  himself  was  the  de- 
fendin"-  party  ;  but  the  position,  that  if  a  grantor  or  covenantor  be  deceived  or 
misled  as  to  the  actual  contents  of  the  deed,  the  deed  does  not  bind  him,  is  sup- 
ported by  many  authorities  (see  Com.  Dig  tit.  "Fait,"  62)  and  is  recognized  by 
Bayley,  J.,  and  the  Court  of  Exchequer,  in  the  case  of  Edwards  v.  Brown,  1  Cr. 
&  J.  312.  Accordingly,  it  has  recently  been  decided  in  the  Exchequer  Chamber, 
that  if  a  deed  be  delivered,  and  a  blank  left  therein  be  thereafter  improperly 
filled  up  (at  least  if  this  be  done  without  the  grantor's  negligence),  it  is  not  the 
deed  of  the  grantor.  Swan  v.  The  North  British  Australasian  Co.  2  Haris.  &  C. 
175;  32  L.  J.  R.  N.  S.  Exch.  273.  These  cases  apply  to  deeds,  but  the  principle 
is  equally  applicable  to  other  contracts.  *  *  *  jt  vvas  not  his  design,  and,  if 
he  was  guilty  of  no  negligence,  it  was  not  even  his  fault  that  the  instrument  he 
signed  turned  out  to  be  a  bill  of  exchange.' "  See  Sims  v.  Bice,  07  111.  88,  where 
party  was  imposed  upon,  and  fraudulently  induced  to  sign  a  note,  supposing  it 
to  be  an  agreement  of  agency,  and  was  interrupted  in  the  course  of  the  transac- 
tion.    He  was  unable  to  read  readily,  and  a  verdict  in  his  favor  was  sustained. 

'  Shirts  V.  Overjohn,  GO  Mo.  31.");  Fredericks  v.  Clemens,  Id.  313.  See  Kem- 
ble  V.  Christie,  55  Ind.  140. 


li^STRUMENTS   EXECUTED  UNDER  MISTAKE.  703 

in  Illinois,  under  statutory  enactments,  wliether  signature  of  a 
note  is  obtained  by  fraud  of  the  payee,  or  Vjy  inducing  him  to 
believe  it  is  not  a  note,  but  a  different  instrument,  it  is  void 
even  in  the  hands  of  a  bona  fide  holder.^  But  if  he  was  ac- 
quainted with  its  language,  or  might  have  been  by  the  exer- 
cise of  ordinary  prudence  and  caution  at  the  time  he  signed 
it,  false  and  fraudulent  representations  of  the  payee  as  to  its 
legal  effect  will  not  render  it  void  in  such  a  holder's  hands.'^ 

In  Ohio,  negligence  is  the  test.  If  the  maker  is  charged 
with  negligence,  as  when  he  signs  a  paper  containing  blanks 
capable  of  being  filled  up  as  a  note,  or  signs  it  without  read- 
ing it,  relying  on  what  is  told  him,  he  is  bound,  notwith- 
standing he  was  deceived  and  did  not  intend  to  make  a  note;^ 
but  if  not  charo-eable  with  ne2:li2:ence  he  is  not.* 

In  Nebraska  it  is  considered  that  the  party  to  an  instru- 
ment is  not  guilty  of  negligence  where  he  relies  on  the  read- 
ing of  it  by  another  party  thereto.^  If  such  party  were  a 
stranger,  we  should,  say  it  was  negligence:''  and,  indeed,  it 
seems  that  it  is  negligence  when  one  can  read  not  to  read 
for  himself.^ 

§  851.  In  other  States  the  courts  go  far  to  protect  the  de- 
frauded parties  to  the  paper  rather  than  the  innocent  holders. 
In  Michigan,  where  the  maker  of  a  note,  of  defective  eyesight, 
in  the  dusk  of  evening,  was  induced  by  an  impostor  to  sign 
several  papers  adroitly  arranged  to  overlie  each  other,  under 
the  assurance  that  they  were  contracts  respecting  the  agency 
far  a  patent  hayfork,  and  amongst  them  was  a  negotiable 
note  for  $120,  which  was  passed  to  a  hona  fide  holder,  the 
liolder  was  not  permitted  to  recover.  The  defective  eyesight, 
was  not  referred  to  as  exempting  the  maker  from  the  charge 
of  negligence,  but  the  broad  doctrine  was  asserted,  that,  as  he 
did  not  intend  to  make  a  negotiable  paper,  he  was  not  bound.^ 

'  Hubbard  v.  Rankin,  71  111.  129;  Richardson  v.  Schirtz,  59  111.  ;U3. 
-  Homes  v.  Hale,  71  111.  553.     See  also  Swannell  v.  Watson,  71  111.  456;  Mead 
v.  Munson,  60  111.  49. 

3  Ross  V.  Dolaud,  29  Ohio  St.  473.  "  De  Camp  v.  Hanna,  29  Ohio  St.  467. 

»  Palmer  v.  Largent,  5  Neb.  323.  '  See  Swaunell  v.  Watson,  71  111.  458. 

'  See  ante,  §  850. 
•  Gibbs  V.  Linabury,  32  Mich.  492  (ISTl);  Graves,  J.,  said:   "Xow,  when  a 


704  RIGHTS  OF  A  BOi^A   FIDE   UOLDER. 

And  the  like  view  was  at  one  time  taken  in  Missouri,  in  a 
case  (lifferinf^  oiily  in  the  circumstance  that  there  was  no 
physical  infirmity  in  the  maker,  and  that  the  patent  machine 
about  which  the  negotiation  took  place  was  a  pump  instead 
of  a  hayfork  ;  ^  but  this  case  was  subsequently  overruled,  and 
the  doctrine  of  the  text  adopted.^  In  another  Michigan  case 
it  was  held,  that  while  there  may  be  cases  where  one  signing 
and  putting  in  circulation  an  instrument,  should  be  bound  by 
the  terms  thereof,  even  though  different  from  what  he  sup- 
posed them  to  be,  that  rule  would  not  apply  where  a  party 
signed  in  good  faith  what  he  had  heard  read,  and  what  pur- 
ported to  be  a  power  of  attorney,  contract,  deed,  or  other 
similar  instrument,  in  case  a  negotiable  note  of  that  date,  of 
which  he  had  no  notice  or  intimation,  should  have  been 
mysteriously  lurking  in  the  depths  of  the  instrument  so 
signed,  and  should  afterward  turn  up  with  his  signature 
attached  thereto.^ 

§  851  a.  In  England,  it  would  seem,  from  the  case  of 
Foster  v.  McKinnon,^  that  the  holder,  under  such  circum- 
stances, is  not  protected.  In  that  case,  the  i)arty  was  induced 
to  indorse  a  bill  upon  the  assurance  that  it  was  a  guaranty, 
and  it  was  held  that  he  was  not  bound.  It  appears  from  the 
evidence,  however,  that  he  was  a  gentleman  far  advanced  in 
life,  and  that  circumstance  may  have  been  of  some  weight  in 

party  never  designed  to  put,  or  cause  to  be  put,  any  sort  of  negotiable  paper  in 
circulation,  when  the  thouglit  of  doing  so  never  entered  his  naind,  when  he  had 
never  bargained  to  do  so,  when  he  has  never  consciously  been  privy  to  any 
attempt  to  set  such  paper  afloat,  how  can  it  be  said  tliat  his  will  in  any  way  as- 
sented to  the  concoction  of  such  a  contract  so  as  to  make  him  an  object  of  the 
rule? 

"So  far  as  this  principle  is  concerned,  it  is  not  perceived  how  the  instance 
here  supposed  would  differ  from  that  when  the  act  leading  to  the  mischief  is 
done  by  an  insane  man,  or  is  compelled  by  duress.  Tiie  point  is,'that  the  will 
does  not  go  with  the  act."     See  Deturlcr  v.  Bish,  44  Ind.  70. 

'  Briggs  v.  Ewart,  51  Mo.  251  (1873);  followed  in  Martin  v.  Smylee,  55  Mo. 
577,  and  Corby  v.  Weddle,  57  Mo.  452. 

*  Shirts  V,  Overjohn  (May,  1875,  reported  in  Central  Law  Journal,  July  2d, 
1875,  p.  423),  60  Mo.  315. 

'  Anderson  v.  Walter,  34  Mich.  113. 

M  C.  B.  704;  38  L.  J.  N.  S.  310;  see  ante,  §  850,  note  3;  and  Chapman  v. 
Rose,  56  N.  Y.  137.     • 


INSTRUMENTS  EXECUTED  UNDER  MISREPRESENTATION.    705 

relieving  him  from  the  imputation  of  negligence.  We  cer- 
tainly cannot  concur  in  the  doctrine  that  tlie  intention  of  the 
party  signing  the  paper  should  determine  the  question  of  his 
responsibility.  ^Third  parties  can  have  no  opportunity  to 
scrutinize  his  intention,  which  is  a  sealed  book  to  all  but  him- 
self; and  he  should  not  he  permitted  to  escape  the  i-esponsi-. 
bility  of  what  he  did  by  pleading  what  he  designed  to  do. 

But  the  language  of  Lord  Chief  Justice  Bovill  is  conso- 
nant w^ith  the  principle  of  the  text.  He  said:  "If  the  de- 
fendant's signature  to  the  document  was  obtained  upon  a 
fraudulent  representation  that  it  was  a  guaranty,  and  if  he 
was  not  guilty  of  any  negligence  in  so  signing  the  paper,  he 
was  entitled  to  the  verdict." 

§  852.  In  Indiana,  a  very  strong  decision  has  been  ren- 
dered protecting  the  maker  against  a  bona  fide  holder.^ 
There,  where  the  maker  of  a  negotiable  promissory  note,  pay- 
able at  a  bank  in  that  State,  was  induced,  by  the  fraud  and 
circumvention  of  the  payee,  to  sign  his  name  to  such  note, 
when  he  honestly  supposed  and  believed  that  he  was  writing 
his  name  on  a  blank  piece  of  paper,  to  enable  the  payee  to 
see  how  his  name  was  spelled  or  written,  and  the  maker  did 
not,  after  he  discovered  that  he  had  so  signed  his  name  to 
the  note,  voluntarily  deliver  it  to  the  payee,  but  it  was  taken 
possession  of  wrongfully  and  forcibly  by  the  payee,  and  by 
him  carried  away  against  the  consent  of  the  maker  and  nego- 
tiated ;  it  was  held  (1),  That  the  maker  was  no  more  bound 
by  his  signature  than  if  it  were  a  total  forgery,  although  the 
person  to  whom  it  was  negotiated  was  a  purchaser  and 
holder  in  good  faith  and  for  a  valuable  consideration  before 
maturity;  and  also  (2),  That  admitting  that  the  maker 
signed  his  name  to  the  note,  with  full  knowledge  of  its  char- 
acter, it  was  nevertheless  invalid  and  void,  even  in  the  hands 
of  an  innocent  purchaser  for  value,  for  the  want  of  delivery  ; 
nor  was  the  maker  liable  on  the  ground  that  when  one  of 
two  innocent  persons  must  suffer  by  the  act  of  a  third,  he 

'  Cluse  r.  Gutbrie,  42  Ind.  237.     See  also  Deturler  v.  Bish,  44  Ind.  70. 
Vol.  I.— 45 


TOG  RIGHTS  OF  A  BONA  FIDE  HOLDER. 

who  has  enabled  such  third,  person  to  occasion  the  loss  must 
sustain  it.  But  in  another  case  in  that  State  the  maker  was 
held  liable  to  a  hona  fide  holder,  for  value,  notwithstanding 
he  was  led  to  execute  the  note  by  fraudulent, and  false  repre- 
sentations of  the  payee  that  it  was  a  different  sort  of  instru- 
ment, and  signed  it  not  supposing  it  was  a  negotiable  note, 
iior  intending  to  make  one/ 

§  853.  It  is  quite  remarkable  that  throughout  the  north- 
western States  so  many  cases  have  occurred  almost  identical 
in  circumstances,  and  in  which,  in  fact,  the  names  of  the  par- 
ties are  frequently  the  only  distinguishing  elements.  The 
peddlers  of  patent  machines  and  patent  rights  seem  to  have 
practiced  a  particular  trick  upon  their  victims,  and  have 
flooded  the  courts  with  litio-ations  arisins;  out  of  it.  These 
-cases  are  notable  instances  of  the  contagion  and  imitativeness 
of  fraud.  In  some  of  the  States,  leij-islation  has  been  deemed 
necessary  to  protect  society  against  frauds  committed  through 
.sucli  instrumentalities  as  those  herein  discusssed.^ 


sectio:n"  yil 

nOLDER    OF    NEGOTIABLE    INSTRUMENT    DELIVERED    BY   THIRD   PARTY    IN 
VIOLATION    OF    INSTRUCTIONS. 

§  854.  Still  another  class  of  cases,  presenting  a  question 
somewhat  different  from  any  yet  discussed,  has  arisen  where 
parties  have  signed  their  names  to  bills  and  notes,  either 
perfect  in  form,  or  in  blank,  with  authority  only  to  deliver 
them  as  complete  and  valid  instruments  upon  condition  that 

'  Kimble  v,  Christie,  55  Ind.  140.  See  also  Ncbeker  v.  Cutsiuger,  48  Ind. 
43G.     See  Wisconsin  Cases,  ante,  §  849,  note. 

^  In  New  York,  by  statute,  where  a  note  is  given  in  -whole  or  in  part  for  the 
right  to  make,  use  or  vend  a  patent  right,  the  "words  "  given  for  a  patent  right " 
are  required  to  be  prominently  written  or  printed  on  the  face  before  execution, 
and  it  is  subject  to  all  defenses  as  if  in  the  hands  of  the  original  taker.  The  sale 
of  a  note  so  given  without  a  compliance  with  the  statute  is  a  miGdemeanor. 
1  Laws,  1877,  Ch.  G5,  p.  68.  In  some  other  States  there  are  also  provisions  as  to 
notes  given  for  patent  rights.  Sec  Pendar  v.  Kelley,  48  Vt.  27;  Moses  v.  Com- 
stock.  4  Neb.  5Ui. 


VIOLATION   OF   INSTRUCTIONS.  707 

some  other  person  shall  become  a  party,  or  some  contingency 
be  fulfilled.  In  these  cases  it  will  be  observed  the  person 
with  whom  such  instrument  is  left  is  its  mere  custodian,  and 
not  an  agent  having  any  absolute  power  to  dispose  of  it. 
He  is  not,  as  to  the  instrument,  an  agent  with  limited  pow- 
ers, but  the  agency  itself  is  conditioned  upon  the  happening 
of  the  event  upon  which  he  is  to  become  the  agent  to 
deliver.  In  such  cases  there  is  the  high  authority  of  the 
English  Court  of  Exchequer  of  Pleas,  that  the  party  whose 
name  is  upon  the  instrument  will  not  be  bound  if  the  custo- 
dian of  it  issue  it  to  a  bona  fide  holder  before  the  condition 
is  fulfilled;  but  the  weight  of  authority  in  the  United 
States,  with  reason,  as  we  think,  supports  the  op2:)osite  view. 
In  the  Court  of  Exchequer  of  Pleas,  w^here  it  appeared  that  A. 
agreed  to  join  his  brother  B.  in  making  a  promissory  note 
for  his  accommodation,  provided  C.  would  also  join ;  and 
with  a  view  to  carrying  out  the  arrangement  a  note,  blank  as 
to  date  and  as  to  the  payee,  and  running,  "  We  jointly  and 

severally  promise  to  pay  Mr. ,  or  order,  £1,000,"  was 

signed  by  A.,  leaving  room  before  his  name  for  C.'s — another 
handed  it  to  B. ;  and  B.  without  procuring  C.  to  sign,  also 
passed  the  note  to  D.,  filling  up  the  blanks,  and  inserting 
D.'s  name  as  payee,  it  was  held  that  D.  could  not  recover 
against  A.  upon  the  ground  that  the  refusal  of  C.  to  join  was 
a  countermand  of  authority  to  B.  to  issue ;  and  that  B.  then 
had  no  authority  to  deal  with  it.^    This  is  the  ratio  decidendi 

*  Awde  V.  Dixon,  6  Exch.  809  (1851),  Parke,  B.,  said:  "It  is  unnecessary  to 
say  whether  this  instrument  is  a  forgery  or  not,  but  there  is  certainly  ground  for 
contending  that  the  making  of  it  complete,  contrary  to  the  directions  of  the  de- 
fendant, renders  it  a  false  instrument  as  against  him.  I  do  not  gainsay  the  posi- 
tion, that  a  person  who  puts  his  name  to  a  blank  papci*  impliedly  authorizes  the 
filling  of  it  up  to  the  amount  that  the  stamp  will  cover.  But  this  is  a  different  case. 
Here,  tiie  instrument,  to  which  the  defendant's  name  is  attached,  is  delivered  to 
his  brother,  with  power  to  make  it  a  complete  instrument,  on  one  condition  only, 
that  is,  provided  Robinson  would  be  a  joint  surety  with  him.  This,  theref;)re,  is 
an  instance  of  a  limited  authority,  where,  in  case  of  a  refusal  by  Robinson  to  join, 
there  is  a  countermand.  Robinson  refused  to  join,  and  consequently  the  defend- 
ant's brother  had  no  authority  to  make  use  of  the  instrument.  A  party  who 
takes  such  an  incomplete  instrument  cannot  recover  upon  it,  unless  the  person 


708  EIGHTS  OF  A  BONA  FIDE  HOLDER. 

of  the  case,  as  will  be  seen  by  releience  to  the  opinion  of 
Parke,  B.  In  Vermont,  however,  Avhere  A.  signed  a  joint 
and  several  note  with  B.,  as  his  surety,  payable  at  a  bank, 
with  the  agreement  that  he  should  not  use  it  unless  be  ob- 
tained another  surety  upon  it,  the  court  held  that  the  bank 
to  which  B.  passed  the  note,  without  procuring  another 
security,  could  recover  against  A.,  A.  being  without  knowl- 
edge of  the  agreement ;  but  distinguished  the  case  from  that 
just  quoted.^     But  there  is  no  distinction  that  we  can  discover 

from  whom  he  receives  it  had  a  real  authority  to  deal  with  it.  There  was  no  such 
authority  in  this  case,  and  unless  the  circumstances  show  that  the  defendant  con- 
ducted himself  in  such  a  way  as  to  lead  the  plaintiff  to  believe  that  the  defend- 
ant's brother  had  authority,  he  can  take  no  better  title  than  tiie  defendant's 
brother  could  give.  The  maxim  of  law  is,  '•nemo  plus  juris  in  alium  transjhre 
potest  quam  ipse  hahet.^  It  is  a  fallacy  to  say  that  the  plaintiff  is  a  bonajide  holder 
for  value;  he  has  taken  a  piece  of  blank  paper,  not  a  promissory  note.  He  could 
only  take  it  as  a  note  under  the  authority  of  the  defendant's  brother,  and  he  had 
no  authority,  consequently  the  instrument  is  void  as  against  the  defendant." 
Alderson,  B.,  and  Piatt,  B.,  concurred.     Rule  absolute. 

'  Passumpsic  Bank  v.  Goss,  31  Vt.  315  (1858).  Barrett,  J. :  "The  case  of 
Awde  V.  Dixon,  5  L.  &  E.  Rep.  513,  upon  a  first  impression,  seems  to  come 
nearer  to  the  present  case,  and  to  countenance  the  defense  here  made.  But  on 
examination  it  clearly  stands  on  a  different  ground.  In  that  case,  the  paj^ee's 
name  was  left  blank  when  the  defendant  signed  the  note  as  surety..  It  was  in- 
serted at  the  time  the  note  wa>  delivered,  and  the  money  was  advanced  upon  it, 
the  principal  '  stating  falsely  that  he  had  authority  to  deal  with  it.'  Moreover, 
the  defendant  signed  leaving  a  space  for  the  name  of  the  person  who  was  to  sign 
as  co-surety.  With  the  note  in  this  condition  when  presented  to  the  plaintiff,  he 
becomes  the  payee  by  having  his  name  inserted,  and  receives  it.  It  is  obvious, 
from  the  report  of  the  case,  that  the  court  deemed  the  insertion  of  the  payee's 
name,  and  the  passing  off  of  the  note,  to  be  a  forgery  upon  the  defendant,  the 
same  as  if  the  sum  had  been  left  blank  when  signed  by  the  surety,  and  after- 
ward had  been  filled  with  a  larger  sum  than  had  been  agreed  between  the  prin- 
cipal and  surety."  *  *  *  Same  Judge,  p.  321 ;  "  The  propriety  of  this  view 
is  strongly  illustrated  by  the  well  known  course  of  this  kind  of  business.  The 
instance  has  hardly  occurred  of  a  bank  making  inquiry  when  paper,  genuine  and 
ajiparcntly  designed  for  dibcount,  is  presented  at  the  counter,  whether,  as 
against  the  makers,  it  is  entitled  to  be  used.  If  the  court  should  sustain  this  de- 
fense in  this  case,  it  would  become  necessary  for  banks,  and  equally  for  all  per- 
sons, upon  the  offer  of  a  note  with  sureties,  in  the  usual  course  of  business,  to 
.call  before  them  all  the  makers,  and  ascertain,  by  personal  inquiry,  whether  it 
was  *  all  right,'  and  not  subject  to  some  side  agreement  or  reservation  in  favor  of 
sonje  of  the  sureties,  that  might  render  it  invalid  as  against  them.  We  think 
such  a  rule  of  law  would  not  only  contravene  the  well  established  usages  of  busi- 
ness, but  would  surprise,  if  not  shock,  the  judgment  of  the  community  upon  this 
subject."     See  also  Farmers,'  &c.  Bank  v.  Humphrey,  36  Vt.  554. 


VIOLATION   OF   INSTRUCTIONS.  709 

in  the  principles  of  the  two,  though  the  facts,  as  to  the  partic- 
ular instruments,  vary.  In  Kentucky,  where  a  party  signed 
as  surety,  and  left  the  note  with  the  principal,  with  the  agree- 
ment that  it  should  not  be  obligatory  until  a  certain  other 
surety  had  signed,  the  surety  was  held ;  and  the  grounds  of 
the  decision  seem  to  us  at  once  comprehensive  and  conclusive.^ 
In  such  cases  notice  to  the  holder  of  the  condition,  and  its 
violation,  is  necessary  to  a  defense.'^  So  in  Missouri,  where 
one  indorsed  a. note  upon  agreement  that  another  should  in- 
dorse also.'  And  the  same  views  have  prevailed,  justly  as 
we  think,  in  Indiana,^  New  Hampshire,^  and  lowa,^  and  have 
been  recognized  in  other  States. 

§  855.  In  none  of  the  cases,  however,  it  is  maintained  that 
a  bill  or  note,  either  in  full  or  in  l)lanlv,  intrusted  to  the  payee, 

'  Smith  V.  Moberly,  10  B.  Mon.  269  (1850),  Simpson,  J.,  saying:  "But  a  de- 
livery of  a  writing  of  this  character,  under  such  circumstances,  to  the  principal, 
docs  not  have  the  effect  of  characterizing  it  as  a  mere  escrow;  but,  on  the  con- 
trary, the  principal  should  be  considered  as  the  agent  of  the  surety,  and  empow- 
ered by  him  to  pass  the  writing  to  the  person  to  whom  it  may  be  made  payable, 
and  his  delivery  as  being  sufficient  to  make  it  eifectual,  unless  the  payee  had 
notice  of  the  special  terras  upon  which  it  was  signed.  The  implied  discretionary 
authority  to  use  the  note,  arising  out  of  its  possession  by  the  principal,  uncontra- 
dicted by  its  terms  or  anything  apparent  on  its  face,  cannot  be  restricted  by  any 
agreement  between  the  payors  themselves,  of  which  the  payee  had  no  notice. 
The  same  prinfciple  is  substantially  decided  in  the  case  of  the  Bank  of  the  Com- 
monwealth V.  Curry,  2  Dana,  142. 

"  The  law  in  relation  to  the  execution  of  deeds  and  specialties  is  not  applica- 
ble to  promissory  notes.  In  the  language  of  this  court,  in  the  case  of  Taylor, 
&c.  V.  Craig,  2  J.  J.  Marsh.  24(3,  '  promissory  notes  are  guasi  mercantile,  but  are 
not  in  this  country,  as  they  are  in  England,  since  the  statute  of  Anne,  negotiable 
precisely  as  bills  of  exchange.  But,  for  many  purposes  the  doctrine  of  bills  of 
exchange  applies  to  promissory  notes,  because  the  reason  of  it  applies  equally  to 
both  kinds  of  paper.  The  law  in  relation  to  the  execution  of  both  is  the  same; 
and  justice  and  the  exigencies  of  commerce  require  that  the  drawer  of  a  bill,  or 
payor  in  a  note,  should  be  bound  sometimes,  when  if  the  instrument  were  a  deed, 
he  would  not  be  liable.' "     See  also  Taylor  v.  Craig,  2  J.  J.  JIarsh.  440. 

^  Bonner  v.  Nelson,  57  Ga.  433. 

'■"  P>auk  of  Missouri  v.  Phillips,  17  ]\Io.  30  (18.j2);  see  Ayrcs  v.  Milroy,  53  Mo. 
510.     Jlekl,  that  in  the  case  of  a  non-negotiable  note  it  is  different. 

*  Deardorff  v.  Foresman,  28  Ind.  481  (1865). 

'  Merriam  v.  Rock  wood,  47  N.  H.  81. 

"  Gage  V.  Sharp,  24  Iowa,  15,  the  condition  being  the  execution  of  a  mortgage 
to  protect  the  surety;  see  also  McCramcr  v.  Thompson,  21  Iowa,  241. 


710  RIGHTS   OF   A   BONA   FIDE   HOLDER. 

to  be  valid  upon  a  condition,  will  not  be  binding  if  the  con- 
dition is  violated.  Sucli  delivery  to  the  payee  is  in  law  abso- 
lute and  complete;  and  whether  the  instrument  be  negotiable 
or  under  seal,  the  doctrines  which  apply  when  third  parties 
are  the  custodians  do  not  extend  to  them.^  An  instrument 
under  seal  deposited  with  a  third  party,  to  be  delivered  upon 
condition,  is  called  an  escrow ;  and  according  to  the  English 
})recodent  referred  to,  and  to  some  of  the  American  decisions, 
wliicli  have  either  followed  it  as  an  adjudication  or  recog- 
nized the  doctrine  which  it  asserts,  a  negotiable  instrument 
may  also  be  deposited  with  a  third  i)arty  as  an  escrow,  and 
the  parties  to  it  will  not  be  bound  if  the  depositary  issue  it 
in  breach  of  the  trust  reposed  in  him.^  In  a  Wisconsin  case, 
whei'e  a  promissory  note  and  a  mortgage  to  secure  it  were 
placed  in  the  hands  of  a  stranger  to  be  delivered  to  the  payee 
upon  the  happening  of  a  certain  event,  and  he  delivered 
them  to  the  payee  without  authority,  and  without  waiting 
for  such  event,  it  was  held  that  neither  the  mortgage  nor  the 
note  were  valid  although  the  latter  'was  in  the  hands  of  a 
Ion  a  fide  holder  for  value  without  notice.^  A  material  alter- 
ation of  a  note  made  by  one  of  the  promisors  before  delivery 
avoids  it  as  against  the  other,  although  done  without  fraud- 
ulent intent.* 

In  Arkansas,  it  was  said  by  Oldham,  J.,  respecting  a  note : 
"If  delivered  to  a  third  person,  it  is  not  binding  until  the 
condition  upon  which  it  was  delivered  be  performed;  but,  if 
directly  to  the  promisee,  it  is  binding  from  delivery,  w^hether 
the  condition  be  performed  or  not.'"^ 

§  856.  It  should  be  borne  in  mind  that  there  is  a  cardinal 

'  Massman  v.  Ilolschcr,  49  Mo.  87  (1871),  ^;os<,  §  850. 

""  Babcock  v.  Biuian,  1  Root  (Conn.),  87;  Couch  v.  Meeker,  2  Conn.  302; 
Chipman  v.  Tucker,  38  Wis.  50. 

^  Chipman  v.  Tucker,  38  Wis.  43  (1875),  Cole,  J.:  "'  Delivery  of  a  promissory 
note  by  the  maker  is  necessary  to  a  valid  inception  of  the  contract,  and  until 
there  is  a  delivery,  the  note  has  no  vitality,  and  the  rules  of  commercial  paper 
have  no  application  to  it."  See  also  Roberts  v.  McGrath,  38  Wis.  52;  Roberts  v. 
Wood,  3S  Wis.  60. 

*  Draper  v.  Wood,  112  Mass.  315.  "  Scott  v.  State  Bank,  9  Ark.  3G. 


VIOLATION   OF   INSTRUCTIONS.  71  1 

distinction  between  the  perversion  of  instruments  in  form  ne- 
gotia})le,  or  capable  and  intended  to  be  made  so  in  a  certain 
contingeney,  and  that  of  instruments  under  seal.  The  latter, 
when  completed,  may  be  delivered  to  third  persons — that  is, 
to  others  than  the  parties — with  authority  only  to  deliver  them 
upon  condition ;  and  in  such  case,  if  the  condition  be  violated, 
the  party  intending  to  be  only  conditionally  bound  will  be 
bound  absolutely.^  A  sealed  instrument  so  delivered  to  a 
third  person  is  called  an  escrow. 

But  negotiable  instruments,  as  it  seems  to  us,  stand  on  a 
different  footing  entirely.  They  are  letters  of  credit,  and 
pi'oclamations  that  all  is  right  to  every  purchaser  or  trans- 
feree ;  and  one  who  chooses  to  put  his  name  on  an  instrument 
possessing  these  characteristics,  instead  of  confining  his  lia- 
bility by  shaping  it  in  a  form  expressive  of  his  meaning, 
should  not  be  permitted  to  ensnare  others,  and  escape  himself 
unscathed.  To  hold  otherwise  would  be  a  wide  departure 
from  the  principles  which  ramify  the  law  merchant,  and  would 
be  as  repugnant  to  reason  as  a  decision  that  an  instrument 
absolute  on  its  face  might  be  varied  by  a  parol  condition. 
And  even  as  to  sealed  instruments  the  doctrine  now  finds 
favor  that,  if  complete,  and  signed  by  sureties  with  condition 
that  other  sureties  shall  join,  the  signing  sureties  will  be 
bound  if  they  leave  them  with  the  principal  obligors,  and 
then  deliver  them  without  procuring  the  additional  sureties ; ' 
thouo-h  it  is  otherwise  where  such  instruments,  when  left 
with  the  obligors,  indicate  on  their  face  that  they  are  incom- 
plete, and  that  additional  parties  are  contemjilated;''  If  the 
sealed  instrument  perfect  on  its  face  be  left  with  the  obligee, 
upon  condition  that  it  shoukl  be  valid  only  upon  its  execu- 
tion by  a  third  person,  the  delivery  is  complete,  and  it  is  valid 
and  operative  though  not  so  executed.* 

'  Nash  V.  Fugate,  24  Grat.  202.     See  Vol.  I,  §  68. 

'  Dair  v.  United  States,  16  Wall.  1;  Naah  v.  Fugate,  24  Grat.  202;  Cutter  v. 
Roberts,  7  Neb.  637;  State  v.  Potteri  63  Mo."  212;  Stater.  Peck,  53  Me.  284. 
Contra,  People  v.  Bostwick,  32  N.  Y.  445;  State  Bank  v.  Evans,  3  Green,  N.  J. 
155.  5  Ward  v.  Churn,  18  Grat.  801. 

*  Miller  v.  Fletcher,  27  Grat.  403  ;   Sinionton's  Est.  4  Watts,  180;  Duncan  v. 


712  RIGHTS   OF   A   BONA   FIDE   HOLDER. 

SECTION   VIII. 
HOLDER   OF   NEGOTIABLE   INSTRUMENTS    EXECUTED   UNDER    DURESS. 

§  857.  Any  contract  entered  into  under  duress  lacks  the 
first  essential  of  validity — the  consent  of  the  contractor — and 
bills  and  notes  form  no  exception  to  the  rule.  As  between 
immediate  parties,  proof  of  duress  at  once  annuls  the  instru- 
ment, or  rather  enables  the  party  who  was  under  duress  to 
avoid  it,  at  his  option ;  ^  but  whether  or  not  in  the  hands  of 
a  hona  fide  holder  for  value  without  notice,  the  duress  in  its 
inception  renders  it  voidable,  is  a  question  upon  which  the 
authorities  do  not  altogether  agree.  It  has  been  held 
in  England  that  where  it  appeared  that  the  defendant 
gave  the  bill  while  under  duress  abroad,  and  under  a  threat 
of  personal  violence  and  confiscation  of  property,  and  without 
consideration,  that  it  was  incumbent  on  the  plaintiff  to  give 
some  evidence  of  consideration,^  and  all  the  authorities  go  so 
far  as  to  require  evidence  of  consideration.  But  the  party 
who  signs  a  bill  or  note  under  such  threats  and  dangers  of 
personal  violence  as  would  naturally  impel  a  man  of  reason- 
able firmness  and  courage,  is  certainly  not  a  free  agent,  and  in 
nowise  in  default ;  and  we  can  but  think  that  the  better  doc- 
trine is  that  held  in  Scotland,  w^here  force  used  to  obtain  the 
subscription  of  a  bill  or  note  nullifies  the  subsci'iption,  since 
the  subscriber's  consent  is  wanting.  The  party  is  not  bound 
by  such  a  subscription,  more  than  if  it  had  been  forged,  in 
which  ca^e  the  obligation  being  originally  null,  even  an  in- 
dorsee can  acquire  no  right  to  enforce  it.^   The  principle  there 

Pope,  47  Ga.  445;  Ward  v.  Lewis,  4  Pick.  518 ;  Currie  v.  Donald,  2  Wash.  (Va). 
59. 

'  Bush  V.  Brown,  49  Ind.  573  (1875),  and  authorities  cited. 

'  Duncan  v.  Scott,  1  Camp.  100.  In  England,  the  old  authorities  held  that 
the  duress  sufficient  to  avoid  a  contract  must  be  such  as  to  create  reasonable  fear 
of  death  or  mayhem;  and  that  fear  of  battery  or  trespass  upon  property  is  insuf- 
ficient. See  4  Cruise,  Dig.  260.  And  this  old  rule  has  been  adhered  to  in  mod- 
ern English  cases.  But  in  the  United  States  it  is  relaxed,  according  to  many  de- 
cisions. See  Sasportas  v.  Jennings,  1  Bay,  470;  Collins  v.  Westbury,  2  Bay,  211 ; 
Forshay  v.  Ferguson,  5  Hill,  158;  United  States  v.  Huckabee,  16  Wall.  431. 

'  Thomson  on  Bills  (Wilson's  ed.),  62. 


1^^STRUMENTS  EXECUTED  UNDER  DURESS.  713 

is  not  extended  to  all  cases  where  the  party  consented  under 
such  circumstances  as  to  raise  a  good  olijection  against  the 
original  payee — for  instance,  where  the  bill  or  note  was  ob- 
tained by  fraud,  or  by  a  mixture  of  deception  and  terror, 
though  without  such  a  degree  of  violence  as  would  influence  a 
man  of  ordinary  constancy.  Thus,  where  a  party  whose 
cattle  had  broken  into  another's  field  was  intimidated  by  the 
threat  of  a  law  suit  to  give  him  a  bill  for  an  unreasonable 
amount  of  damao^es,  it  was  held  that  the  bill  must  be  reduced 
in  so  far  as  the  damages  were  exorbitant.^  But  it  does 
not  appear  that  the  grounds  of  reduction  in  this  case  could 
have  been  pleaded  against  an  indorsee  suing  on  the  bill 
or  note,  for  there  was  a  real  consent,  and  consequently  an 
obligation  which,  till  reduced,  was  transmissible  to  a  third 
party. 

§  858.  The  English  doctrine  is  cited  by  many  text  writers 
on  bills  and  notes  without  criticism  or  dissent,  and  as  a  cor- 
rect statement  of  the  law ;  ^  but  at  least  one  English  author 
seems  to  agree  with  us,^  as  does  also  the  most  recent  and 
thorou2;h  of  the  American  writers  on  bills  and  notes.* 

Indeed,  we  can  discern  no  principle  which  would  compel 
any  person,  whether  a  party  to  a  negotiable  or  other  kind  of 
instrument,  to  pay  it,  when  under  violent  duress — that  is, 
under  the  compulsion  of  force  with  the  only  alternative  of 
submitting  to  great  bodily  injury  or  indignity.     Consent  is 

'  Thomson  on  Bills  (Wilson's  ed.),  62. 

'  Byles  on  Bills  (Sharswood's  ed.),  220;  Bayley  on  Bills,  ch.  is,  p.  318;  Chitty 
on  Bills  (i;3th  Am.  ed.),  85 ;  Edwards  on  Bills,  325 ;  Story  on  Notes,  §  188 ;  Story 
on  Bills,  §  185. 

'  In  Roscoe's  Digest  of  Bills  and  Notes,  note  20,  p.  117,  it  is  said,  in  com- 
menting on  Duncan  v.  Scott,  1  Campb.  100:  "It  may  be  doul)ted  ■.vhttiier  the 
defendant  in  this  case  was  liable  even  to  a  honajile  indorsee  for  value.  The  bill 
being  drawn  under  duress,  no  contract  arose,  and  it  resembles  the  case  of  a  bill 
drawn  by  -a  feme  covert,  who  is  under  a  disability  to  contract." 

*  Prof.  Parsons  says,  in  vol.  1,  N.  &  B.  p.  276:  "A  note  or  bill  obtained  by 
duress  miglit  not  be  available  in  any  hands  against  the  party  so  compelled;  and 
if  the  note  were  a  good  note,  and  a  subsequent  party  indorspd  it  by  duress,  he 
would  not  be  bound  to  any  one;  but  a  subsequent  indorsee  who  indorsed  it  over 
for  value  would  be  bound  to  his  own  indorsee,  or  those  deriving  title  from  him." 
But  in  a  previous  portion  of  his  work  he  follows  in  the  rut  of  the  authorities 
already  quoted  in  a  previous  note.     1  Parsons  N.  &  B.  188. 


714  RIGHTS  OF   A  BONA  FIDE   HOLDER. 

of  the  essence  of  every  contract,  and  if  it  is  not  given,  the 
party  sbould  not  be  bound  if  he  had  no  alternative  but  to 
seem  to  give  it,  or  suffer  grievous  wrong.  He  creates  no  trust, 
he  commits  no  negligence,  whereby  the  confidence  of  another 
can  be  betrayed.  He  is  in  no  default,  having  a  right  of  self- 
defense  in  preferring  his  own  life  and  safety  to  the  chances  of 
pecuniary  injury  to  others ;  and  his  extorted  act  is  nothing 
more  or  less  than  the  act  of  the  wrong-doer  who  uses  his  per- 
son as  the  instrument  of  forging  his  name.  Threats  to  inflict 
slicfhter  wronsfs  would,  as  we  have  seen,  stand  on  a  different 
footing. 

In  a  recent  case  in  New  York,  where  a  married  woman 
was  coerced  by  her  husband  with  threats  of  violence  to  sign 
a  promissory  note,  in  such  form  as  to  charge  her  separate 
estate,  the  Court  of  Appeals  held  it  absolutely  void.^ 

SECTION  IX. 

WHEN    IIOLDEK   OF   NEGOTIABLE   INSTRUMENTS  IS  PROTECTED  BY  ESTOPPEL 

IN   PAIS. 

§  859.  There  are  some  cases  in  which  defenses  which 
would  avoid  the  instrument  in  any  one's  hands,  are  rendered 
unavailable  to  the  defendant  by  his  own  conduct — cases  in 
which,  to  use  the  legal  phrase,  he  is  "  estopped  "  from  pleading 
the  particular  defense  which  he  endeavors  to  set  up.  "  An 
estoppel,"  says  Lord  Coke,  "  is  where  a  man  is  concluded  by 
his  own  act  or  acceptance  to  say  the  truth."  Thus,  if  a  per- 
son who  is  negotiating  with  the  payee  or  indorsee  of  a  note 
for  the  purchase  of  it,  inquires  concerning  its  validity  of  the 
maker,  and  the  latter  assures  him  that  the  note  is  good, 
that  he  has  no  defense  against  it,  that  it  is  good  business 
paper,  or  that  it  is  all  right  and  will  be  paid,  the  maker 
could  not  afterwards  plead  that  it  was  usurious  or  otherwise 
illegal.-     His  mouth  is  closed  by  his  previous  representation, 

'  Loomis  V.  Ruck,  56  N.  Y.  465  (1874). 

'  Davis  V.  Thomas,  5  Leigh,  1 ;  Tobey  v.  Chipman,  13  Allen,  133;  Vaughn  v. 
Terrall,  57  Ind.  182;  Rose  v.  Hurley,  39  Ind.  82;  McCabe  v.  Raney,  32  hid.  312; 


ESTOPPEL   IN   PAIS.  715 

and  the  law  will  not  assist  liim  to  lead  another  into  a  pitfall, 
and  then  to  make  him  a  scapegoat  for  himself  And  so,  if  the 
holder  purchased  the  note  with  the  defendant's  knowledge 
and  consent,  it  has  been  held  that  the  latter  cannot  set  up 
prior  payment,  or  other  defense  against  it.^ 

§  860.  But  such  representations,  referring  only  to  the 
then  existing  status  of  the  instrument,  will  not  exclude  de- 
fenses subsequently  arising.^  And  where  they  are  made  by 
an  indorser,  and  not  by  the  maker,  they  bind  the  former,  but 
not  the  latter.^  This  plea,  on  the  part  of  the  plaintiff,  which 
excludes  the  right  of  the  defendant  to  set  up  the  true  con- 
dition of  allairs  as  a  defense,  is  called  "  estoppel  in  pais,"  it 
beinof  an  extraneous  matter  dehors  the  record.  And  when- 
ever  it  is  relied  upon  where  the  system  of  common  law 
pleading  prevails,  it  has  been  held  that  it  must  be  specially 
pleaded.* 

§  861.  It  is  to  be  observed  respecting  estoppel  that  while 
it  exacts  good  faith  from  the  party  bound,  it  likewise  exacts 
good  faith  in  the  party  dealing  with  him.  Therefore,  if  the 
latter  is  himself  cognizant  of  a  fraud  upon  the  maker  at  the 
time  of  the  purchase,  and  knows,  also,  that  the  maker  is 
ignorant  respecting  it,  good  faith  would  require  that  he 
should  inform  the  maker  of  it,  and  if  he  does  not  so  inform 

Vanderpool  v.  Brake,  28  Ind.  130;  Plant  v.  Voegelin,  30  Ala.  160;  Cloud  v. 
Whiting,  38  Ala.  57;  Lynch  v.  Kennedy,  34  N.  Y.  151;  Crout  v.  De  Wolf,  1  R. 
I.  393  ;  Brooks  v.  Martin,  43  Ala.  3G0.  Peters,  J.:  "  It  is  difficult  to  conceive 
what  would  make  a  note  '  all  right '  that  could  not  be  collected  by  suit,  or  that 
would  not  be  paid  at  maturity,  if  the  maker  was  able.  *  *  Had  there  been  a 
suit  pending  on  the  note  between  Brooks  and  Martin,  and  the  latter  had  come 
into  court,  and  pleaded  that  the  note  was  '  all  right,'  the  court  could  not  have 
refrained  from  giving  judgment  against  him.  Now,  by  his  words,  he  puts  in 
this  plea  before  suit  is  brought,  and  the  law  will  not  permit  him  to  withdraw  it 
after  suit  is  brought." 

*  Downer  V.  Reed,  17  Minn.  493.  But  it  has  been  held,  in  Mackay  v.  Hol- 
land, 4  Mete.  69,  that  where  the  maker  of  a  note  for  the  accommodation  of  the 
payee  said  that  it  was  good,  in  answer  to  a  question  put  by  an  indorser  who 
acquired  it  after  maturity,  was  not  jJrecluded  from  showing  that  he  made  the 
admission  in  ignorance  of  the  fact  that  his  liability  had  been  ended  by  the 
payment  of  the  debt  for  which  it  had  been  indorsed  in  the  first  instance. 

'  Maury  v.  Coleman,  24  Ala.  381  ;  Cloud  v.  AVhiting.  38  Ala.  57. 

'  Do  we  V,  Schutt,  2  Den.  631.  *  Davis  v.  Thomas,  5  Leigh,  1. 


710  EIGHTS   or   A   BONA   FIDE   HOLDER. 

hhn,  tbe  maker  will  not  be  estopped  by  having  told  tlie  pur- 
chaser that  the  note  was  all  right,  and  would  be  paid  at  ma- 
turity, from  setting  up  the  fraud  of  wliich  the  purchaser  had 
notice.^  And  so  the  holder  will  not  be  protected  if  he  knew 
of  any  illegality  in  the  instrument.^  In  other  words,  estoppel 
is  a  plea  that  is  born  of,  and  must  be  nourished  by,  equity, 
and  he  that  asks  equity  must  do  equity.  If  he  conceals  facts 
from  the  maker  he  acts  inequitably  and  cannot  recover.^  And 
so  if  the  plaintiff  rely  upon  an  estoppel  in  pais,  in  order  to 
recover  against  the  defendant  who  has  really  a  defense,  equity 
only  requires  that  he  should  be  indemnified  to  the  full  ex- 
tent of  the  amount  he  has  invested  on  the  faith  of  the  de- 
fendant's representation,  and  in  the  absence  of  fraud  on  the 
part  of  the  defendant,  the  plaintiff  can  only  recover  that 
amount  witli  legal  interest.^  An  indorser  who  signs  the 
name  of  a  firm  is  estopped  to  deny  its  existence,  in  order  to 
protect  himself^    The  maker  of  a  note  to  a  company  to  pay 

'  Sackett  v.  Kellar,  22  Ohio  St.  554. 

'Watson  V.  Hoag,  40  Iowa,  143  (1874),  Beck,  J. 

"  PJatt  V.  Jerome,  2  Blatchf.  C.  C.  186. 

*  Campbell  v.  NichoUs,  33  N.  J.  L.  (4  Vroom)  88,  Beasley,  C.  J.,  saying:  "  If 
the  drawer  of  a  note  should,  through  mistake,  admit  its  validity  to  a  person  who, 
to  the  knowledge  of  such  drawer,  was  about  to  purchase  it,  after  such  purchase 
for  full  value,  it  is  clear  he  could  not  aver  iiis  mistake  and  set. up  the  invalidity 
of  the  note  as  a  defense.  In  such  a  case  it  is  right  that  he  should  bear  the  loss 
whose  carelessness  occasioned  it.  But  suppose  the  purchaser  gave  only  part 
value  for  the  note,  upon  what  principle  should  he  be  allowed  to  recover  more 
than  the  money  thus  paid  of  the  drawer,  who,  although  he  inadvertently  admitted 
liis  liability,  in  point  of  fact  owes  nothing  on  the  paper.  The  true  measure  is, 
that  the  party  acting  on  the  faith  of  a  representation  should  be  indemnitied  from 
loss,  by  the  application  of  the  doctrine  of  estoppel  in  pais,  and  these  limits, 
as  I  think,  take  the  whole  field  of  the  doctrine.  The  rule  is  designed  to  protect 
against  fraud,  either  in  fact  or  in  law;  but  the  remedy  does  not  extend  beyond 
the  injury.  Neither  good  policy  nor  honest  dealing  requires  that  one  who  has 
made  an  admission  which  has  influenced  the  conduct  of  another,  should  be 
estopped  by  such  admission  from  showing  the  truth  of  the  case,  except  to  the 
extent  of  permitting  the  person  misled  from  recovering  indemnification.  For 
it  is  to  be  remembered,  that  the  principle  of  estoppel  applies  as  well-  to  cases  of 
unintentional  deceptions  as  to  designed  and  actual  frauds,  and  it  would  certainly 
seem  plain,  that,  in  the  former  class  of  cases,  the  limitation  of  the  doctrine  above 
indicated  is  absolutely  necessary  for  the  accomplishment  of  the  ends  of  justice." 

"  Hubbard  v.  Mathews,  54  N.  Y.  43. 


ESTOPPEL  IN   PAIS.  717 

assessments  on  his  real  estate  is  not  estopped  to  deny  that 
the  assessments  were  void,  and  that  he  was  not  informed  as 
to  the  facts  vibratins:  them  wlien  he  made  the  note.^ 

§  8G2.  Certificates  of  validity. — Sometimes  the  practice  is 
resorted  to  of  annexing  the  maker's  certificate  to  the  note 
that  the  same  is  given  for  value  and  will  be  paid  when  due,  or 
that  it  is  business  paper ;  and  it  has  been  held  in  New  York 
that  if  it  l)e  afterward  sold  to  a  third  person  for  an  amount 
less  than  should  have  been  paid  for  it  if  discounted  at 
legal  interest  (which  in  New  York  would  be  usurious),  the 
maker  is  estopped  by  his  certificate  from  setting  up  the 
defense  of  usury.^  This  doctrine  is  questionable  at  best,  and, 
as  we  think,  erroneous.  If  one  about  to  pay  a  note  inquires 
touching  its  character,  it  is  right  that  the  maker's  representa- 
tions should  bind  him.  They  are  given  in  the  usual  course 
of  business  in  answer  to  a  pertinent  inquiry,  and  there  is 
nothing  to  excite  the  buyer's  suspicions,  but  everything  to 
allay  them.  But  when  a  note  has  annexed  to  it  a  certificate 
proclaiming  that  it  is  valid  and  will  be  paid,  this  is  no  more 
than  its  face  purports  without  any  additional  certificate.  It 
is  too  much  like  a  man  having  "  I  am  honest "  chalked  on 
his  back ;  and  as  the  words  "  value  received,"  ^  or  others 
equally  importing  value  received,  and  obligation  to  pay,  do 
not  estop  the  maker  from  showing  tbat  the  consideration 
was  usurious,  or  otherwise  illegal  and  void,  so  should  not  the 
mere  repetition  of  words  to  the  like  effect,  in  another  form. 
On  the  contrary,  the  over  zeal  to  create  an  appearance  of 
legality  would  be  in  itself  a  circumstance  of  suspicion  which 
should  put  the  purchaser  on  his  guard.* 

'  Madry  v.  Sulphur  Springs,  «&c.  Turnpike  Co.  57  Intl.  149. 

"  Chamberlain  v.  Townsend,  2G  Barb.  611 ;  Mechanics'  Bank  v.  Townscnd,  29 
Barb.  5G9;  Tru^scott  v.  Davis,  4  Barb.  495;  Clark  v.  Sisson.  4  Ducr,  408. 

=  Gaul  V.  Willis,  26  Penn.  St.  259. 

''  Jaqua  v.  Montgomery,  '6^  lud.  46  (1870).  In  this  case  the  maker  of  a  non- 
negotiable  note  wrote  a  certificate  contemporaneous  with  its  execution,  that  it 
was  ''all  right  and  will  be  paid  by  me  when  due."  But  this  was  held  not  to  estop 
the  maker  from  showing,  against  a  hona  fide  holder  who  acquired  it  for  value 
before  maturity,  that  the  note  was  fraudulently  obtained.     Gregory,  C.  J.,  said  : 


718  RIGHTS   OF   A   BONA   FIDE   HOLDER. 

"Tbe  instrument  signed  at  the  time  the  note  was  executed  has  not  the  first  ele- 
ment of  an  estoppel.  It  is  no  more  than  what  the  note  itself  imported  on  its 
face.  It  was  obtained  by  the  same  fraudulent  act  that  proved  the  execution  of 
the  note.  It  was  a  part  of  the  same  contract,  and  was  as  much  a  part  of  the 
note  as  if  it  had  been  incorporated  in  it.  It  was  a  statement  upon  which  the 
appellant  had  no  right  to  rely.  Indeed,  I  thiuk  that  such  a  paper  accompanying 
au  ordinary  promissory  note  should  have  the  cflcct  of  exciting  suspicion  thiit  all 
was  not  right.  It  looks  too  much  like  the  act  of  the  thief  in  attempting  to 
cover  up  his  crime." 


CHAPTER  XXVII. 

TIIE    CONFLICT    OF    LAWS. THE   LAW    OF    PLACE    AS    APPLICABLE 

TO    NEGOTIABLE   INSTRUMENTS. 


SECTIOT^T  I. 

GENERAL   PEINCIPLES    OF   THE    LAW    OF    TLACE. 

§  863.  Each  one  of  the  United  States  is,  in  contempla- 
tion of  its  own  and  of  the  Federal  Constitution,  a  distinct 
and  independent  sovereignty,  with  its  own  peculiar  code  of 
laws  and  system  of  judicature.  And  while,  in  the  aggregate, 
they  compose  one  integral  confederacy,  which  is  itself  an  in- 
dependent nation,  paramount  in  certain  respects  to  the  States, 
in  all  other  respects  the  States  retain  their  separate  auton- 
omies, and  are  deemed  as  much  foreign  to  each  other  as  if  not 
in  anywise  associated  together.  The  regulation  of  contracts 
comes  peculiarly  within  the  province  of  the  States,  and 
therefore  contracts  between  citizens  of  the  different  States, 
while  they  may  be  enforced  by  process  in  the  Federal  courts, 
nevertheless,  are  to  be  construed  and  effectuated,  not  by  a 
general  system  of  laws  which  overspread  the  whole  country, 
but  in  accordance  with  the  principles  of  international  law 
which  govern  transactions  between  parties  of  different  nations. 

§  <8G4.  As  long  as  all  the  parties  to  a  bill  or  note  are 
confined  within  the  limits  of  a  sinsjle  State,  the  local  law 
alone  determines  their  rights  and  liabilities.  No  suit  can  be 
brought  in  a  Federal  court,  and  any  question  which  may  be 
litigated  begins  and  ends  with  the  local  tribunals.  But  the 
vast  and  constant  traffic  between  the  States,  and  the  general 
use  of  bills  and  notes  as  a  medium  of  exchange,  give  cir- 
culation to  those  instruments  from  hand  to  hand,  and  from 
State  to  State;  and  questions  of  nicety  are  often  presented 


720  THE   CONFLICT   OF   LAWS. 

in  the  inquiry  by  wLat  law  the  rights  and  liabilities  of  the 
parties  are  to  be  ascertained.  In  some  of  the  States,  as  in 
Maryland,  the  English  statute  of  3  and  4  Anne  is  in  force. 
In  others,  as  in  Virginia,  where  none  but  notes  payable  at 
bank  are  negotiable,  there  are  peculiar  statutory  provisions 
respecting  commercial  paper.  In  all  of  the  States,  each  rec- 
ognizes the  precedents  of  its  own  courts,  as  independently 
of  the  rulings  of  the  Supreme  Court  of  the  United  States 
as  of  those  of  Great  Britain  ;  which  may,  indeed,  shed  great 
light  on  all  commercial  questions,  but  are  of  no  binding 
authority.  When  suit  is  brought  in  one  of  the  Federal  courts, 
it,  on  the  other  hand,  will  be  guided  by  the  general  law 
merchant  in  questions  referable  to  it,  and  will  follow  its  own 
views  about  it,  unless  the  nature  of  the  liability  contracted 
has  already  been  determined,  in  the  particular  State  of  the 
contract,  at  the  time  it  w^as  entered  into. 

It  is  therefore  important,  in  any  treatise  upon  negotiable 
instruments,  to  discuss  the  principles  by  which  the  liabilities 
of  parties  are  to  be  determined,  when  they  have  been  con- 
tracted in  different  States.  A  party  whose  domicile  is  in 
Maine,  may  make  a  contract  in  Maryland  for  the  purchase  of 
real  estate  in  Virginia,  and  may  in  Maryland  execute  his 
negotiable  note  therefor,  payable  in  Texas ;  and  suit  might 
be  brought  against  him  in  California.  And  the  question 
might  arise  whether  or  not  the  law  of  the  maker's  domicile, 
the  lex  domicilii^  as  it  is  termed ;  or  the  law  of  the  place 
where  the  contract  was  made,  lex  loci  contractus  j  or  the  law 
of  the  situs  of  the  property  purchased,  lex  loci  rei  sitce  /  or 
the  law  of  the  place  wdiere  the  note  was  made  payable,  lex 
loci  solutionis;  or  the  law  of  the  place  where  suit  was 
brought,  lex  fori,  were  applicable  to  the  transaction. 

§  865.  General  principles. — The  following  general  prin- 
ciples on  this  subject  may  be  regarded  as  established : 

First.  Every  contract  is,  in  respect  to  its  formalities,  and 
authentication  to  be  regulated  by  the  laws  of  the  State  or 
country  in  which  it  is  entered  into ;  and  it  is  also  regulated 
l)y  the  laws  of  tlie  State  or  country  in  which  it  is  made,  in 


GENERAL  PRINCIPLES  OF  THE  LAW  OF  PLACE.  721 

respect  to  its  nature,  validity,  interpretation  an<l  effect,  ex- 
cept when  it  is  to  be  performed  in  another  State  or  country. 

Second.  When  a  contract  is  made  in  one  State  or  country 
to  be  performed  in  another  State  or  country,  it  is  to  be  regu- 
lated by  the  laws  of  the  place  of  performance,  without 
regard  to  the  place  at  which  it  was  written,  signed  or  dated, 
in  respect  to  its  nature,  validity,  interpretation  and  effect. 

Third.  In  determining  the  place  where  a  contract  is  made,\, 
the  place  where  it  was  delivered,  as  consummating  the  bar- 
gain, controls;    and    not    the    place  where    it  was  written, 
signed  or  dated. 

Fourth.  If  a  party  contracts  while  in  transitu^  and  with- 
out identity  with  any  other  place,  the  place  of  his  domicile  / 
is  deemed  the  place  of  the  contract.  ^ 

Fifth.  If  a  contract  be  illegal  and  void  at  the  place  where 
it  is  made,  it  is  void  everywhere. 

Sixth.  The  laws  of  a  State  or  country  have  no  extra- 
territorial force,  proprio  vigore  ;  and  are  only  executed  by 
other  States  and  countries  from  considerations  of  courtesy 
or  policy,  termed  the  comity  of  nations. 

Seventh.  The  laws  of  a  State  or  country  being  only 
executed  in  another  by  comity,  they  will  be  executed  only  so 
far  as  they  may  be  consistent  with  religion,  good  morals, 
and  with  the  public  rights  and  interests  of  the  State  or 
country  in  which  the  remedy  is  sought. 

Fightli.  The  courts  of  a  State  or  country  cannot  take 
judicial  notice  of  the  laws  of  a  foreign  State  or  country;  and 
when  such  laws  are  sought  to  be  applied,  they  must  be 
alleged  and  proved. 

Ninth.  The  law  of  the  place  where  suit  is  brought,  the 
lexfori^  as  it  is  termed,  regulates  the  form  of  the  action  and 
the  nature  and  extent  of  the  remedy. 

§  866.  The  coniitij  of  nations. — It  results  from  the  prin- 
ciple that  the  laws  of  a  country  hav^e  no  binding  force 
beyond  its  own  boundaries,  that  the  appeal  for  their  en- 
forcement addresses  itself  entirely  to  the  comity  and  discre- 
tion of  the  forum  in  which  suit  is  brouglit.     That  comity  is 

Vol.  I.— 4G 


722  THE  CONFLICT  OF  LAWS. 

freely  exercised  by  civilized  countries,  which  look  for  and 
receive  reciprocal  courtesies  from  other  nations  ;  and  the  close 
relations  of  the  several  States  of  the  Union  with  eacli  other, 
the  family  likeness  of  their  institutions,  and  the  homogeneity 
of  their  people,  are  powerful  incentives  to  the  exercise  be- 
tween them  of  a  comity  peculiarly  liberal  and  expansive.* 
But,  nevertheless,  a  State  must  be  just  before  it  is  generous; 
and  therefore  no  State  should  exercise  comity  in  favor  of  con- 
tracts which  violate  its  own  laws,  or  the  law  of  nature,  or 
the  ]aw  of  God,^  It  must  consult  sound  morals  and  the 
interests  and  public  policy  of  its  own  people,  and  if  to  en- 
force the  laws  of  another  State  or  country  would  lead  to 
their  infringement,  it  would  be  treacherous  to  its  own  duties 
to  lend  aid  to  their  execution.^  As  an  illustration  :  "  in 
many  countries  a  contract  may  be  maintained  by  a  courtesan 
for  the  price  of  the  piostitution ;  and  one  may  suppose  an 
action  to  be  brought  here  upon  such  a  contract  which  arose 
in  such  a  country.  But  that  would  never  be  allowed  in  this 
country,"  *  as  was  well  said  in  England,  and  might  be  said 
hera. 

SECTION  11. 

LEX     LOCI      CONTRACTUS. 

§  8G7.  We  shall  now  endeavor  to  illustrate  these  general 
principles  by  applying  them  to  the  various  liabilities  which 
arise  upon  negotiable  instruments.  The  rule  is  of  general 
acceptation  that  the  law  of  the  place  where  the  contract  is 
made  regulates  the  formalities  of  its  execution  and  authenti- 
cation and  the  consideration  necessary  to  its  validity;  and 
also  regulates  its  interpretation,  nature,  ol)ligation  and  effect.* 


'  Lathrop  v.  Commercial  Bank,  8  Dana,  118. 

'  Forbes  v.  Cochrane,  2  Barn.  &  C.  448. 

'Ohio  Ins.  Co.  v.  Edmundson,  5  La.  295;  Armstrong  v.  Tolcr,  11  Wheat. 
258 ;  Pearsall  v.  Dwight,  2  Mass.  84 ;  Mahorncr  v.  Hooe,  9  Sm.  &  M.  247 ;  Donovan 
V.  Pitcher,  53  Ala.  411. 

*  Kobin.son  v.  Bland,  2  Burr.  1077,  Wihnot,  J. 

^  Ilyde  V.  Goodnow,  3  Corns.  266;  Evans  v.  Anderson,  78  111.  558. 


LEX  LOCI   CONTRACTUS.  7'J3 

If  formally  executed  upon  a  legal  consideration  there,  it  is 
valid  everywhere  ;  ^  and  if  defective  there  in  either  respect,  it 
is  invalid  everywliere.'^  These  doctrines  are  absolutely  nec- 
essary to  healthful  commercial  intercourse  between  States  and 
nations,  and  they  find  various  illustration  in  numerous  cases. 
Thus,  where  a  bill  was  made  and  indorsed  in  blank  in  France, 
and  sued  in  England,  and  it  appeared  that  by  French  law  the 
blank  indorsement,  without  additional  formalities,  did  not 
pass  the  property  to  the  holder,  it  was  held  that  there  could 
be  no  recovery  in  England,  although  by  the  English  law  the 
indorsee  in  blank  could  sue.'  But  in  a  subsequent  case  it 
has  been  shown  that,  while  the  legal  principle  of  this  decision 
is  correct,  the  view  taken  of  the  French  law  was  erroneous, 
an  indorsement  by  procuration  meaning  only  that  just  such 
title  as  indorser  had  should  pass.*  So,  where  a  note  was 
made  in  Mississippi,  for  a  slave,  and  lacked  a  certain  certifi- 
cate, which  w^as  necessary  by  the  laws  of  that  State  to  its 
validity,  it  was  held  void  in  Arkansas,  where  suit  was 
brous^ht.^  So,  where  a  bill  was  drawn  in  Michiiran  unon  a 
drawee  in  Chicago,  Illinois,  it  was  held  that  a  parol  accept- 
ance valid  in  Chicago  was  binding,  although  by  the  laws  of 
Michigan  an  acceptance  must  be  in  writing.^  So,  where  a 
bill  was  drawn  in  Chicago  upon  a  firm  of  St.  Louis,  Mo.,  and 
was  verbally  accepted  by  a  member  of  the  firm  at  the  time 
in  Chicago,  it  was  held  to  be  governed  by  the  laws  of  II li- 
uois,  and  binding.'^ 

§  8G8.  The  place  where  a  contract  is  made  depends  not 


'  Ford  V.  Buckeye  Ins.  Co.  G  Bush  (Ky.)  133;  Fant  v.  Miller,  17  Grat.  47; 
Andrews  v.  Pond,  13  Pot.  G5 ;  Palmer  v.  Yarrington,  1  Ohio  St.  'iry.i ;  Andrews  v. 
llerriott,  4  Cow.  510;" Smith  v.  Mead,  3  Conn.  2r)3. 

"  Thayer  v.  Elliott,  16  N.  II.  102;  Ansted  v.  Sutter,  30  Hi.  164;  Pearsall  v. 
Dwight,  2  Mass.  84;  Van  Schaick  v,  Edwards,  2  Johns.  Cas.  355;  Kanaga  v. 
T:iylor,  7  Ohio  St.  134;  Robinson  v.  Bland,  2  Burr.  1077. 

'  Trimbey  v.  Vignier,  1  Bing.  N.  C.  151. 

*  Bradlaugh  v.  De  Ilin,  5  C.  P.  L.  R.  [*476],  475. 
'  Moore  v.  Clopton,  22  Ark.  125. 

•  Mason  v.  Dousay,  35  111.  424;  .^ce,  also,  BisscU  v.  Lewis,  4  yVich.  450. 
'  Scudder  v.  Union  Not.  Bank,  91  U.  S.  (1  Otlo),  406. 


724  THE  CONFLICT  OF   LAWS. 

upon  the  place  where  it  is  written,  signed  or  dated,  but  upon 
tlie  place  where  it  is  delivered  as  consummating  the  bargain.^ 
Thus,  the  law  of  the  place  where  a  bill  or  note  is  written, 
signed  or  dated  does  not  necessarily  control  it,  but  the  law 
of  the  place  where  it  is  delivered  from  drawer  or  maker  to 
payee,  or  from  indorser  to  indorsee.  A  note  drawn  and  dated 
in  Maryland,  but  delivered  in  New  York,  in  payment  of 
goods  there  purchased,  or  money  loaned,  is  payable  in  and 
governed  by  the  laws  of  New  York.^  And  if  a  note  be 
dated  and  signed  in  blank  in  Virginia,  and  sent  to  Maryland, 
and  there  filled  up  and.  negotiated,  it  is  a  Maiyland,  and  not 
a  Viro-inia,  note.^  So,  where  a  note  is  indorsed  for  accommo- 
dation  in  one  State,  and  delivered  in  another,  the  indorsement 
is  governed  by  the  laws  of  the  latter,  for  the  accommodation 
indorser  makes  that  party  to  whom  he  lends  his  signature 
his  agent  for  putting  the  instrument  into  circulation,  and  his 
own  contract  with  those  to  whom  it  is  negotiated  must  con- 
sequently be  judged  on  the  principles  of  agency,  which  refer 
it  to  the  place  where  the  circulation  commences.*  And  a  bill 
accepted  in  New  York  for  accommodation  of  a  drawer  in 
Massacluisetts,  and  there  put  in  circulation,  would  be  gov 
erned  by  Massachusetts  law.^ 

§  869.  But  however  this  doctrine  may  be  as  a  general  rule 
(and  we  by  no  means  intend  to  discredit  it  as  such),  it  should 
not  be  regarded  as  without  exceptions.  And  where  the  parties 
acquiring  a  bill  for  value,  and  in  the  usual  course  of  business, 

■  Frcose  v.  Brownell,  35  N.  J.  L.  R.  (G  Vroom),  38G  ;  Campbell  v.  Nichols,  33 
Id.  81 ;  Overton  v.  Bolton,  9  lleisk.  763. 

'Cook  V.  Moffat,  5  How.  295;  Re  Conrad,  1  Tcnn.  Legal  Gazette  Rep.  384; 
Hyde  v.  Goodnow,  3  Corns.  2G6;  Davis  v.  Coleman,  7  Ired.  424.  On  same  prin- 
ciple, if  a  mercliant  orders  goods  from  England,  and  the  English  merchant  exe- 
cutes the  .contract,  it  is  governed  by  English  law.  Whiston  v.  Stodder,  8  Mart. 
(La.)  95. 

'  Fant  v.  Miller,  17  Giat.  47. 

*  Cook  V.  Litchfield,  5  Sand.  330;  Stanford  v.  Pruet,  27  Ga.  343;  Davis  v. 
Clemson,  G  McLean,  G22;  Wharton  Confl.  of  Laws,  §  459;  3  Parsons  N.  &  B.  380. 

'  First  National  Bank  v.  Morris.  1  Hun,  680  (8  N.  Y.  S.  C.  R.),  overruling 
Jewell  V.  Wright,  30  N.  Y.  359,  and  approving  Bank  of  Georgia  v.  Lewin,  45 
Barb.  340,  and  Bowen  v.  Bradley,  9  Abb.  N.  S.  395. 


LEX   LOCI  CONTRACTUS.  t2o 

have  no  knowledge  that  it  was  not  issued  and  deliv^ered.  as  a 
sul)sisting  instrument  at  the  place  where  it  bears  date,  it  is 
but  just  that  they  should  be  entitled  to  regard  its  ostensible 
as  its  real  character,  and  should  at  least  not  be  permitted  to 
suffer  by  reason  of  the  after-discovered,  fact  that  it  was  not 
there  delivered.^ 

In  consonance  with  this  view,  it  has  been  held  in  Penn- 
sylvania, that  where  a  drawer  in  Philadelphia  there  dated 
and  wrote  a  bill,  blank  as  to  the  payee,  and.  sent  it  to  London, 
where  a  payee's  name  was  inserted,  his  indorsement  pro- 
cured, and  the  bill  negotiated  to  a  bank  which  had  no 
"  notice  of  the  manner  in  which  it  originated,  or  of  the  fact 
that  it  w^as  issued  in  Loudon,  and  not  in  Philadelphia" — 
such  drawer  was  bound  in  damages  to  the  holder,  as  upon  a 
bill  actually  drawn  and  delivered  in  Philadelphia.  Foi',  as 
said  by  Lewis,  J. :  "  It  bore  the  dress  of  a  bill  of  exchange 
drawn  in  Pennsylvania ;  and  upon  the  principle  that  every 
one  is  presumed  to  produce  all  the  consequences  to  which 
his  acts  naturally  and  necessarily  tend,  the  presumption  is 
that  the  defendants  intended  that  the  purchasers  of  it  should 
receive  it  under  the  belief  that  it  was  a  bill  drawn  in  Phila- 
delphia, in  the  usual  course  of  business."  ^ 

And  ^vhere  it  appeared,  in  England,  that  parties  resident 
in  Ireland  signed  and  indorsed  a  copper-plate  impression  of 
a  bill,  leaving  blanks  for  the  date,  sum,  time  when  payable, 
and  name  of  the  drawee,  and  transmitted  it  to  B.  in  England 
for  his  use ;  and  B.  dated  it  "  Waterford,"  a  place  in  Ireland, 
filled  np  the  blanks,  and  negotiated  it  to  the  plaintiff  who 
had  no  knowledge  that  the  history  of  the  bill  was  not  exactly 
what  its  face  purported — it  was  held,  that  it  was  to  be  con- 
sidered an  Irish  bill,  by  relation  from  the  time  it  was  signed 
in  Ireland,  and  consequently  that  an  English  stamp  was  not 
necessary.^ 

'  1  Parsons  N.  &  B.  57;  see  National  Bank  v.  Smoot,  1  McArtluir,  371. 
'  Lennig  v.  Kalston,  23  Peiin.  St.  139. 

'  Snaitli  V.  Miugay^  1  Maule  &  Sel.  87.     Grose,  J.,  said:   "The  question  is, 
■whether  this  is  to  be  considered  as  an  Irish  or  an  English  bill  of  exchange.    The 


72G  THE   CONFLICT   OF   LAWS. 

§  870.  A  bill  sketclied  out  and  accepted  in  England,  but 
afterward  signed  by  the  drawer  abroad,  would  be  considered 
as  made  abroad  ;  or  vice  versa,  if  signed  by  tlie  drawer  abroad 
and  filled  up  in  England.^  Where  a  bill  was  drawn  in 
Jamaica,  on  a  stamp  of  that  island  only,  and  a  blank  was  left 
for  the  payee's  name,  it  was  held  that  an  English  stamp  was 
not  necessary  to  the  validity  of  the  insertion  of  the  bearer's 
name  in  England.^  And  where  a  Britisli  subject  residing  in 
Florence,  signed  a  joint  and  several  note  as  one  of  its  makers, 
and  sent  it  by  j^ost  to  his  brother  in  England,  the  other 
maker,  who  also  signed  it,  and  paid  it  into  bank, — it  was 
held  that  a  cause  of  action  arose  in  England,  upon  its  deliv- 
ery there  to  the  payee.^  It  is  to  be  observed  that  couits  do 
not  take  judicial  notice  of  the  divisions  of  foreign  States  and 
countries  into  counties,  towns  and  cities.* 

§  871.  The  ascertainment  of  the  true  meaning  and  inten- 
tion of  the  parties  is  the  prime  object  of  the  interpretation 
of  contracts,  and  as  the  same  words  are  used  with  difl'erent 
significations  in  different  communities,  and  import  different 
obligations — it  follows  that  the  interpretation  placed  upon 
them  must  be  according  to  the  signification  and  effect  at- 
tached to  them  in  the  State  or  country  in  which  the  contract 
is  made — otherwise  the  intention  of  the  parties  will  be  de- 
feated, instead  of  effectuated.  Thus  by  the  word  "  month  "  is 
sometimes  meant  a  lunar,  and  sometimes  a  calendar  month, 
and  if  it  were  used  in  a  contract  entered  into  in  a  foreign  State 
or  county,  evidence  would  Ijc  admissible  to  show  in  what 
sense  the  term  was  there  understood.  So  the  word  "pounds" 
when  employed  in  England  would,  mean  pounds  stei'ling; 
while  in  the  United  States  it  would  mean  pounds  in  Ameri- 

case  seems  to  me  to  be  this:  a  piece  of  paper  signed  by  a  person  in  Irelanrl,  is 
given  for  the  purpose  of  being  filled  up,  and  operating  as  a  bill  of  exchange; 
and  although  it  was  im[)erfect  at  the  time  when  it  was  signed,  yet  when  it  be- 
came perfect  by  being  filled  up,  it  operated  as  a  bill  of  exchan<;e,  from  the  time 
when  it  was  signed  and  intended  to  have  such  operaton."  See  National  Bank 
V.  Smoot,  1  McArthur,  371. 

'  Barker  v.  Sterne,  9  Exch.  684.  '  Crutchley  v.  Mann,  5  Taunt.  029. 

'  Chapman  v.  Cotterell,  34  L.  J.  Exch.  18G.  *  Ante,  Chap.  I,  §  11. 


LEX   LOCI   CONTRACTUS.  727 

can  currency  wliich  is  a  fourtL  less  in  vnlue.  So  the  term 
usance  in  different  countries  signifies  different  periods  of  time, 
varying  from  half  a  month  to  several  months  in  duration.  It 
is  obvious  that  in  such  cases  the  contract  must  be  enforced 
accordino-  to  the  meaniui>:  of  the  several  terms  in  the  countries 
wherein  they  are  respectively  used.  The  law  in  force  at  the 
time  the  contract  is  made  must  apply  to  it  in  respect  to  its 
interpretation  and  effect,  otherwise  the  legislature  would  it- 
self make  a  contract  for  the  parties.  Therefore  a  State  enact- 
ment, making  notes  payable  at  a  designated  place  negotiable, 
would  only  relate  to  notes  executed  after  its  passage.^ 

§  872.  By  the  nature  of  the  contract  is  meant  those  qual- 
ities which  pertain  to  it.  Thus,  whether  it  be  joint  or  sev- 
eral ;  or  joint  and  several ;  whether  absolute  or  conditional ; 
whether  of  principal  or  surety;  whether  personal  or  real, 
are  points  which  concern  the  nature  of  the  contract,  and  are 
to  be  governed  by  the  law  of  the  place  at  which  it  is  entered 
into.  This  is  well  illustrated  in  an  English  case,  where  suit 
was  brought  in  England  upon  a  bill  accepted  at  Leghorn, 
where  the  law  is,  that  if  the  acceptor  have  not  in  his  hands 
sufficient  funds  of  the  drawer,  and  the  drawer  then  fiiil,  the 
acceptance  is  thereupon  vacated.  It  was  held  that  the  law 
of  Leghorn  sbould  prevail.^ 

§  873.  In  speaking  of  the  obligation  of  contracts,  Story 
says :  "  It  would  be  easy  to  multiply  illustrations  under  this 
head.  Suppose  a  contract,  by  the  law  of  one  country,  to 
involve  no  personal  obligation  (as  was  supposed  to  be  the 
law  of  France  in  a  particular  case  which  came  in  judgment), 
but  merely  to  confer  a  right  to  proceed  in  rem,  such  a  con- 
tract would  be  held  everywhere  to  involve  no  personal 
obligation.  Suppose,  by  the  law  of  a  particular  country,  a 
mortgage  for  money  borrowed,  should,  in  the  absence  of  any 
express  contract  to  paj^,  be  limited  to  a  mere  repayment 
thereof  out  of  the  land,  a  foreign  court  would  refuse  to  eu- 

'  Cook  V.  Citizens'  Mut.  Ins.  Co.  53  Ala.  37;  see  g  970  a. 
'  Burrows  v.  Jemimo,  2  Strs.  733. 


728  THE   CONFLICT   OF  LAWS. 

tertain  a  suit  giving  it  a  personal  obligation.  Suppose  a 
contract  for  the  payment  of  the  debt  of  a  third  person  in  a 
country  where  the  law  subjected  such  a  contract  to  the  tacit 
condition  tliat  payment  must  first  be  sought  against  the 
debtor  and  his  estate;  that  would  limit  the  obligation  to  a 
mere  accessorial  and  secondary  character,  and  it  would  not 
be  enforced  in  any  foreign  country,  excej^t  after  acompliance 
with  the  requisitions  of  the  local  law.  Sureties,  indorsers 
and  guarantors  are  therefore  everywhere  liable  only  accord- 
ing to  the  law  of  the  place  of  their  contract.  Their  obliga- 
tions, if  created  by  such  local  law  as  an  accessorial  obliga- 
tion, will  not  anywhere  else  be  deemed  a  principal  obligation. 
So,  if  by  the  law  of  the  place  of  a  contract,  its  obligation  is 
positively  and  ex  directo  extinguished  after  a  certain  period, 
by  the  mere  lapse  of  time,  it  cannot  be  revived  by  a  suit  in  a 
foreign  country,  whose  laws  provide  no  such  rule,  or  apply  it 
only  to  the  remedy.  To  use  the  expressive  language  of  a 
learned  judge,  it  must  be  shown,  in  all  such  cases,  what  the 
laws  of  the  foreign  country  are,  and  that  they  create  an  obli- 
gation which  our  laws  will  enforce.^ 

§  874.  A  defense  or  discharge — any  plea  which  impeaches 
the  oiiginal  validity,  or  declares  the  subsequent  extinguish- 
ment, of  the  contract — must  be  governed  by  the  law  of  the 
place  where  the  contract  was  made.  Thus,  infancy,^  cover- 
ture,^ tender  or  payment,^  or  discharge  by  insolvent  laws,^  if  a 
valid  defense  by  the  lex  loci  contractus,  will  be  a  valid  de- 
fense everywhere.  And  if  by  the  lex  loci  payment  by  bill  or 
note  is  conditional  payment  only,  it  Avill  be  so  regarded  even 
in  States  which  hold  such  payment  absolute,^  and  vice  versa? 

§  875.  But  the  discharge  of  a  contract  by  the  law  of  a 
place  where  it  was  not  made,  or  to  be  performed,  will  not 
operate  as  a  discharge  of  it  in  any  other  country.^ 

'  Story  on  Bills,  §  143. 

»  Male  V.  Roberts,  3  Esp.  163;  2  Parsons  N.  &  B.  350.  '  Ibid. 

♦  Searight  v.  Callright,  4  Dall.  325;  Warder  v.  Arell,  2  Wash.  (Va.)  282. 

"  Stiirgis  V.  Crow nitif^hi eld,  4  Wheat.  122;  Ogden  v.  Saunders,  12  Wheat.  213. 

*  Bartsch  v.  Atwater,  1  Conn.  40U;  Vanclecf  v.  Therasson,  3  Pick.  12. 
'  Ward  V.  Howe,  38  N.  H.  42. 

•  Smith  V.  Buchanan,  1  East,  6;  M'Millan  v.  M'Neil,  4  Wheat,  209;  Sherriil  v. 


LEX   DOMICILII.  720 

Thus  a  discharge  under  the  insolvent  laws  of  Pennsyl- 
vania would  be  no  bar  to  a  suit  brought  by  an  indorsee 
against  the  indorser  of  a  note,  the  indorsement  having  been 
made  in  another  State  where  action  is  brought,  and  where 
the  indorsee  resides,  although  the  indorser  resides  in  Penn- 
sylvania.^ 

They  who  are  iufiints  in  one  country,  may  lawfully  and 
validly  contract  in  another,  where  by  law  they  are  of  full  age.^ 


SECTION    III. 
LEX   Do:snciLii. 

§  876.  There  are  some  peculiar  circumstances  under  which 
the  domicile  of  the  contracting  parties  becomes  an  important 
element  of  consideration,  both  for  the  purpose  of  ascertaining 
their  intention,  and  of  determining  whether  or  not  such  in- 
tention may  be  legally  effectuated.  Thus,  where  a  Virginian 
transiently  in  California,  contracts  a  debt  there  with  a  Cali- 
forniau,  or  with  a  Kentuckian,  there  transiently  also,  the 
question  would  at  once  arise,  by  what  law  sball  the  contract 
be  governed  ?  If  the  contract  were  in  express  terms  to  be 
performed  in  California,  it  w^ould  seem  clear  that  the  law  of 
California  would  govern  it,  it  being  the  lex  loci  solutionis, 
and  Caiitbi-nia  being  thus  indicated  as  the  place  with  refer- 
ence to  which  the  contract  was  made,^  And  if  the  circum- 
stances of  the  contract  were  such  that  it  w'ould  be  inferen- 
tially  to  be  performed  in  California,  the  like  lule  would  ap- 
ply. Thus,  if  it  were  a  debt  for  board  at  a  hotel,  or  articles 
of  personal  subsistence  or  necessity,  it  would  be  payable  by 

Hopkins,  1  Cow.  103,  overruling  Penniman  v.  Meigs,  9  Johns.  325;  Green  v.  Sar- 
miento.  Pet.  C.  C.  74;  Frey  v.  Kirk,  4  Gill  &  J.  509;  Smith  v.  Smith,  2  Johns. 
235:  Urton  v.  Hunter,  2  Hag.  (W.  Va.)  83;  Pratt  v.  Chase,  44  N.  Y.  597;  Bald- 
win v.  Hale,  1  Wall.  223;  Story  on  Hills,  §§  1G5-9;  2  Parsons  N.  &  B.  325;  but 
see  Braynard  v.  Marshall,  8  Pick.  194,  where  it  was  held  otherwise. 

'  Van  Raugb,  v.  Van  Arsdaln,  3  Caines,  154. 

■■•  Saul  V.  Creditors,  17  Mar.  (La.)  569.  '  See  jmt,  §  879. 


730  THE   CONFLICT  OF  LAWS. 

usage  before  the  sojourner  left  the  place,  and  therefore  pay- 
able there,  and  controlled  by  its  laws/ 

But  suppose  there  was  a  business  transaction  between 
the  Virginian  and  Kentuckian,  and  the  former  were  to  accept 
the  bill  of  the  latter,  payable  in  future,  but  not  expressly  at 
any  particular  place,  would  it  be  deemed  a  Virginia  or  a  Cali- 
fornia acceptance  ?  The  criterion  to  apply  would  be,  whether 
or  not  the  acceptance  was  to  be  paid  in  California  or  in  Vir- 
ginia." If  the  Virginian  were  in  transitu — that  is,  merely 
there  for  a  particular  negotiation,  or  for  convenience,  or 
merely  casually  passing  through  the  State,  without  any  local 
business  established  there,  the  single  transaction  would  be 
govei'ned  by  the  law  of  his  domicile,  where  it  would  be  pre- 
sumed he  would  be,  and  where  it  is  presumable  he  would 
discharge  his  obligation  at  maturity;  but  otherwise  the  law 
of  California  would  govern. 

§  877.  In  a  case  in  Georgia,  it  appeared  that  the  plaintiffs 
were  residents  of  New  York,  and  that  the  makers  and  iu- 
dorsers  of  the  note  resided  in  Georgia,  and  that  the  indorse- 
ments were  made  and  delivered  in  Tennessee  to  the  agents  of 
the  plaintiffs.  It  was  contended  that  it  was  accordingly  a 
Tennessee  contract ;  but  the  court  held  that,  as  it  was  known 
and  understood  that  the  indorsers  resided  in  Georgia,  and 
were  in  Tennessee  only  for  the  purpose  of  effecting  negotia- 
tions, and  as  a  matter  of  convenience,  and  the  plaintiff's  agent 
only  happened  to  be  there  at  the  time,  the  parties  must  be 
deemed  to  have  contemplated  Georgia  as  the  place  of  per- 
formance, and  to  be  governed  by  its  laws.^ 

§  878.  If  the  transaction,  however,  were  between  a  Vir- 
ginian and  a  Californian,  resident  of  course  in  California, 
there  would  be  strong  reason  to  hold  it  a  California  contract, 
upon  the  principle  stated  by  Grotius,  and  quoted  approvingly 
by  Story,  that  "  if  a  foreigner  makes  a  bargain  with  a  native, 
he  shall  be  obliged  by  the  laws  of  his  (the  native's)  State; 

'  Wharton  Confl.  of  Laws,  5;§  414,  415,  416,  also  §'  436,  rule  D. 

'  Wharton  Confl.  of  Laws,  §  402;  2  Parsons  N.  &  B.  351. 

'  Vanzant  v.  Arnold,  31  Ga.  210;  see  Bullard  v.  Thompson,  35  Tex.  318. 


LEX   DOMICILII.  731 

Lecaiise  he  who  enters  into  a  contract  in  any  ])lacc  is  a  sub- 
ject for  the  time  l)eing,  and  must  be  obedient  to  the  laws  of 
that  place ;"^  which  would,  in  such  a  case,  seem  justly  appli- 
cable. 

But  it  has  been  held  in  Massachusetts,  that  where  the 
member  of  a  Boston  firm,  at  the  time  in  Manchester,  En- 
gland, there  accepted  a  bill  drawn  on  his  firm,  by  a  drawer 
in  Manchester,  it  was  to  be  deemed  a  bill  accepted  in  Boston, 
because  the  domicile  of  the  firm  was  there,  and  that  damao-es 
were  recoverable  at  ten  per  cent.,  as  they  would  be  upon  a 
like  bill  accepted  in  Boston.^  But  this  case,  although  quoted, 
without  apparent  disapproval,  by  several  high  authorities,^  is 
not  in  consonance  wdth  principles  generally  recognized.  It 
has  been  sharply  criticised  by  Story  ;^  and  in  New  York, 
upon  the  like  state  of  facts,  an  opposite  decision  was  ren- 
dered.^ This  latter  decision  the  same  learned  author  regarded 
as  in  entire  harmony  with  the  general  principles  on  the  sub- 
ject, and  prophesied  that  it  would  obtain  general  credit  in 
the  commercial  world." 

In  Scotland,  it  seems  that  an  acceptance  is  deemed  paya- 
ble at  the  place  of  the  acceptors  domicile  at  the  time  when  it 
becomes  due."^ 


'  story  Oonfl.  of  Laws,  §  274. 

^  Grimshaw  v.  Bender,  6  Jfass.  lo7,  Parsons,  C.  J.,  saying:  "It  is  manifest 
that  the  remedy  contemplated  by  the  parties,  in  the  event  of  the  bill  being  dis- 
honored, must  be  sought  in  tliis  State,  where  the  acceptors  lived.  The  instru- 
ment must  be  considered  as  a  foreign  bill,  having  the  same  effect  as  if  the  payee 
had  sent  it  to  Boston,  and  it  had  been  accepted  here  payable  in  London." 

'  Wharton  Confl.  of  Laws,  §  451 ;  2  Parsons  N.  &  B.,  351 ;  but  see  Ibid.  p.  339, 
note  j. 

*  Story  Confl.  of  Laws,  §  310,  where  it  is  said:  ''There  was  notliing  on  the 
face  of  the  bill  that  alluded  to  an  acceptance  in  Boston,  and  nothing  in  the  cir- 
cumstances that  pointed  in  that  direction.  It  was  certainly  competent  for  the 
firm  to  contract  in  England,  and  to  accept  in  England;  and  beyond  all  question, 
if  the  bill  had  been  drawn  solely  on  tiie  person  who  accepted  it,  the  acceptance 
must  have  been  deemed  to  be  made  in  England,  notwithstanding  his  domicile  in 
Boston." 

*  Foden  v.  Sharp,  4  Johps.  183.  "  Story  Confl.  of  Laws,  ^  SCO. 

'  Don  V.  Lippman.  5  Clark  &  F.  12,  where  a  bill  payable  generally  was  ac- 
cepted in  Paris  by  a  Scotchman  domiciled  in  Scotland. 


732  THE  CONFLICT   OF   LAWS. 

SECTION  ly. 

LEX    LOCI    SOLUTIONIS. 

§  879.  If,  by  the  law  of  the  State  or  country  where  the 
contract  is  made,  it  is  formal  and  legal,  it  is  valid  everywhere, 
as  we  have  already  seen.  But  the  law  of  the  place  where  it 
is  made  yields,  in  certain  respects,  to  that  5f  the  place  of 
performance ;  for  it  is  in  view  of  and  in  reference  to  the 
laws  of  the  place  of  performance,  that  it  is  to  be  presumed 
the  tei  ms  of  the  contract  were  selected,  and  its  stipulations 
entered  into.^  "The  general  principle  as  to  contracts  made 
in  one  place  to  be  performed  in  another,"  says  Chief  Justice 
Taney,  "  is  well  settled.  They  are  to  be  governed  by  the 
law  of  the  place  of  performance."  ^  Such,  also,  is  the  rule  of 
the  civil  law :  "  Contraxisse  unmsquisqite  in  eo  loco  intelU- 
gitui\  in  quo  ut  solveret  se  ohligavitP  Thus,  in  Massachusetts, 
a  note  payable  to  A.  or  order  at  any  or  either  bank  in  a  city, 
is  negotiable ;  but  if  such  a  note  were  made  in  Massachusetts, 
and  were  payable  in  Virginia,  it  would  not  be  negotiable, 
because  not  payal:)le  at  a  particular  bank,  as  the  Virginia 
statute  requires.^  Where  a  part  of  the  contract  is  to  be  per- 
formed in  one  country,  and  a  part  in  another,  each  part  is  to 
be  governed  V)y  the  law  of  the  place  where  it  is  performable.* 
The  question  whether  or  not  a  note  is  negotiable  is  deter- 
mined by  the  law  of  the  State  where  it  was  made,  and  pay- 
able, not  by  that  of  the  State  where  suit  is  brought.^ 

-  Andrews  v.  Pond,  13  Pet.  65;  Belle  v.  Bruen,  1  How.  182;  Strieker  v.  Tink- 
ham,  35  Ga.  176;  Prentiss  v.  Savage.  13  Mass.  23;  Goddin  v,  Sliiplcy,  7  B.  Mon. 
575;  Smith  v.  Mead,  3  Conn.  253;  Fanning  v.  Constqua,  17  Johns.  511;  Hyde 
V.  Goodnow.  3  Comst.  266 ;  Chapman  v.  Robertson,  6  Paige,  627 ;  Thompson  v. 
Ketchum,  4  Johns.  285;  Eobinson  v,  Bhind,  2  Burr.  1077;  Blodgett  v.  Durgin, 
32  Vt.  361;  Thorp,  v.  Craig,  10  Iowa,  461;  Hunt  v.  Standart,  15  Ind.  33;  Frcese 
V.  Brownell,  35  N.  J.  L  R.  285;  Bylcs  (Sharswood's  ed.)  [*384],  563. 

^  Andrews  v.  Pond,  supra. 

'  Freeman's  Bank  v.  Ruckman,  16  Grat.  126;  see,  also,  Thompson  v.  Ketchum, 
4  Johns.  285,  where  a  note  made  in  Jamaica,  payable  in  New  York,  was  held  to 
be  governed  by  New  York  law. 

*  Pomeroy  v.  Ainsworth,  22  Barb.  118;  Young  v.  Harris,  14  B.  Mon.  556. 

'  Stixv.  Mathews,  63  Mo.  371. 


LEX   LOCI    SOLUTIONIS.  733 

§  880.  Whenever  it  is  alleged  tliat  a  bill  is  payable  by 
the  acceptor,  or  a  note  by  the  maker,  at  a  place  different  from 
that  at  which  such  acceptance  or  making  took  place,  it  is 
necessary  to  show  it,  either  by  the  express  language  of  the 
instrument  itself,  or  by  intendment  and  construction  of  law 
arising  from  the  attendant  circumstances.  And  if  the  note 
be  dated  at  a  particular  place  and  payable  generally — that 
is,  without  designation  of  a  particular  place — the  law  attaches 
to  it  the  presum])tion  that  it  is  to  be  paid  where  made.^  So 
it  is  to  be  presumed  that  an  acceptance  of  a  bill,  naming  no 
place  of  payment,  is  to  be  paid  where  made ;  and  the  address 
of  the  drawee  generally  indicates  where  such  place  of  accept- 
ance is.^ 

Such  are  the  general  principles  sustained  by  text  writers, 
and  adjudicated  cases. 

§  881.  It  has  been  held  in  Massachusetts,  that  if  a  bill  or 
note  be  payable  generally,  and  be  negotiated  by  one  holder 
to  another  in  a  foreign  country,  it  becomes  a  promise  to  pay 
such  holder,  and  is  consequently  a  contract  of  the  place  of 
such  negotiation  to  the  holder  and  is  governed  by  its  laws.^ 
But  although  a  debt  payable  generally  is  payable  anywhere, 
and,  if  negotiable,  is  payable  to  anybody  to  whom  it  may  be 
transferred,  nevertheless,  a  contract  to  pay  generally  is  gov- 
erned by  the  law  of  the  place  where  it  is  made,  for  the  debt 
is  payable  there  as  well  as  in  every  other  place.^  Being  pay- 
able everywhere  cannot  render  it  subject  to  the  laws  of  every 
place.  The  parties  must  have  had  in  view  the  law  of  some 
place,  and  that  is  presumed  to  be  the  place  where  their  con- 
tract is  made.  The  holder  does  not  make  a  new  contract 
with  the  maker  or  acceptor,  but  becomes  beneficiary  of  the 
contract  as  originally  made,  witk  certain  additional  privi- 
leges which  arise,  not  from  his  location,  but  from  his  character 

•  Wilson  V.  Lazier,  11  Grat.  477;  Blodgett  v.  Durgin,  32  Vt.  361 ;  Thompson 
V.  Ketchum,  8  Johns.  189;  4  Johns.  285;  Short  v.  Trabue,  4  Mete.  (Ky.)  299; 
Backhouse  v.  Selden,  29  Grat.  586. 

'  Todd  V.  Bank  of  Kentucky,  3  Bush  (Ky.)  026. 

'  Braynard  v.  Marshall,  b  Pick.  194.  *  Story  on  Bills,  §  158. 


734:  THE  CONFLICT   OF   LAWS. 

as  holder.  Where  a  note  is  payable  generally,  no  evidence 
would  be  admissible  to  show  that  in  fact  it  was  agreed  to  be 
paid  in  some  special  place.^ 


SECTION  Y. 

LEX    FORI. 

§  882.  It  is  a  settled  principle  of  law,  that  the  remedies 
for  breach  of  any  contract  must  be  pursued  according  to  the 
law  of  the  place  where  suit  is  brought.  Those  remedies  are 
devised  by  the  State  in  consonance  with  its  own  views  of 
justice,  public  policy  and  convenience;  and  comity  does  not 
require  that  it  should  depart  from  the  courses  of  procedure 
which  it  applies  to  its  own  inhabitants,  and  extend  greater 
or  different  privileges  to  strangers.^  The  foreigner  who  sues 
must  take  the  law  as  he  finds  it.^ 

This  doctrine  extends  to  the  determination  of  (1)  the 
parties  who  may  sue  and  be  sued  ;  (2)  the  time  within  which 
suit  may  be  brought ;  (3)  the  form  of  action ;  and  (4)  the 
nature,  effect  and  extent  of  the  remedy  applied. 

§  883.  Who  7nay  sue. — Who  may  sue  is  generally  a  ques- 
tion of  the  remedy ;  and  the  mere  designation  of  the  plaintiif 
is  always  made  by  reference  to  the  lex  fori.  And  as  a  gen- 
eral rule,  if  allowed  by  the  lex  fori^  an  assignee  may  sue  in 
his  own  name,  although  he  cannot  so  sue  at  the  place  of  the 
assignment.'*  And  if  not  allowed  by  the  lex  fori^  he  cannot 
sue  in  his  own  name,  although  he  might  do  so  at  the  place  of 
assicrnment.^  But  we  think  this  doctrine  should  not  be 
pushed  farther  than  to  indicate  the  mere  nominal  parties  to 
the  suit  when  it  is  purely  a  question  of  remedy.     Thus,  if  a 

'  Frazier  v.  Warfield,  9  Sm.  &  M.  220. 

*  Scoville  V.  Canfield,  14  Johns.  338 ;  Bank  U.  S.  v.  Donally,  8  Pet.  372 ;  Hyder 
V.  Goodnow,  3  Com.  2GG;  Van  Reimsdyk  v.  Kane,  1  Gall.  371  ;  Smith  v.  Spinolla, 
2  Johns.  1£8;  Wharton  Confl.  of  Laws,  §  747. 

'  De  la  Vega  v.  Vianna,  1  B.  &  Ad.  284. 

*  Foss  V.  Nutting,  14  Gray,  484;  see  Pearsall  v.  Dwight,  2  Mass.  84;  also,  2 
Parsons,  368,  3(59,  note  g,  and  cases  cited;  Wharton  Confl.  of  Laws,  §  457. 

'  Fisk  V.  Brackett,  32  Vt.  798;  Folcott  v.  Ogden,  1  H.  Bl.  135;  Wharton 
Confl.  of  Laws,  §  735;  2  Parsons  N.  &  B.  368. 


LEX  FORI.  7.J.i 

note  were  non-nc2:otiable  in  Vir<2;inia,  and  could  not  be  there 
indorsed  or  assigned,  yet  if  negotiable  and  actually  indorsed 
in  Kentucky,  so  as  to  completely  vest  title  in  the  indorsee, 
the  holder  would  then  have  an  absolute  right  to  recover  the 
amount,  and  the  lex  loci  contractus  should  govern.^  So  if  by 
the  law  of  the  pLice  of  transfer,  an  executor  or  administrator 
may  indorse  or  assign  a  note,  so  as  to  vest  title  and  right  to 
sue  completely  in  his  transferee,  the  latter  should  be  per- 
mitted to  sue  anywhere.^  This  is  due  to  a  liberal  comity. 
But  the  authorities  predominate  in  number  the  other  way.' 

§  884.  Time  ivithin  ivhicli  suit  may  he  brought. — The 
time  within  which  suit  may  be  brought  is  purely  a  question 
of  the  forum.  Thus  suit  may  be  brought  immediately  in 
one  State  by  attachment,  although  at  the  time  no  action 
would  lie  in  the  State  where  the  cause  of  action  arose.^  And 
in  like  manner  the  statute  of  limitations  of  the  forum  pre- 
vails ;  ^  and  no  suit  can  be  maintained  if  it  be  barred  there, 
although  by  the  law  of  the  contract  there  was  no  limitation,® 
or  a  less  restricted  limitation.^  And  suit  may  be  maintained 
where  the  limitation  of  the  lex  fori  has  not  attached,  al- 
though by  the  lex  loci  contractus  action  has  been  formally 
barred.^  This  doctrine  rests  upon  the  ground  that  the  time 
of  suit  is  purely  a  matter  for  local  municipal  regulation.  It 
may  be  different  in  cases  w^here  the  right,  in  contradistinction 

'  Story  on  Bills,  §  173 ;  Confl.  of  Laws,  §  354 ;  Trimbcy  v.  Vigraer,  1  Bing.  N. 
C.  159;  O'Callaghan  v.  Thomond,  3  Taunt.  82. 

'  Owen  V.  Moody,  29  Miss.  79 ;  Harper  v.  Butler,  3  Pet.  239 ;  Birrett  v.  Bar- 
rett, 8  Greeul.  353.;  2  Parsons  N.  &.  B.  373,  note  v;  Story  Coatl.  of  Laws,  §  350; 
Wharton  Confl.  of  Laws,  §  457. 

^  Goodwin  v.  Jones,  3  Mass.  514;  Thompson  v.  Wilson,  2  N.  II.  291 ;  Stearns 
V.  Buniham,  5  Greenl.  2G1. 

•  Clark  V.  Conner,  2  Strobh.  34G;  1  Robinson's  Practice  (new  ed.),  317. 
'  Mineral  Point  R.  R.  Co.  v.  Barron,  83  111.  307. 

•  Nicolls  V.  Rodgers,  2  Paine  C.  C.  437. 

'  Jones  V.  Hook,  2  Raud.  303;  British  Linen  Co.  v.  Drunimond,  10  B.  &  C. 
903;  Byles  on  Bills  [*389j,  572. 

•  Power  V.  Hathaway,  43  Barb.  214;  Bulger  v.  Roche,  11  Pick.  36;  Putnam 
V.  Dike,  13  Gray,  535;  Estes  v.  Kyle,  Meigs,  34;  Iluber  v.  Steirer.  2  Cr.  &  M. 
629;  contra,  Harrison  v.  Stacy,  G  Rob.  (La)  15;  Goodman  v.  Munks,  8  Port. 
(Ala.)  89. 


73G  TIIS   CONFLICT   OF   LAWS. 

to  the  remedy,  is  lield  by  foreign  law  to  be  extinguished. 
Sucli  extinction  might  operate  by  comity  everywhere.* 

§  885.  The  necessity  of  selecting  the  form  of  action  ac- 
cording to  the  law  of  the  forum  has  been  well  ilhistrated  in 
the  United  States  in  a  numl)er  of  cases  where  the  instrument 
sued  upon  was  deemed  a  specialty  where  made,  and  a  simple 
contract  where  the  suit  was  brought ;  or  vice  versa.  Thus 
in  some  of  the  States  a  scroll  attached  to  the  promisor's 
name  is  the  same  as  a  common  law  seal ;  and  covenant  or 
del;t  would  be  the  proper  remedy  in  the  State  where  the 
promise  was  made,  assumpsit  not  lying  on  a  sealed  instru- 
ment. And,  moreover,  by  the  local  law  the  defendant  could 
not  plead  want  of  consideration,  because  of  the  instrument 
being  sealed.  But  if  suit  were  brought  in  a  State  where  a 
scroll  is  not  recognized  as  a  seal,  it  has  been  repeatedly  held, 
that  assumpsit  would  be  the  proper  remedy,  and  that  want 
of  consideration  might  be  pleaded.^  And  the  converse  has 
been  also  held,  that  although  where  made  the  instrument 
might  be  a  simple  promissory  note,  yet  if  where  suit  was 
brought  it  was  regarded  as  a  specialty,  the  appropriate  action 
of  debt  or  covenant  should  be  brought,  and  the  sanctity  at- 
tached to  seals  would  be  imputed  to  it.^ 

§  886.  At  one  time  it  was  held  that  the  extent  of  the 
remedy  was  to  be  determined  by  the  law  of  the  place  of  con- 
tract, and  where  suit  was  brought  in  England  upon  a  French 
contract,  upon  which  by  the  laws  of  France  no  arrest  could 
be  made,  it  was  held  that  the  defendant  could  not  in  En- 
gland be  held  to  bail ; "  but  the  contrary  doctrine  is  now  well 
settled.'"^ 


'  Williams  v.  Jones,  13  East,  439. 

"  Bank  United  States  v.  Donally,  8  Pet.  3G1 ;  Le  Roy  v.  Beard,  8  How.  451 ; 
Williams  v.  Haynes,  27  Iowa,  251  •,  Douglas  v.  Oldham,  6  N.  H.  150;  Andrews 
V.  Herriott.  4  Cow.  508;  Warren  v.  Lynch,  5  Johns.  239;  Steele  v.  Curie,  4  Dana, 
381 ;  1  Robinson's  Practice  (new  cd.)  319. 

=  Tlirasher  v.  Everhart,  3  Gill  &  J.  234. 

'  Melun  V.  Fitzjamcs,  1  B.  &  P.  138;  Talleyrand  v.  Boulanger,  3  Ves.  Jr.  447. 

'  De  la  Vega  v.  Vianna,  1  B.  &  Ad.  284;  Smith  v.  Spinolla,  2  Johns.  198; 
Sicard  \.  Whale,  11  Johns.  194;  Peck  v.  llozier,  14  Johns.  346;  Hindley  v. 
Marean,  3  Mason,  90;  White  v.  Canfield,  7  Johns.  117. 


LEX  FORI.  737 

§  887.  Qmstions  of  evidence  appertain  to  the  remedy, 
and  consequently  are  controlled  by  the  law  of  the  forum. 
"  Whether  a  witness  is  competent  or  not ;  whether  a  certain 
matter  requires  to  be  proved  by  writing  or  not ;  whether 
certain  evidence  proves  a  certain  fact  or  not — this  is  to  be  de- 
termined by  the  law  of  the  country  where  the  question  arises, 
where  the  remedy  is  sought  to  be  enforced,  and  where  the 
court  sits  to  enforce  it,"  is  the  language  of  Lord  Brougham.' 
Accordingly,  evidence  was  admitted  in  Connecticut  to  show 
that  a  blank  indorsement  was  made  for  collection  only, 
although  by  the  laws  of  New  York,  where  the  indorsement 
was  made,  sucli  evidence  was  inadmissible.^  Upon  an  analo- 
gous principle,  it  has  been  held  in  England  tliat  as  the  stat- 
ute of  frauds  does  not  make  agi'eements  void,  but  only  pre- 
vents their  being  enforced  by  action,  a  parol  agreement  not 
to  be  performed  within  a  year,  though  made  in  France-,  and 
valid  there,  could  not  be  enforced  in  England.^ 

The  certificate  of  a  foi'eign  notary  of  demand  and  notice 
as  to  a  note,  though  evidence  by  the  law  of  the  place  of  pay- 
ment, would  be  excluded  unless  admissible  by  the  law  of  the 
place  where  suit  is  brought.^ 

§  888.  The  lex  fori  undoubtedly  applies  to  the  admissi- 
bility and  credibility  of  witnesses;^  but  as  to  the  number 
of  attesting  witnesses  necessary  to  the  validity  of  a  writino-, 
the  law  of  the  place  where  the  writing  was  made  would 
control  on  the  ground  locus  regit  actum.^  And  where  the 
ol)jection  is  not  to  the  competency  of  evidence,  but  to  its 
effect,  the  law  of  the  place  of  contract  should  prevail.  Thus 
a  parol  acceptance  could  only  be  proved  by  parol  evidence, 
and  therefore  if  valid  where  made,  it  would  be  unreasonable 
to  reject  it  because  by  the  lex  fori  an  acceptance  must  be  in 
writinir.^ 


'  Bain  v.  Whitehaven,  &c.  R.  R.  Co.  3  H.  L.  Cas.  1 ;  Wharton  Conflict  of  Laws,. 
§  768;  Story  Confl.  Laws,  §  03-3;  Pliillimoro,  IV,  G62. 

'  Downer  v.  Chesebrough,  36  Conn.  39. 

»  Leroux  v.  Brown,  12  C.  B.  801;  14  E.  L.  «fc  Ex.  247;  Byles  on  Bills  [*390], 
573.  <  Klrtlancl  v.  Wanzer,  2  Duer,  277. 

'  Wharton,  §  709.  '  Ibid.  '  Mason  v.  Dousay,  35  111.  424. 

Vol.  L— 47 


738  TOE   CONFLICT  OF   LAWS. 

S  889.  So  the  effect  of  the  transaction  in  fixinor  the  rela- 
tions  of  the  parties  is  determined  by  the  Jex  loci  contractus. 
Thus,  if  by  the  lex  loci  contractus  the  purchaser  acquires  the 
note  as  a  hona  fide  holder,  not  subject  to  the  defense  of  a 
prior  payment,  such  payment  cannot  be  pleaded,  although 
•the  lex  fori  would  permit  it.^  And  whether  or  not  the  pro- 
prietor of  the  bill  or  note  is  a  hona  fide  holder,  is  to  be  deter- 
mined by  the  lex  loci  contractus — that  is,  the  place  of  pay- 
ment.^ 

§  890.  In  respect  to  set-of  it  is  laid  down  by  text  writers, 
•and  by  the  courts  of  common  law,  that  a  set-off  to  any  action 
allowed  by  the  local  law  is  to  be  treated  as  a  part  of  the 
remedy;  and  that,  therefore,  it  is  admissible  in  claims  be- 
tween persons  belonging  to  different  States  or  countries,  al- 
though it  may  not  be  admissible  by  the  law  of  the  country 
where  the  debt  which  is  sued  was  contracted.^  The  same 
principle  applies  to  the  mode  of  attacking  consideration. 
When  the  lex  fori  allows  a  plea  of  want  of  consideration  in 
■a  suit  on  an  obligation,  which  by  the  lex  loci  contractus  was 
sealed,  and  to  which  by  such  latter  law  no  such  plea  could 
be  offered,  the  lex  fori  controls.'*  So  as  to  other  legal  and 
■equitable  defenses,  where  the  very  contract  itself  does  not 
exclude  them,  they  are  to  be  controlled  by  the  lexfori.^  Stat- 
utes providing  certain  exemptions  from  levy  and  sale  upon 
execution  affect  the  remedy,  and  those  of  the  forum  prevail." 

§  891.  The  courts  can  tahe  no  judicial  notice  of  the  laws  of 
another  country. — When  relied  upon,  they  must  be  proved  as 
facts,  and  otherwise  it  will  be  presumed  that  they  are  the 
same  as  the  laws  of  the  forum  in  which  suit  is  brought."  Thus, 


'  Harrison  v.  Edwards,  12  Vt.  651.  '  Allen  v.  Bratton,  47  Miss.  139. 

'  Gibbs  V.  Howard,  2  N.  H.  286;  Bank  of  Gallipolis  v.  Trimble,  6  B.  Mon. 
600;  Storj^  Cwifl.  of  Laws,  §  575;  Wharton  Confl.  of  Laws,  §  788;  Mineral  Point 
R  R.  Co.  V.  Barron,  83  111.  306. 

*  Whnrton,  §  788.  '  Bliss  v.  Houghton,  13  N.  H.  126. 

"  Mineral  Point  R.  R.  Co.  v.  Barron,  83  HI.  367. 

'  Hunt  V.  Johnson,  44  N.  Y.  27;  Dunn  v.  Adams,  1  Ala  529;  Fouke  v.  Flem- 
ing, 13  Md.  392;  Whidden  v.  Seelye,  40  Me.  247;  Legg  v.  Lcgg,  8  Mass.  100; 
Bean  v.  Briggs,  4  Iowa,  467  ;  Harper  v.  Hampton,  1  Harr.  &  J.  687  ;  Bernard  v. 


LEX   FORI.  730 

the  law  as  to  the  rate  of  damages  will  be  presumed  to  l)e  the 
same  where  the  bill  is  drawn  in  one  country,  and  is  sued  on 
in  another ;  ^  and  where  l)y  the  law  of  the  forum  a  contract 
made  on  Sunday  is  void,  it  will  be  presumed  that  a  foreign 
contract  made  on  Sunday  is  void  also.'^  So  it  will  be  pre- 
sumed, where  the  law  of  the  forum  authorizes  an  indorsee  to 
sue  before  exhausting  recourse  against  the  maker,  that  the 
law  of  the  place  of  the  contract  is  likewise."^  But  there  is 
this  exception  to  the  rule — that  where  countries  have  once 
belonged  to  the  same  government,  the  courts  after  the  sepa- 
ration will  adopt  a  presumption  suitable  to  the  case,  and  most 
frequently  presume  the  continued  existence  of  jire-existing 
laws.^ 

§  892.  There  are  some  cases  which  are  consistent  with  the 
doctrines  above  stated,  and  which  seem  to  qualify  the  rule 
given  by  the  limitation  that  a  contract  entered  into  in  another 
State  will  not  be  presumed  illegal  there,  although  illegal  by 
the  law  of  the  forum.  Thus,  in  New  York,  where  a  minor 
under  twenty-one  years  of  age  could  not  enter  into  a  contract, 
the  maker  of  a  note  executed  in  Jamaica  was  sued,  and  proved 
that  he  was  under  twenty-one  years  of  age.     But  the  law  of 

Barrj',  1  Greene  (Iowa),  388;  Martin  v.  Martin,  1  Smed.  &  M.  176;  Kuenzi  v. 
Elvers,  14  La.  Ann.  391 ;  Hill  v.  Wilker,  41  Ga.  449  ;  Byles  on  Bills  (Sharswood'a 
ed.),  573,  574;  1  Rolnnson's  Practice  (new  ed.)  230. 

'  Kuenzi  v.  Elvers,  14  La.  Ann.  391,  Merrick,  C.  J.,  saying:  "On  the  trial  of 
these  cases  no  evidence  was  offered  of  the  laws  of  Brazil  where  the  bills  were 
drawn.  The  defendants  have  paiil  the  amounts  specified  on  the  face  of  the  l^ills, 
and  the  only  question  submitted  to  this  court  for  its  determination  is,  whether  or 
not  the  plainlifls  can  recover  daniajjes  at  the  rate  of  ten  per  cent.,  as  allowed  by 
our  statute  on  bills  of  exchange  drawn  in  Louisinna  on  foreign  countries,  and 
there  protested  for  non-payment  or  non-acceptance.'' 

"The  bills  drawn  in  Brazil  (although  against  a  shipment  of  coffee  to  this  city), 
were  payable  in  London,  and  are  governed  by  the  Invs  of  Brazil,  the  country 
where  tliey  were  drawn.  Story  on  Bills  397.  But  the  record  docs  not  hirnish 
us  any  proof  of  those  laws.  In  the  absence  of  proof,  the  laws  of  that  countrv,  in 
reference  to  bills  drawn  there  upon  other  foreign  countries,  must  be  presumed  to 
be  the  same  as  our  own,  and  the  damages  claimed  must  be  allowed." 

"  Hill  V.  Wilker,  41  Ga.  449. 

'  Bean  v.  Briggs,  4  Iowa,  467;  Bernard  v.  Barry,  1  Greene  (Iowa"),  389. 

*  Dickinson  v.  Hoomcs,  8  Grat.  408  ;  Arayo  v.  Currill.  1  La.  •■)41  ;  1  Roiiinson's 
Practice  (new  ed.)  ~30. 


740  THE   CONFLICT  OF  LAWS. 

Jamaica  as  to  iiifiincy  was  not  proved.  Kent,  C.  J.,  said : 
"As  the  defendant  did  not  prove  what  the  law  of  Jamaica 
was  on  the  suhject,  he  did  not  make  out  his  defense,  and  the 
plaintiff  is  entitled  to  judgment."^  The  like  view  obtained 
in  a  similar  case  in  England."-^  So  in  Mississippi,  where  a 
note  was  executed  in  Vicksburg,  payable  in  New  Orleans, 
Louisiana,  bearing  interest  at  ten  per  cent.  Six  per  cent, 
was  the  lawful  rate  of  interest  in  Mississippi,  wdiere  suit  was 
brought.  The  action  was  sustained,  there  being  no  proof  as 
to  the  laws  of  Louisiana.^ 


SECTION  yi. 

LEX    LOCI    KEI     SIT^. 

§  893.  Keal  estate  is  controlled  in  respect  to  the  validity 
and  form  of  conveyance  by  the  lex  loci  rei  sitce — that  is,  by 
the  law  of  the  place  where  it  is  situated.  And  while  the 
lex  loci  contractus  determines  the  nature  and  effect  of  a  ne- 
gotiable instrument,  when  it  is  secured  by  a  mortgage  on 
real  estate,  it  becomes  important  in  some  cases  to  ascertain 
the  law  of  the  place  of  the  mortgage,  as  there  may  arise  a 
conflict  between  it  and  the  law  of  the  place  w^here  the  nego- 
tiable paper  was  executed,  or  is  made  payable. 

§  894.  The  question  has  been  much  litigated  in  the 
United  States,  as  to  wdiat  law  applies  when  a  mortgage  is 
given  as  security  for  a  loan,  and  the  mortgage  is  in  one  State, 
and  the  place  of  payment  of  the  loan  in  another.  "  The  true 
test  is,  was  the  mortgage  merely  a  collateral  security,  the 
money  being  employed  in  another  State,  and  under  other  laws, 

•  Thompson  v.  Kctclium,  8  Johns.  192  (1811). 

'  Male  V.  Roberts,  3  Esp.  N.  P.  163  (1800).  Suit  to  recover  upon  contract 
made  in  Scotland.  Plea,  infancy;  Lord  Eldin  said  :  "I  hold  myself  not  war- 
ranted in  saying  that  such  a  contract  is  void  by  the  law  of  Scotland,  because  it 
is  void  by  the  law  of  England.  The  law  of  the  country  where  the  ccntract  arose 
should  govern  the  contract;  and  what  that  law  is,  should  be  given  in  evidence 
to  me  as  a  fact." 

'  Martin  v.  Martin,  1  Sm.  &  M.  177,  178  (1843),  Clayton,  J.:  "The  presump- 
tion is,  that  the  parties  have  not  violated  the  law  by  their  contract.'' 


BY   WHAT   LAW   LIABILITY   OF   TARTY   DETERMINED.        741 

or  was  the  money  employed  on  the  land  for  which  the  mort- 
gage was  given  ?  If  the  former  be  the  case,  then  the  law  of 
the  place  where  the  money  was  actually  used,  and  not  tliat 
of  the  mortgage,  applies.^  If  the  latter,  then  the  law  of  the 
place  where  the  mortgage  is  situate  must  prevail."'  Where 
money  was  borrowed,  and  the  note  made  payable  in  New 
York,  but  dated  in  Nebraska,  where  a  mortgage  to  secure 
it  was  executed  on  land,  the  mortfrasie  was  held  to  be  a  mere 
incident  of  the  loan,  and  the  transaction  being  usurious  by 
New  York  law,  it  was  held  void.' 

SECTION  VII. 

BY  WHAT    LAW  THE    LIABILITY    OF    THE    MAKEK,    ACCEPTOR,  DRAWER    AND 
INDORSEE   IS   DETERMINED. 

§  895.  In  the  first  ijlace^  as  to  the  moiker  of  a  note. — The 
maker's  liabilities  are  controlled  by  the  law  of  the  place 
where  the  note  is  executed,  unless  it  be  payable  elsewhere, 
in  which  case  he  will  be  deemed  to  have  had  reference  to  the 
law  of  such  place,  and  it  will  control  his  obligation.  If  ])y 
the  law  of  the  place  of  making,  equitable  defenses  are  ad- 
missible in  the  maker's  favor,  no  subsequent  indorsement  in 
another  place  where  the  rule  is  different  can  preclude  him 
from  making  them.* 

Accordingly,  it  has  been  held,  that  the  maker  of  a  note 

'DeWolf  V.  Johnson,  10  Wheat.  383;  Newman  v.  Kerson,  10  Wis.  333; 
Kennedy  v.  Knight,  31  Wis.  340;  Davis  v.  Clemson,  6  McLean,  633;  Atwatcr  y, 
AValker,  1  C.  E.  Green,  42. 

'  Wharton  Confl.  of  Laws,  §  510;  Arnold  v.  Potter,  32  Iowa,  194  ;  Chapman  v. 
Robinson,  6  Paige,  627;  Goddard  v.  Sawyer,  9  Allen,  78;  Pine  v.  Smith,  11  Gray, 
38;  Fitch  v.  Remer,  8  Am.  Law  Reg.  6.j4. 

In  an  old  case  a  bond  was  executed  in  Ireland  for  a  debt  contracted  in  En- 
gland. It  bore  Irish  interest,  which  was  held  valid  because  it  constituted  a  se- 
curity on  lands  situated  in  Ireland.  Connor  v.  Bellamont,  3  Atk.  381;  Story 
Confl.  of  Laws,  §  305. 

'  Sands  v.  Smith,  1  Neb.  108. 

«  Wilson  V.  Lazier,  11  Gratt.  483;  Chartres  v.  Cairnes,  16  .Mart.  (La.)  1 ;  Yeat- 
man  v.  Callen,  5  Blackf.  341 ;  Stacy  v.  Baker,  1  Scammon,  417;  Brabston  v. 
Gibson  8  How.  303. 


742  THE   CONFLICT   OF   LAWS. 

made  and  indorsed  in  Mississippi,  wliei-e  the  maker  was  en- 
titled to  the  benefit  of  all  defenses  against  an  Indorsee  which 
he  could  have  made  against  the  payee  before  notic3  of  the 
Indorsement,  conld  avail  himself  of  such  defense  in  a  suit 
brouo-ht  In  another  State  where  a  different  rule  prevailed.^ 
And  the  converse  has  also  been  held,  that  where  a  note  was 
made  between  parties  resident  In  New  York,  and  there 
negotiated  while  current,  but  paid  by  the  maker  before  ma- 
turity, was  afterward  sued  upon  In  Vermont  by  a  bona  fide 
holder  for  value  and  without  notice,  the  maker  could  not 
avail  himself  of  the  defense  of  payment  which  was  not  good 
according  to  the  law  of  New  York,  although  by  the  law  of 
Vermont  in  force  at  the  time  of  such  payment  It  would  have 
been  a  good  defense  to  the  action.^ 

§  896.  In  the  second  place^  as  to  the  acce2?fo)'  of  a  hill. — 
The  acceptor  of  a  bill  occupies  a  position  analogous  to  that 
of  the  maker  of  a  note,  and  his  acceptance  is  a  contract  to 
pay  the  amount  at  the  place  where  the  acceptance  is  made,  if 
the  bill  be  in  terms  there  payable,  or  inferentially  so  from 
being  silent  as  to  the  place  of  payment.^  The  address  of  the 
bill  to  the  drawee  at  a  particular  place  generally  indicates 
the  place  of  his  acceptance,  and  of  payment;  but  if  the  bill 
be  expressly  payable  elsewhere,  then  the  place  of  payment 
determines  the  acceptor's  liabilities/  Thus  if  a  bill  be  drawn 
in  Massachusetts,  by  a  drawer  there  resident,  upon  a  drawee 
in  New  York,  and  no  place  of  payment  be  mentioned,  it 
would  be  presumably  payable  in  New  York  and  be  governed 
by  the  laws  of  that  State.'^     And,  if  a  merchant  promise  to 

'  Brabston  v.  Gibson,  9  How.  2G^.  "  Harrison  v.  Edwards,  12  Vt.  648. 

'  Musson  V.  Lake,  4  How.  263;  Ducrsou's  Adm'r  v.  Alsop,  27  Grat.  24L 

*  Freese  v.  Brownell,  35  N.  J.  L.  R.  (6  Vroom),  28(i ;  Bright  v.  Judson,  47 
Barb.  29;  Everett  v.  Vendryes,  19  N,  Y.  436;.  Frazier  v.  W^artield.  9  Smedes  &  M. 
220;  Bainbridgc  v.  Wilcocks,  1  Bald.  536:  Don  v.  Lipman,  5  Clarke  &  F.  1 ; 
Cooper  V.  Earl  of  Waldergrave,  2  Bcav.  282;  see  Barney  v.  Newcoml).  9  Cush. 
4G;  Bylcs  on  Bills  (Sharswood's  cd.)  568. 

'  Ibid.;  Worcester  Bank  v.  Wells,  8  Met.  107;  Lewis  v.  Owen,  4  B.  &  Aid- 
654 ;  Lizardi  v.  Cohen,  3  Gill,  430 ;  Todd  v.  Bank  of  Ky.  3  Bush.  (Ky.)  626 : 
Freese  v.  Brownell,  36  K  J.  L.  R.  285 ;  see  post,  §  898. 


BY   WHAT   LAW   LIABILITY   OF   PARTY   DETKRMINED.        743 

accept  a  bill  drawn  on  liini  l>y  a  merchant  of  another  country, 
it  is  to  be  deemed  a  contract  of  the  place  where  the  accept- 
ance is  to  be  made.^ 

§  897.  Sometimes  letters  of  credit  are  written  in  one 
country  by  which  the  letter  writer  becomes  liable  to  accept 
bills  in  another  country;  or  to  accept  them  in  the  same 
country  payable  in  another  country.  In  the  first  instance, 
the  engagement  to  make  the  acceptance  must  be  construed  as 
an  engagement  to  accept  according  to  the  laws  of  the  country 
where  the  acceptance  is  to  be  made.  And  although  the 
acceptance  would  not  be  valid  unless  made  in  accordance 
with  the  laws  of  the  place  where  made,  tbe  promise  to  accept 
contained  in  the  letter  of  credit  (while  it  might  not  operate 
as  an  acceptance)  would  be  held  valid  in  the  judicial  tribu- 
nals of  the  civilized  world,  and  enforced  equally  in  one  coun- 
try as  in  another  as  a  subsisting  contract,  the  breach  of  which 
would  entitle  the  injured  party  to  complete  redress  for  all 
the  damage  sustained  by.  him.^  But  in  Ohio  a  different  view 
has  been  taken,  apparently  under  the  peculiar  circumstances 
of  the  case,  the  Court  saying:  "The letter,  indeed,  is  dated 
New  Orleans  (Louisiana),  and  the  acceptances  were  to  be 
there ;  but  the  contract  was  closed  in  Cincinnati  (Ohio)  ; 
the  bills  were  to  be  drawn  and  endorsed  there;  the  money 
upon  them  to  be  obtained,  and  the  produce  brought  there. 
With  such  a  state  of  facts  we  suppose  that  Ohio  furnishes 
the  law  of  the  contract."  ^ 

§  898.  Li  the  third  place^  as  to  the  drawer  of  a  hill,  andtlie 
fourth  2ylace,  as  to  the  indorser  of  a  bill  or  note. — The  contract 
of  the  drawer  of  a  bill  and  of  the  indorser  of  a  bill  or  note  is 
very  difierent  in  its  nature  from  that  of  the  maker  or  accept- 
or. Thu>=!,  if  a  merchant  in  New  York  draw  a  bill  on 
another  in  Richmond,  Virginia,  requiring  him  to  pay  a  certain 
amount  without  specifying  any  place  of  j^ayment,  the  draw^ee 

'  Boyce  v.  Edwards,  4  Pet.  111. 

'  Russell  V.  Wiggin,  3  Story,  230 ;  Carnegie  v.  Morrison,  2  Mete.  (Mass.)  397 ; 
Bissell  V.  Lewis,  4  Mich.  459;  see  Barney  v.  Newcomb,  9  Cusli.  46. 
'  Lonsdale  v.  Lafayette  Bank.  18  Ohio  (old  scries),  142  (1849). 


744  THE   CONFLICT  OF   LAWS. 

will,  if  lie  accepts,  l)e  bound  to  pay  the  amount  in  Riclmiond 
that  being  implied  by  the  address  of  the  bill  to  him  at  that 
place.  But  it  does  not  follow  that  the  new  drawer  would 
be  himself  bound  to  pay  the  amount  of  the  bill  in  Eichmond 
in  the  event  of  dishonor  for  non-payment  by  the  acceptor. 
His  undertaking  is  not  to  pay  it  in  Eichmond  himself,  but  a 
guaranty  that  it  shall  be  paid  there  by  the  'drawee,  and  a 
further  undertaking  that  if  not  so  paid  by  the  drawee,  he 
will  pay  the  amount  in  New  York,  provided  the  bill  be  only 
presented,  and  he  has  received  due  notice  of  its  dishonor.  In 
other  words,  the  drawer  of  a  bill  does  not  bind  himself  to  pay 
it  specially  where  the  acceptor  is  impliedly  or  expressly 
called  on  to  pay  it ;  but  his  contract  is  to  pay  generally,  and 
is  consequently  construed  to  be  a  contract  to  pay  at  the  place 
where  the  bill  is  drawn.^  Accordingly,  where  a  resident  in 
Demerara  drew  a  bill  in  favor  of  another  resident  there,  pay- 
able  in  London,  upon  C,  a  resident  in  Scotland,  and  C. 
accepted  it  payable  "  at  Payne  and  Smith's,  in  London  ;  "  it 
was  held  that  the  contract  of  the  drawer  was  to  be  governed 
by  the  law  of  Demerara,  and  that  the  Dutch-Eoman  law 
there  in  force  applied  to  this  obligation.  And  T.  Pemberton 
Leigli,  Chancellor,  said  'J  "It  is  argued  that  this  bill  being 
drawn  payable  in  London,  not  only  the  acceptor,  but  the 
drawer  must  be  held  to  have  contracted  with  reference  to 
the  English  law.  This  argument,  however,  appears  to  us  to 
be  founded  on  a  misapprehension  of  the  obligation  which  the 
drawer  and  indorser  of  a  bill  incurs.  The  drawer,  by  his 
contract,  undertakes  that  the  drawee  shall  accept,  and  shall 
afterward  pay  the  bill  according  to  its  tenor  at  the  place  and 
domicile  of  the  drawee.  If  this  contract  of  the  drawer  be 
broken  by  the  drawee,  either  by  non-acceptance  or  non-pay- 

'  Frccse  V.  Brownell,  35  K  J.  L.  BSfl;  Everett  v.  Veiulryes,  19  N.  Y.  436; 
Hunt  V.  Staudart,  15  Iiul.  33;  Raymond  v.  Holmes.  11  Texas,  55;  Kuonzi  v. 
Elvers,  14  La.  Ann.  391 ;  Lenuig  v.  Ralston,  11  Har.  137  (23  Penn.  St.  R.) ;  Prico 
V.  Page.  24  Mo.  67;  Bonedou  v.  Page,  34  Mo.  595  ;  Page  v.  Page,  24  Mo.  596  ; 
Bank  U.  S.  v.  U.  S.  2  How.  711. 

'  Allen  V.  Kemblc,  G  Moore  P.  C.  314  (1848). 


BY  WHAT  LAW  LIABILITY  OF  TARTY  DETERMINED.        745 

ment,  the  drawer  is  liable  for  payment  of  the  l)ill,  not  Vvhere 
the  bill  is  to  be  paid  by  tlie  drawee,  but  where  he,  the 
drawer,  made  his  contract,  with  his  interest,  damages  and 
costs,  as  the  law  of  the  country  where  he  made  the  contract 
may  allow." 

So,  where  a  bill  was  drawn  in  California  where  the  rate 
of  interest  was  twenty-five  })er  cent.,  on  a  drawee  in  Wash- 
ington City,  where  the  rate  was  six  per  cent.,  it  was  held  that 
the  drawee  w^as  bound  for  the  rate  of  interest  at  the  place 
where  the  bill  was  drawn. ^ 

And  so  where,  by  the  laws  of  Mississippi,  a  bill  was 
drawn,  the  drawer  may  set  up  want  or  failure  of  consid- 
eration between  himself  and  the  payee,  although  sued  by  an 
innocent  holder  for  value  and  without  notice,  such  defense 
has  been  held  admissible,  although,  by  the  laws  of  Louisiana, 
where  the  drawee  resided  and  on  which  the  bill  was  drawn, 
such  defense  was  not  available.^ 

§  899.  The  indorser  of  a  bill  or  note  is  regarded,  in  like 
manner,  as  undertaking  to  pay  at  the  place  where  his  indorse- 
ment is  made,  in  the  event  of  dishonor  and  due  notice,  for  the 
reason  that  he  is,  in  effect,  the  drawer  of  a  new  bill  at  the 
place  where,  and  the  time  when,  he  makes  the  indorsement, 

'  Gibbs  V.  Tremont,  20  Eng.  L.  &  Eq.  555  ;  9  Exch.  25.  To  same  effect  see 
Crawford  v.  Branch  Bank,  0  Ala.  N.  S.  15;  Bailey  v.  Heakl,  17  Texas,  102.  Con- 
tra. Indorser  liable  for  interest  according  to  law  of  place  in  which  bill  is  drawn, 
Mullen  V.  Morris,  2  Barr,  87. 

-  Wood  V.  Gibbs'  Adm'r,  35  Miss.  5G0.  In  Musson  v.  Lake,  4  How.  262,  -«here 
a  bill  drawn  and  indorsed  in  Mississippi  was  accepted  in  Louisiana,  where 
the  acceptors  resided,  the  U.  S.  Supiemc  Court  said:  "  So  far  as  their  (the  accept- 
ors') liabilities  arc  concerned,  they  were  governed  by  the  law  of  Louisiana.  But 
the  drawer  and  indorsprs  resided  in  Mississippi;  the  bill  was  drawn  and  indorsed 
there,  and  their  liabilities,  if  any,  occurred  there."  And  due  diligence  to 
recover  of  the  drawer  and  indorsers  was  to  be  controlled,  it  was  he!d  by  the  laws 
of  the  latter  State.  SeeRoquette  v.  Overman.  16  Q.  B.  L.  R.  525(1875),  (quoted 
post,  §  970  a),  and  Ducrson's  Adm'r  v.  Alsop,  27  Grat.  241  (1876).  wherein  it  is 
said  by  Staples,  J.:  "The  decision  (in  Roquette  v.  Overman)  is  based  upon  the 
idea,  chiefly,  that  as  the  liability  of  the  indorser  is  to  be  measured  by  that  of  the 
acceptor  whose  surety  he  is,  it  followed  that  an  indorser  residing  in  England 
might  be  reached  by  a  law  of  France,  through  the  medium  of  the  acceptor 
who  resided  in  France."  And  he  adds  that  the  decision  is  in  direct  conflict  with 
that  in  Musson  v.  Lake  above  quoted. 


74G  TIIB  CONFLICT  OF  LAWS. 

and  is  not  considered  as  merely  adopting  the  date  of  place 
and  time  of  the  bill  or  note  which  he  indorses.  And  he  is 
bound  by  the  law  of  the  place  of  indorsement/  even  though 
the  bill  or  note  be  expressly  payable  elsewhere.^   "  For,"  says 


'  Cook  V.  Litchfield,  5  Seld.  280  (1853)  ;  5  Sandf.  330;  Williams  v.  Wade,  1 
Mete.  (Mas3.)  83;  Dow  v.  Rowell,  12  N.  H.  49;  Dundas  v.  Bowler,  3  McLeau, 
400;  Aymar  V.  Sheldon,  12  Wend.  443;  Slocum  v.  Pomeroy,  6  Crancli,  S.  C. 
221;  National  Bank  of  Michigan  v.  Green,  33  Iowa,  140;  Short  v.  Trabue,  4 
Mete.  (Ky.)  299;  Trabue  v.  Short,  18  La.  Ann.  257;  Trabue  v.  Short,  5  Cold. 
293;  Meatman  V.  Cullen,  5  Blackf.  210;  Edwards  on  Bills,  185  ;  Greathead  v. 
Walton,  40  Conn.  226;  Clantou  v.  Barnes,  50  Ala.  403.  ■ 

^  Trabue  v.  Short,  18  La.  Ann.  257  (18SG).  The  note  was  made  in  Kentucky, 
payable  to  the  order  of  the  payees  at  their  office  in  New  Orleans,  Louisiana,  and 
was  indorsed  in  Kentucky.  The  indorsers  were  sued  in  Louisiana,  where  they 
were  domiciled.  The  Court  said:  "  The  defense  is,  tliat  the  contract  of  indorse- 
ment having  been  made  in  Kentucky,  the  liability  of  defendants  as  indorsers  is 
governed  by  the  law  of  that  State,  according  to  which  a  remote  assignor  of  a 
note  is  not  primarily  liable  to  the  holder,  and  the  immediate  assignor  is  only  lia- 
ble for  the  consideration  received,  with  six  per  cent.,  and  the  holder  cannot 
make  him  liable  without  first  prosecuting  the  payor  with  diligence,  which  is  not 
shown  to  have  been  done.  *  *  *  The  general  rule  is  that  the  form  and  eflect 
of  public  and  private  written  instruments  are  governed  by  the  laws  of  the  place 
where  they  are  passed  or  executed,  unless  it  is  expressed  that  they  are  to  have 
effect  in  another  countiy;  and  the  question  is  presented:  Does  the  fact  that  the 
note  sued  on  is  payable  to  the  defendants  at  their  office  in  this  city  make  them 
liable,  under  the  laws  of  Louisiana,  upon  their  indorsement  made  in  Kentucky? 

"  Every  indorsement,  accommodation  or  otherwise,  is  essentially  an  original 
contract,  equivalent  to  a  new  note  or  bill  in  favor  of  the  holder  and  the  acceptor 
or  obligor.     13  M.  185;  11  Whart.  213,  341;  Story  on  Notes,  §  155. 

"The  agreement  or  obligation  of  defendants  as  indorsers  having  been  entered 
into  in  Kentucky,  without  expressing  a  different  place  of  performance,  must, 
under  the  above  general  rule,  be  regulated  by  the  law  of  Kentucky.  The  fact 
that  the  payors  reside  where  the  note  is  payable  does  not  amount  to  such  a  desig- 
nation of  the  jDlace  of  performance  as  to  take  it  out  of  the  general  rule.  The  par- 
ties, at  the  time  of  making  the  indorsements,  were  all  in  Kentucky,  and  are  pre- 
Bumed  by  law  to  have  contracted  with  reference  to  the  laws  of  that  State.  See 
Story  on  Conflict  of  Laws,  §  316  h;  Q  Cranch,  221  ;  8  N.  S.  21. 

"Doubtless  the  defendants  may  be  sued  at  their  domicile,  but  the  obligation 
of  their  indorsement  and  the  duties  of  the  holders  arc  governed  by  the  law  of 
Kentucky,  where  the  indorsement  was  made.  Such  was  the  ruling  in  the  case  of 
Dimcan  v.  Sparrow,  3  Ky.  167,  which  was  a  suit  upon  a  note  made  in  Louisiana 
and  payable  in  Mississippi."  To  same  effect,  see  Artisans'  Bank  v.  Park  Bank, 
41  Barb.  692  (1864).  Short  v.  Trahuc,  4  Mete.  (Ky.)  299;  Trabue  v.  Short,  5 
Cold.  293  (18o8);  Hunt  v.  Standart,  15  Ind.  35  (1860);  Loury's  Adm'r  v.  West- 
ern Bank,  7  Ala.  N.  S.  120;  Holbrook  v.  Vibbard,  2  Scam.  465;  Currier  v.  Lock- 
wood,  4i.'  Conn.  349, 


BY  WHAT   LAW    LIABILITY   OF   TARTY   DETERMINED.        747 

tlie  Court,  ill  the  case  in  Tennessee,  cited  below,  wliere  the 
note  was  indorsed  in  Kentucky,  "  the  fact  that  the  note  is 
payable  in  Louisiana  is  not  enough.  That  is  tlie  maker's 
undertaking;  but  the  iudorscr's  contract  is  separate  and  dis- 
tinct; and  being  made  without  any  view  of  performance 
under  the  laws  of  Louisiana,  it  must  be  governed  both  upon 
principle  and*  authority  by  the  laws  of  Kentucky,  where  it 
was  made."  ^  Therefore,  each  of  several  and  successive  in- 
dorsers  of  a  bill  or  note  may  contract  several  and  different 
liabilities,  each  being  bound  according  to  the  law  of  the  place 
wliere  his  indorsement  was  made.  Thus,  if  a  bill  l)e  drawn 
or  note  made  in  one  State  and  indorsed  successively  in  sev- 
eral others,  the  indorser  in  one  State  may  be  merely  liable  as 
a  surety;^  in  another,  he  may  not  be  liable  until  the  holder 
has  exhausted  his  remedy  against  the  acceptor  or  maker ;  ^ 
while,  in  a  third,  he  may  be  liable  according  to  the  general 
principle  of  the  law  merchant,  ijnmediately  upon  due  notice 
of  dishonor.* 

^  900.  In  a  leading  case  on  this  subject,  it  was  said  by 
Shaw,  C.  J. :  ^  "  The  note  declared  on  being  made  in  Illinois, 
both  parties  residing  there  at  tlie  time,  and  it  also  being  in- 
dorsed in  Illinois,  we  think  that  the  contract  created  by  that 
indorsement  must  be  governed  by  the  law  of  that  State. 
The  law  in  question  does  not  affect  the  remedy,  but  goes  to 
create,  limit  and  modify  the  contract  effected  by  the  fact  of 
indorsement.  In  that  which  gives  force  and  effect  to  tlie  con- 
tract, and  imposes  restrictions  and  modifications  upon  it,  the 
law  of  the  place  of  contract  must  prevail  when  another  is  not 
looked  to  as  a  place  of  performance.  Suppose  it  were  shown 
that,  by  the  law  of  Illinois,  the  indorsement  of  a  note  by  the 
payee  merely  transferred  the  legal  interest  in  the  note  to  the 
indorsee,  so  as  to  enable  him  to  sue  in  his  o\vn  name,  but 

'  Tiabuc  V.  Short,  5  Cold.  293.  "^  Ingersoll  v.  Long.  4  Dev.  &  Bat.  293. 

'  Hunt  V.  Standart,  lo  Ind.  33;  Violett  v.  Patton,  5  Crancli.  142;  IIowcll  v. 
Wilson,  3  Blackf.  418;  Williams  v.  Wade,  1  Mete.  82;  Slocum  v.  Ponieroy,  6 
Cranch,  221;  Trabue  v.  Short,  18  La.  Ann.  257. 

*  McDonald  v.  Bailey,  14  Me.  101.  '  Williams  v.  Wade,  1  Mete.  82. 


748  TUB  CONFLICT   OF  LAWS. 

imposed  no  conditional  obligation  on  the  indorser  to  jiay,  it 
would  hardly  be  contended  that  an-  action  could  be  brought 
here,  upon  such  an  indorsement,  if  the  indorser  should  hap- 
pen to  be  found  here,  because,  by  our  law,  such  an  indorse- 
ment, if  made  here,  would  render  the  indorser  conditionally 
liable  to  pay  the  note. 

"  By  the  law  of  Illinois,  the  indorser  is  liable  only  after  a 
judgment  obtained  against  the  maker;  and  as  no  such  judg- 
ment appears  to  have  been  obtained  on  this  note,  the  condi- 
tion upon  which  alone  the  plaintiff  may  sue  is  not  complied 
with,  and  therefore  the  action  cannot  be  maintained." 

§  901.  This  doctrine,  that  the  drawer  and  indorser  are 
bound  according  to  the  law  of  the  place  of  drawing  or  in- 
dorsing, although  sustained  by  great  weight  of  opinion,  and 
an  overwhelming  current  of  authorities,  has  not  escaped 
criticism  and  dissent,  and  rests,  as  it  seems  to  us,  rather  upon 
the  sanction  of  decisions  than  upon  clearly  and  well  defined 
principles.  If  A.,  in  New  York,  di-aws  a  bill  on  B.,  in  Eich- 
mond,  directing  him  to  pay  $1,000  at  the  First  National 
Bank  in  Baleigh,  North  Carolina,  he  thereby  guarantees  to 
C,  the  payee,  that  the  money  shall  be  there  paid  by  B.  on 
the  day  of  its  maturity.  He  is  as  clearly  bound  as  B.  is, 
although  secondarily,  that  the  money  shall  be  paid  at  the 
time  and  at  the  place  named.  If  either  tenders  the  amount 
at  the  time  and  place,  it  would  be  a  good  tender.  And  al- 
though A.'s  liability  is  contingent  upon  due  notice  of  dis- 
honor, the  liability  is  nevertheless  for  breach  of  his  contract 
that  B.  should  pay  at  Raleigh.  He  has  contracted  that  the 
amount  shall  be  there  paid  by  the  hand  of  B,,  and  yet  his 
contract  is  regarded  as  being  governed  by  the  law  of  New 
York;  while  B.'s  contract  to  pay  by  his  own  hand  is  gov- 
ei-ned  by  the  laws  of  North  Carolina.  This  seems  to  us  an 
inconsistency  of  the  law ;  and  while  the  doctrine  is  now 
perhaps  too  well  settled  to  be  disturbed,  it  does  not  bear  the 
test  of  searching  analysis.     In  Indiana,^  it  was  at  one  time 

*  Shanklin  v.  Cooper,  8  Ind.  42  (18 IG).     The  note  was  executed,  and  made 
payable  in  New  York,  and  indorse!  to  the  plaintiff  in  Indiana.     Blackford,  J., 


BY   WnAT   LAW   LIABILITY   OF  TAIITY   DETERMINED.        749 

boldly  denied,  thougli  subsequently  estaljlisLcd/  and  Chan- 
cellor Kent  lias  expressed  his  dissatisfaction  with  it.'^  Pro- 
fessor Pai'sons  thinks  it  would  be  a  better  rule  if  the  place 
of  payment  should  be  generally  adopted  as  governing  the 
liability  of  all  parties,  except  with  regard  to  damages,  &,c., 
and  whatever  may  be  properly  regarded  as  belonging  to 
remedy,  which  depends  upon  the  lex  fori? 

§  902.  Whether  or  not  the  transferrer  is  liable  as  indorser 
or  assignor  must  be  determined  by  the  law  of  the  j^lace 
whei'c  the  transfer  is  made.  The  United  States  Supreme 
Court  has  said:  "An  instrument  may  be  negotiable  in  one 
State  which  may  yet  be  incapable  of  negotiability  by  the 
laws  of  another  State,  and  the  remedy  must  be  in  the  courts 
of  the  latter  on  such  instrument."*  Therefore,  if  a  note 
negotiable  by  the  laws  of  Maiyland  be  transferred  in  Vir- 
ginia or  West  Virginia,  where  it  is  not  negotiable  (not  being 
payable  at  a  particular  bank),  the  transferrer  is  not  an  in- 
dorser in  the  sense  of  the  law  merchant,  but  an  assignor,  and 
cannot  be  sued  until  recourse  acjainst  the  maker  has  been 


said:  "  We  consider  the  indorsement  to  be  a  contract  wbicb  must  be  governed 
by  the  law  of  the  place  where  the  note  is  payable,  without  regard  to  the  place 
where  the  indorsement  was  actually  made.  The  maker  of  the  note  before  us 
bound  himself  to  pay  it  in  New  Y'ork  to  the  payee  or  order,  and  the  payee,  l)y 
the  indorsement,  directed  him  to  ])ay  it,  at  the  same  place,  to  the  indorsee.  The 
indorser  is,  indeed,  the  drawer  of  a  bill  of  exchange,  in  which  the  maker  of  the 
note  is  the  acceptor,  and  the  indorsee  the  payee;  and  it  is  payable  where  the 
note  is  payable.  The  indorsement  in  the  present  case,  therefore,  if  made  in  this 
State,  stiuuU  on  the  same  ground  with  a  bill  of  exchange  drawn  here  and  pay- 
able in  Kew  York,  and  there  can  be  no  doubt  but  that  the  contract  of  the  drawer 
of  such  a  bill  would  be  governed  by  the  law  of  New  York." 

'  Hunt  V.  Standart,  15  Ind.  33  (1800);  Mox  v.  State  Bank,  13  Ind.  521.  In 
Raymond  v.  Holmes,  11  Tex.  60,  it  is  said  by  Lipscomb,  J.:  "It  would  seem, 
that  if  it  be  true,  that  the  drawer  and  every  indorser  undertakes  that  the  bill 
shall  be  paid  at  the  place  of  payment  named  in  the  bill,  it  would  be  difficult,  on 
principle,  to  reconcile  the  distinction  between  such  undertaking,  and  any  other 
contract  for  performance  at  a  particular  place,  where  the  law  is  ditferent  from  the 
lex  loci  contractus.  But  the  American  doctrine  has  acquired  the  force  of  au- 
thority, and  uniformity  must  be  observed  on  this  question." 

'  2  Kent  Com.  459,  460;  and  see  Mullen  v.  Morris,  2  Barr,  87. 

'  2  Parsons  N.  &  B.  347. 

•  Bank  U.  S.  v.  Donnally,  8  Pot.  361 ;  sec  2  Parsons  K  &  B.  852. 


TnO  THE   CONFLICT  OF  LAWS. 

exhausted.^  So  if  a  note  drawn  in  Oliio,  where,  V)eing  pay- 
able at  bank,  it  is  negotiable,  be  transferred  in  Kentucky, 
w  lici-e  sncli  a  note  is  not  negotiable,  the  indorser  in  Kentucky 
is  not  technically  such,  but  only  an  assignor.^ 

SECTION  YIII. 

BY  WHAT  LAW  THE  VALIDITY  AND    EFFECT  OF  TRANSFER   AND  THE  EIGHTS 
OF  THE  HOLDER  ARE  DETERMINED. 

§  903.  Questions  have  arisen  whether  negotiable  notes 
and  bills,  made  in  one  country,  are  transferable  in  other 
countries,  so  as  to  found  a  right  of  action  in  the  holder 
against  the  other  parties.*^  It  has  been  held  in  England  that 
the  statute  of  Anne,  which  makes  promissoiy  notes  payable 
to  order  or  bearer  negotiable,  applies  as  well  to  foreign  as  to 
inland  promissory  notes;  and,  therefore,  that  a  note  made  in 
Scotland  and  indorsed  (whether  in  England  or  Scotland  did 
not  appear)  could  be  sued  in  England  by  the  indorsee 
against  the  maker.'^  And  that  a  promissory  note  payable  to 
bearer,  made  in  England  and  transferred  in  France,  could  be 
likewise  sued  by  the  bolder.'^  And  this,  although  by  the  law 
of  France  mere  delivery  would  be  inoperative.^ 

§  904.  Very  many  other  interesting  questions  arise  in 
respect  to  the  liabilities,  rights  and  remedies  of  parties  to 
negotiable  instruments  when  they  have  been  drawn,  made 
or  accepted  in  one  country  and  have  been  transferred  by  in- 
dorsement or  assignment  in  another.  In  the  first  place,  sup- 
pose a  note  transferred  in  the  country  were  matle,  so  as  to 
vest  title  in  the  transferee,  does  such  transfer  have  the  same 
efficacy  where  suit  is  brought?  It  has  been  held  not.  Thus 
in  Illinois,  it  appears  it  w^as  necessary  that  a  note  payable  to 
A.  or  bearer  should  be  transferred  by  indorsement,  so  as  to 

'  Nichols  Ex.  V.  Porter,  2  Hagans  (W.  Va.)  13. 

'  Carlisle  v.  Chambers,  4  Bush  (Ky.)  209.  '  Story  on  Bills,  §  171. 

*  Milne  V.  Graham,  1  Barn.  &  C.  183. 

'  De  la  Chaumette  v.  Bank  of  England,  2  B.  &  Ad.  385;  9  B.  &  C.  208. 

'  Ibid.;  Eyles  on  Bills  (Sharswood's  ed.)  [=^385],  5G9. 


BY   WHAT    LAW   VALIDITY   AND   EFFECT  DETERMINED.      751 

vest  a  title  in  the  holder.  The  note  sued  on  was  made  and 
transferred  in  New  York  without  indorsement,  and  it  was 
held  that  the  transferee  could  sue  in  Illinois,  but  it  would 
not  follow  that  he  could  do  so  in  his  own  name.^  And  it 
seems  that  the  law  of  the  forum  v/ould  generally  determine 
in  whose  name  the  suit  should  be  brought.^ 

§  905.  In  the  second  place,  suppose  the  instrument  is 
made  in  one  country,  and  is  transferred  in  another,  in  a  way 
valid  1)y  the  law  of  the  country  where  it  was  made,  but  not 
so  by  the  law  of  the  place  where  it  was  transferred.  In  such 
a  case,  as  bet\veen  the  transferrer  and  transferee,  it  would 
doubtless  be  regaided  that  suit  could  not  be  anywhere  sus- 
tained. But  as  between  the  transferee  and  the  maker  or  ac- 
ceptor, the  law  of  the  place  of  contract  would  prevail.  This 
was  well  illustrated  in  a  Scotch  case.  In  Scotland,  a  bill  or 
note  is  transferable  by  indorsement  when  payable  to  A.  B. 
simply,  without  the  negotiable  words  "  to  the  bearer"  or  "or 
order"  being  added.  And  the  note  in  question  was  made  in 
Scotland,  and  indorsed  in  England,  where  such  a  note  is  not 
negotiable.  Upon  the  maker  being  sued  in  Scotland,  it  was 
lield  that  suit  could  be  maintained,  and  Lord  Medwyn  said : 
"  It  is  often  said,  and  truly,  that  by  indorsation  a  new  con- 
tract is  created ;  and  I  was  puzzled,  at  one  time,  with  the 
circumstance  that  the  indorsation  in  the  present  case  was  by 
an  Englishman  to  an  Englishman,  and  executed  in  England  ; 
and  it  appeared  difficult  for  me  to  conceive  ho^v  such  a  con- 
tract could  be  validly  entered  into  in  a  country  where  such 
an  indorsation  was  not  valid,  so  as  not  to  constitute  a  right 
in  favor  of  the  one,  or  an  obligation  against  the  other.  But 
altliongli  it  might  be  consistent  with  principle  to  allow"  the 
law  of  the  place  where  the  indorsement  was  made  to  regulate 
its  edect  between  indorser  and  indorsee,  as  between  the  in- 
dorsee and  the  maker  no  new  contract  is  created,  the  contract 
between  them  remaining  the  same  original  contract,  regulated 
by  the  lex  loci  contractus  ;  the  indorsee  is  merely  substituted 


'  Roosa  V.  Crist,  17  111.  450.  =  Harper  v.  Butler,  2  Pot.  23'J. 


7r)2  THE  CONFLICT   OF   LAWS. 

in  the  place  of  tlie  original  payee,  and  the  maker  remains 
under  the  same  liability  he  contracted  at  the  time  he  made 
the  note,  which  was  to  pay  to  the  payee  or  to  the  holder  by 
indorsement ;  and  he  cannot  object  to  the  form  of  the  trans- 
fer, if  it  be  made  according  to  the  law  which  giv^es  its  charac- 
tei-,  and  regulates  the  quality  of  the  note — that  is,  in  the 
present  case,  according  to  the  law  of  Scotland."  ^ 

§  000.  It  appears  now  to  be  settled  that  each  holder  lias 
the  same  rights  against  the  acceptor  or  maker  as  the  original 
payee,  though  the  intermediate  indorsements  W'Cre  executed 
abroad,  and  were  inoperative  by  the  foreign  law,  w^hile  good 
by  the  law  of  the  place  of  the  acceptor's  or  maker's  contract. 
Tlius,  on  a  bill  payable  to  oi'der,  drawn,  accepted  and  paya- 
ble in  England,  an  indorsee  can  maintain  an  action  against 
the  acceptor  in  England,  though  sucb  action  could  not  be 
maintained  in  France,  and  though  the  indorser  and  indorsee 
w^ere,  at  the  time  of  the  indorsement,  wdiicli  was  made  ici 
France,  residents  of  and  domiciled  in  France.^  On  the  other 
hand,  when,  by  the  law  to  which  the  defendant's  contract  is 
subject,  the  indorsements  are  defective,  he  cannot  be  sued  on 
them  in  a  foreign  court.  Thus,  where  a  promissory  note  was 
made  in  France,  and  indorsed  in  blank  by  the  payee  in  that 
country,  the  maker  and  payee,  both  at  the  time  of  making 
and  indorsing  the  note  being  domiciled  tliere,  it  w\as  held 
that  as  no  action  could  have  been  maintained  upon  it  in  the 
French  courts  of  law,  in  the  name  of  the  indorsee,  the  in- 
dorsement, according  to  the  law  of  France,  operating  as  a 
procuration  only  and  not  as  a  transfer,  so  no  action  could  be 
maintained  by  him  in  England.^ 

§  907.  Again,  in  the  third  place :  Suppose  a  note  not 
negotiable  by  the  law  of  the  place  where  made,  but  negotia- 

'  Robertson  v.  Burdckin,  1  Ross  Lead.  Cases,  812 ;  Wharton's  Conflict  of 
Laws,  §  4o2. 

'  Lcbcl  V.  Tucker,  2  Q.  B.  77  (1867),  s.  c.  8  Best  &  Smith,  830;  Wharton's 
Conflict  of  Laws,  §  454. 

=  Trimbcy  v.  Vignier,  4  M.  &  Scott,  G95 ;  1  Bing.  N.  C.  151;  G  C.  .&  P.  25; 
Wharton's  Conflict  of  Laws,  §  455. 


FORMALITIES  OF  PRESENTMENT,  PROTEST  AND  NOTICE.    753 

ble  hy  the  law  of  the  place  where  indorsed.  In  such  a  case 
the  right  of  action  by  the  indorsee  against  the  maker  would 
be  governed  by  the  law  of  the  forum.^  It  would  seem  that 
in  the  country  where  the  note  was  made,  suit  could  not  be 
sustained  by  the  indorsee  against  the  maker,  because  incon- 
sistent with  its  laws.  But  in  tlie  country  of  the  indorsement 
the  same  reason  would  not  apply;  and  if  the  maker  used 
terms  of  negotiability  in  his  contract,  capabl(;;  of  binding 
him  to  the  indorsee,  there  would  not  seem  to  be  any  solid 
objection  to  giving  the  contract  its  full  effect  there.  Thus, 
it  has  been  held,  that  where  a  note  was  made  in  Connecticut 
payable  to  order,  but  by  the  laws  of  that  State  was  not  ne- 
gotiable, and  was  indorsed  in  New  York,  where  it  was  nego- 
tiable, the  indorsee  suing  in  New  York  could  recover  against 
the  maker.^  But  if  there  were  no  words  of  negotiability 
in  the  note,  it  might  be  different.^  And  as  a  general  princi- 
ple, it  may  be  stated,  that  if  the  instrument  be  not  assigna- 
ble at  all  in  its  inception,  the  laws  of  no  other  country  would 
enlarge  the  contract,  and  give  title  against  the  debtor,  to  any 
assio-nee  a2:ainst  his  consent.^ 

SECTION  IX. 

BY  WHAT   LAW  THE   FORMALITIES    IX  RESPECT   TO  PRESENTMENT,    PROTEST 
AND    NOTICE    ARE    GOVERNED. 

§  908.  In  order  to  charge  the  drawer  or  indorser,  the 
holder  must  exercise  due  diligence  in  presenting  the  bill  to 
the  drawee,  or  acceptor,  and  the  note  to  the  maker;  and  as 
the  acts  necessary  to  constitute  a  due  presentment  are  to  be 
done  at  the  place  upon  which  the  bill  is  drawn,  or  at  which 
the  bill  or  note  is  payal)le,  they  must  be  governed  by  the 
law  of  the  place  upon  which  it  is  drawn,  or  at  which  it  is 
payable,  as  the  case  may  be.     Thus,  if  a  bill  were  dra^vn  by 

»  2  Parsons  N.  &  B.  353. 

"  Lodge  V.  Phelps,  1  Johns.  Cas.  139;  3  Caincs  Cas.  321. 
'  Story  on  Conflict  of  Laws,  §  253  a ;  Story  on  Bills,  §  175. 
*  Talleyrand  v.  Boulanger,  3  Ves.  Jr.  447. 
Vol.  I.— 48 


754  THE   CONFLICT  OF  LAWS. 

a  mercliant  in  New  York,  payable  at  thirty  days'  sight,  upon 
a  mei-chant  in  London,  England,  it  should  be  presented  for 
acceptance,  according  to  the  law  of  England ;  and  should  be 
presented  for  payment  at  maturity,  also  according  to  the  law 
vof  England,  as  it  would  be  there  payable/  But  if  the  bill 
were  drawn  in  like  manner  in  New  York  upon  London,  with 
the  exception  that  it  was  drawn  and  accepted  payable  at  a 
particular  place  in  New  York,  or  in  France,  then  the  law  of 
England  would  control  the  presentment  for  acceptance,  and 
the  law  of  New  York,  or  France,  the  presentment  for  and 
'demand  of  payment.  Accordingly,  the  question  whether  or 
not  the  bill  should  have  grace  would  be  determined  by  the 
law  of  the  place  of  payment ;  and  also,  if  allowable,  in  how 
many  days  grace  should  consist.  In  France  no  grace  is 
allowable,  while  in  Endand  and  the  United  States,  it  is 
generally  three  days.  But  it  ranges  in  different  places  from 
three  to  thirty  days,  and  in  each  case  the  law  of  the  particu- 
lar place  would  determine,^ 

§  909.  Tlie protest. — When  a  foreign  bill  is  dishonored,  it 
is  necessary  that  it  should  be  protested,  and  the  protest 
should  be  made  at  the  time,  in  the  manner,  and  by  the  per- 
sons prescribed  in  the  place  where  the  bill  is  refused  accept- 
ance or  payment,  as  the  case  may  be.  The  bill  miglit  be 
drawn  in  New  York  upon  England,  and  might  be  indorsed 
in  Pennsylvania  and  in  Maryland,  in  Germany  and  in  France. 
But  only  one  protest  would  be  necessary,  and  that  should 
be  made  according  to  the  laws  of  England,  where  the  bill  is 
payable.  To  hold  otherwise  would  subject  the  holder  to  the 
necessity  of  making  five  different  protests  conformably  to 

•  Rothschild  v.  Curiie,  1  Ad.  &  El.  N.  S.  434  (1  E.  C.  L.  R.  428) ;  approved  in 
Phillips  V.  Im.  Thiirn.  1  C.  P.  L.  R.  4()3.  See  also  Rouquette  v.  Overman,  10  Q. 
B.  L.  R.  525  (14  Moak's  English  R.  380;  Todd  v.  Neal's  Adm'r,  49  Ala.  266. 

-  Bank  of  Washington  v.  Triplett,  1  Pet.  25;  Bovveu  v.  Newell,  3  Ker.  290; 
Vidal  V.  Thompson,  11  Mart.  (La.)  23:  Goddin  v.  Shipley,  7  B.  Mon.  575;  Bryant 
V.  Edson,  8  Vt.  325;  Bank  of  Orange  Co.  v.  Colby,  12  N.  H.  520;  Aymar  v. 
Sheldon,  12  Wend.  439;  Rothschild  v.  Currie,  1  Ad.  &  E.  N.  S.  43;  (41  E.  C.  L. 
R.  428).  See  ante,  §§  622,  623 ;  Bowen  v.  Newell,  13  N.  Y.  290 ;  Jewell  v.  Wright, 
30N.  Y,  264. 


FORMALITIES  OF  PRICSENTMKN T,  I'UOTEST  AND  NOTICE.    7.~5 

the  laws  of  the  five  different  places  in  which  the  parties  to 
V»e  charged  signed  as  drawer  or  indorsers,  provided  there 
were  as  many  diffei-ent  styles  of  protest  required.  The  doc- 
trine on  this  subject  is  well  settled/  and  it  is  not  until  the 
question  of  notice  arises  that  any  conflict  of  authority  pre- 
sents itself. 

§  910.  Notice. — In  respect  to  notice,  it  has  been  distin- 
guished from  the  presentment  and  ])rotest  in  an  often  quoted 
American  case,'^  in  which  it  is  held  that  it  must  conform 
to  the  law  of  the  place  where  the  drawing  or  indorsement 
occurs,  in  order  to  charge  the  drawer  or  any  particular  in- 
dorser,  on  the  ground  that  the  nature  and  extent  of  the  lia- 
bilities of  the  drawer  or  indorser  are  to  be  determined 
according  to  the  law  of  the  place  where  the  bill  is  drawn  or 
indorsement  made,  and  that  the  mode  and  time  of  notice  con- 
stitute an  implied  condition  of  tlie  contract. 

In  the  case  referred  to,  the  bill  was  drawn  in  the  French 
island  of  Martinique,  on  parties  at  Bordeaux,  France.  It 
was  indorsed  by  the  payee  in  New  York  to  the  plaintiffs, 
and  was  protested  for  non-acceptance  in  France.  The  con- 
ti-act  of  the  drawer,  according  to  the  French  law,  was,  that  if 
the  holder  should  i)resent  it  within  a  year,  and  it  should  be 
protested  for  non-acceptance,  and  notice  given,  he  would  give 
security  to  pay  it,  and  pay  it  if  defiiult  were  made  in  the 
payment  by  the  drawee,  after  protest  for  non-pay?nent  and 
notice.  Suit  beino:  brou2:ht  in  New  York  after  notice  of 
non-acceptance,  without  any  protest  for  or  notice  of  non-pay- 
ment, it  was  held  that  the  law  of  New  York  controlled  the 
contract  of  indorsement  there  made,  and  that  the  defendant, 

'  Tovvusley  v.  Sumrall,  2  Pet.  170;  Carter  v.  Union  Bank,  7  Humph.  548; 
Raymond  v.  Holmes,  11  Tex.  54;  Snow  v.  Perkins,  2  Micli.  238;  Ticknor  v. 
Roberts,  11  La.  IG;  Bank  of  Rocliester  v.  Gray,  2  Hill  (N.  Y.)  227;  Aymar  v. 
Shdclon,  12  Wend.  444;  Ross  v.  Bedell,  5  Duer,  463;  Williams  v.  Putnam,  14 
N.  H.  543;  1  Robinson's  Practice  (new  ed.),  70;  Whart.  Contl.  of  Laws,  §§  G99  a, 
4G2;  2  Parsons  N.  &  B.  344,  345;  Story  Confl.  of  Laws,  §  3G0;  Story  on  Bills,  §§ 
138,  176;  Todd  v.  Ncal's  Adm'r,  49  Ala.  266. 

*  Aymar  v.  Sheldon,  12  Wend.  444;  see  also  Williams  v.  Putnam,  14  N.  H. 
543;  Story  on  Bills,  §  285;  Snow  v.  Perkins,  2  Mich.  238. 


75G  THE  CONFLICT   OF   LAWS. 

having  received  notice  according  to  New  York  law,  was 
liable  to  the  plaintiff.^  This  case  impliedly  determines  that 
if  the  law  of  Fiance,  where  the  bill  was  payable,  had  been 
followed,  the  holder  could  not  have  recovered ;  and  it  is 
quoted  with  approbation  by  Story,  in  his  treatises  on  Bills 
and  Notes,  and  on  the  Conflict  of  Laws.^  It  has  also  been 
followed,  though  with  evident  reluctance,  in  Texas.^ 

§  911.  But  in  England  the  question  of  notice  has  been 
considered  to  be  on  the  same  footing  as  that  of  demand  and 
protest,  and  if  it  be  in  accordance  with  the  law  of  the  place 
\vhere  the  dishonor  of  which  notice  is  given  occurs,  it  is  suf- 
ficient.    Nor  will  notice,  according  to  any  otiier  law,  suffice.* 


'  Mr.  Justice  Nelson  saying:  "Upon  the  principle  that  the  rights  and  obliga- 
tions of  the  parties  are  to  be  determined  by  the  hxw  of  the  place  to  which  tliey 
had  reference  in  making  the  contract,  there  are  some  steps  which  the  holder 
must  take  according  to  the  law  of  the  place  in  which  the  bill  is  drawn.  It  must 
be  presented  for  payment  when  due,  having  regard  to  the  amount  of  days  of 
grace  there,  as  the  drawee  is  under  obligation  to  pay  only  according  to  such 
calculation;  and  it  is,  therefore,  to  be  presumed  that  the  parties  had  reference 
to  it.  So  the  protest  must  be  according  to  the  same  law,  which  is  not  only  con- 
venient, but  grows  out  of  the  necessity  of  the  case.  The  notice,  however,  must  be 
given  according  to  the  law  of  the  place  where  the  contract  of  the  drawer  or  iu- 
dorser,  as  the  case  may  be,  was  made,  such  being  an  implied  condition."  So  in 
Allen  V.  Merchants'  Bank,  23  Wend.  215  (overruling  same  case,  15  Wend.  482), 
where  a  bill  was  drawn  on  New  York  in  Philadelphia,  Pennsylvania,  it  was  held 
that  a  failure  by  the  notary  to  give  notice  of  non-acceptance  was  fatal,  although 
by  the  law  of  Pennsylvania  such  notice  was  not  necessary. 

"  Story  on  Bills,  S§  285,  2^16 ;  Story  on  Notes,  §  339. 

'  Raymond  v.  Holmes,  11  Tex.  55. 

*  Rothschild  V.  Currie,  1  Ad.  &  El.  N.  S.  43  (41  E.  C.  L.  R.  428).  In  this  rase 
it  appeared  that  a  bill  was  drawn  in  England  upon  a  house  in  Paris,  France,  by 
whom  it  was  accepted,  in  favor  of  the  defendant,  a  payee  in  England;  and  was 
expressed  to  be  payable  in  Paris,  and  indorsed  to  the  plaintiff  in  England.  Upon 
its  dishonor  for  non-payment  notice  was  given  to  the  plaintiff  in  England,  which 
notice  was  good  according  to  French  law,  but  too  late  according  to  the  English 
law.  The  notice  was  transmitted  the  same  day  by  the  plaintiff  to  the  defendant. 
In  an  action  in  England,  by  the  English  indorsee  against  the  payee  and  indorssr, 
the  Court  of  Queen's  Bench  held,  that  the  bill  being  payable  in  France,  the 
French  law  as  to  notice  of  dishonor  transmitted  from  France  to  England  must 
prevail.  In  Hirschfield  v.  Smith,  L.  R.  1  C.  P.  350  (18G6),  Erie,  C.  J.,  said: 
"  Due  notice  is  such  notice  as  can  be  reasonably  required  under  the  circum- 
stances ;  and  the  reasonableness  of  the  notice  proved  in  evidence  is  a  question  of 
law,  depending  on  the  facts  of  each  particular  case,  and  such  facts  are  for  the 


FORMALITIES  OF  PRESENTMENT,  PROTEST  AND  NOTICE.    757 

In  tlii«  view  hio-h  les^al  authorities  concur,^  and  the  reasonin"- 
upon  which  it  rests  seems  to  us  unanswerable.  It  is  un- 
doubtedly true  that  the  nature  and  extent  of  the  liability  of 
the  drawer,  or  of  any  indorser,  when  it  is  once  fixed,  is  de- 
termined by  the  law  of  the  place  of  his  contract;  but  we 
cannot  see  that  that  fact  at  all  alters  or  concerns  the  condi- 
tions to  be  complied  with  by  the  holder  in  order  to  fix  his 
liability.  The  contract  of  indorsement  is  a  bilateral  conti'act 
between  the  indorser  and  the  holder,  that  he  will  pay  the 
bill  drawn  upon  a  foreign  land,  provided  that  the  holder  will 
exercise  due  diligence  in  presenting  the  bill,  and  demanding 
payment  of  the  drawee  or  acceptor  at  the  place- upon  which 
the  bill  is  drawn,  or  where  it  is  payable,  and  in  protesting  it 

jury.  In  the  course  of  practice  rules  have  been  recognized  by  the  judges,  and 
so  have  become  law;  seethe  judgments  of  Grove,  J.,  Lawrence,  J.,  and  Le 
Blanc,  J.,  in  Darbisiiire  v.  Parker,  6  East,  2.  If,  by  the  law  of  the  place  where 
the  bill  is  payable,  there  are  regulations  for  giving  notice  of  dishonor,  in  order 
to  make  indorsers  liable  to  the  holder,  a  presumption  is  raised  that  notice  ac- 
cording to  those  regulations  is  all  that  the  indorser  should  require." 

"  The  indorser  of  a  bill  accepted  payable  in  France  promises  to  pay  in  the 
event  of  dishonor  in  France  and  notice  tliereof.  By  his  contract  he  must  be 
taken  to  know  the  law  of  France  relating  to  the  dishonor  of  bills;  and  notice  of 
dishonor  is  a  portion  of  that  law.  Then,  although  his  contract  is  regulated  by 
the  law  of  England  relating  to  indorsement,  and  although  he  may  not  be  liable 
unless  reasonable  notice  of  dishonor  has  been  sent  to  him,  yet  the  notice  of  dis- 
honor according  to  the  law  of  France  may  be,  and,  we  think,  ought  to  be, 
deemed  reasonable  notice  according  to  the  law  of  England,  and  be  sutiicieut  in 
England  to  entitle  the  plaintiff  to  recover  according  to  that  law." 

"  It  is  reasonable  to  hold  that  the  foreign  holder  should  have  time  to  make 
good  his  right  of  recourse  against  all  the  parties  to  the  bill,  in  whatever  country 
they  may  be.  Here  the  holder  was  a  Frenchm  in,  in  France.  The  indorsement 
to  hiu)  was  by  the  plaintiff,  a  Frenchman,  in  France.  The  indorsement  to  the 
plaintiff  was  by  the  defendant,  an  Englishman,  in  England;  and  the  indorse- 
ment to  that  Englishaian  by  Lion,  the  payee,  may  have  been  in  any  country. 
The  inconvenience  would  be  great  if  the  holder  was  bound  to  know  the  place  of 
each  indorsement,  and  the  law  of  that  place  relating  to  notice  of  dishonor,  and 
to  give  notice  accordingly,  on  pain,  in  case  of  mistake,  of  losing  his  remedy; 
whereas  there  would  be  great  convenience  to  the  holder  if  notice  valid  accord- 
ing to  the  law  of  the  place  should  be  held  to  be  reasonable  notice  for  each  of 
the  countries  of  each  of  the  parties,  unless  an  exceptional  case  should  give  occa- 
sion for  an  exception."     See  Redrield  &  Bigelow's  Lead.  Cases,  713  et  seg. 

'  2  Parsons  N.  &  B.  344.  245,  and  340.  note  j;  Bylcs  on  Bills  (Sharswood'3 
ed.),  5G7;  1  Robinson's  Practice  (newed.),  80;  Todd  v.  Xeal's  Adm'r,  49  Ala. 
265. 


758  TEE   CONFLICT   OF   LAWS. 

ill  tlic  event  of  (Hshouor,  and  giving  him  due  notice.  Now, 
tlie  payment  is  to  be  made  by  the  iudorser  at  the  phice  of  his 
indorsement;  that  is,  the  place  where  his  part  of  the  con- 
tract is  to  Ije  })erfoi'med,  and  by  the  laws  of  which  it  is 
accordingly  to  be  governed.  But  the  acts  constituting  due 
diligence,  wliich  the  holder  contracts  to  perform,  are  to  be 
performed  at  the  place  where  the  non-payment,  which  is  to 
be  protested  and  notified,  occurs,  and  consequently  they  are 
to  be  defined  and  governed  by  its  laws.  It  is  simply  a  case 
in  whicli  each  party  contracts  to  do  different  things,  at  differ- 
ent places,  and  which  fall  severally  and  resj)ectively  under 
the  laws  of  the  place  at  whicli  they  are  to  be  done. 

§  912.  To  hold  otherwise  than  in  accordance  with  these 
views  would  involve  the  law  respecting  notice  in  great  per- 
plexities. In  the  case  of  a  bill  drawn  in  Massachusetts  upon 
a  drawee  in  France,  and  indorsed  successively  in  Pennsyl- 
vania and  Maryland,  Austria  and  England,  the  notice  would 
have  to  conform  to  the  law  of  Massachusetts  in  order  to 
chai'2:e  the  drawer,  and  to  the  laws  of  the  four  different 
States  and  countries  in  order  to  charge  the  successive  indors- 
ers  respectively.  The  holder  in  France,  perhaps  a  bank  for 
collection,  might  thus  be  under  an  intolerable  burden  ;  for 
notaries,  and  other  officials  and  agents  could  not  be  presumed 
to  know  the  laws  of  foreign  countries,  and,  indeed,  it  might 
be  a  matter  of  the  greatest  difficulty  to  ascertain  them,  even 
were  counsel  consulted. 

If  the  law  of  France  were  complied  with  in  respect  to  the 
drawer  and  all  the  indorsers,  we  should  say  that  it  was  suf- 
ficient for  all  purposes.  If  the  holder  in  France  only  notified 
the  English  indorser,  then  the  latter  would  have  to  notify 
the  German  indorser  and  his  antecedents  l)y  English  law,  for 
in  England  his  due  diligence  would  have  to  be  exercised, 
and  so  on,  each  successive  party  would  have  to  act  by  the 
law  of  his  own  land.^ 

•  See  3  Parsons  N.  &  3.  345. 


RE"VENUE  LAWS  OF   OTHER  COUNTRIES.  759 


SECTION   X. 

REVENUE    LAWS    OF    OTHER    COUNTRIES. LAW    APPLICABLE    TO    8TAMP.S 

UPON    NEGOTIABLE    INSTRUMENTS. 

§  913.  It  is  frequently  laid  down  as  a  general  rule  that 
one  country  will  not  regard  the  revenue  laws  of  another 
country/  and  it  is  applied  to  maintain  the  doctrine  that  a  bill 
or  note  which,  according  to  the  law  of  the  State  or  country 
where  it  is  made,  requires  a  stamp  in  order  to  its  validity, 
will  nevertheless  be  regarded  as  valid  in  another  State  or 
country  where  suit  is  brought.  Bat  this  rule  is  by  no  means 
universally  conceded,  and  Story  refers  to  it  in  terms  of  strong 
reprobation,  declaring  that  "  sound  morals  would  seem  to 
point  to  a  very  different  conclusion,"  and  citing  with  ap- 
proval the  view  of  Pothier  that  the  doctrine  is  "  inconsistent 
with  good  ftiith,  and  the  just  duties  of  nations  to  each  other."  ^ 
The  general  rule  that  the  formalities,  proofs  and  authentica- 
tions of  a  contract  must  conform  to  the  laws  of  the  place 
where  it  is  made,  is  conceded,  and  why  such  an  exception  as 
this  should  be  made  to  it,  which  not  only  involves  departure 
from  a  principle  wise  in  itself,  but  also  in  the  particular  in- 
stance leads  to  the  countenancing  of  frauds  upon,  and  eva- 
sions of  the  fiscal  laws  of  another  people — is  to  us  entirely 
undiscernible. 

§  914.  The  true  view  of  this  subject  seems  to  us  to  be 
this :  that  if  the  bill  or  note  be  absolutely  void  according  to 
the  law  of  the  place  where  it  is  made,  unless  it  be  stamped, 
then  it  is  void  everywhere;  but  if  the  lex  loci  contractus 
only  declares  that  it  shall  not  be  admissible  in  evidence,  then 
the  regulation  is  regarded  as  merely  a  rule  of  evidence,  and 
has  no  force  or  eff'ect  beyond  the  confines  of  the  State  or 

'Byles  on  Bills  (Sliarswood's  ed),  563;  2  Parsons  N.  &  B.  318.  321,  330; 
1  Robinson's  Practice  (new  ed.),  02;  Ludlow  v.  Van  Rensselaer,  1  Johns.  94; 
Lambert  v.  Jones,  2  Pat.  &  Heath,  144;  James  v.  Catherwood,  2  Dow.  &  R.  I'JO; 
Skinner  v.  Tinker,  34  Barb.  333;  note  held  valid  in  New  York  though  without 
stamp  required  by  laws  of  Cuba,  where  note  was  made. 

'  Story  on  Bilb,  §§  136,  137. 


7G0  THE  CONFLICT  OF  LAWS. 

country  whose  laws  enact  it.  Some  of  the  English  cases  do 
not  recoirnize  this  discrlniination  between  contracts  declared 
void  and  those  which  were  only  inadmissible  in  evidence;* 
but  the  later  English  as  well  as  the  later  American  cases 
ado])t  it  as  sound  doctrine,^  and  it  meets  the  appioval  of  such 
text-writers  as  Story /"^  Wharton,  Phillimore  and  Westlake. 

"  It  is  now  clear,"  says  Phillimore,  "  that  if  by  the  for- 
eign law  the  want  of  a  stamp  renders  the  contract  void,  it 
cannot  be  enforced  in  this  country." 

§  915.  Wlien  a  contract  is  made  in  one  country  to  be 
performed  in  another,  and  by  the  laws  of  tlie  latter  a  stamp 
is  required  to  render  it  valid,  the  question  arises  whether  it 
is  governed  by  the  lex  solutionis  or  the  lex  loci  contractus^  as 
to  the  stamp.  Here  the  general  rule  is  applicable,  that,  as 
to  the  form,  validity,  interpretation  and  effect  of  the  contract, 
it  is  to  be  governed  by  the  laws  of  the  place  of  performance ; 
but  its  mere  form  and  authentication  by  tbe  lex  loci  contractus. 
And  accordingly,  it  has  been  held  that  a  stamp  in  such  cases 
is  not  necessary.*  This  view  is,  as  we  think,  sustainable  also 
upon  the  ground  that,  in  such  cases  of  international  transac- 
tions, the  parties  are  entitled  to  elect  by  what  law  they  will 
be  governed,  and  that  they  will  be  presumed  to  have  elected 
the  law  of  the  place  by  the  laws  of  which  their  contract  is 
valid,  at  res  7nagis  valeat,  quam  pereat.^ 

'  Wynne  v.  Jackson,  2  Russ.  251  ;  James  v.  Cathcrwood,  2  Dow.  &  Ry.  190. 

^  Fant  V.  Miller,  17  Grat.  47;  Alves  v.  Hodgson,  7  T.  R.  241  ;  Clegg  v.  Levy, 
8  Camp.  1G6  ;  Bristow  v.  Sequeville,  5  Exch.  279;  Rolfe,  B.,  saying:  "  I  agree 
that  if  for  want  of  a  stamp  a  contract  made  in  a  foreign  country  is  void,  it  can- 
not be  enforced  here."     See  Lambert  v.  Jones,  2  Pat.  &  Heath,  144. 

'  Story  on  Bills,  §  137;  Wharton's  Conflict  of  Laws,  §§  685,  688;  Phillimore. 
IV,  608  ;  Westlake,  Art.  176;  see  Parsons  N.  &  B.  330. 

*  Vidal  V.  Thompson,  11  Mart.  (La.)  23,  the  Court  saying:  "An  instrument, 
as  to  its  form  and  the  formalities  attending  its  execution,  must  be  tested  by  the 
laws  of  the  place  where  it  is  made;  but  the  laws  and  usages  of  the  place  of  the 
obligation  of  which  it  is  evidence  is  to  be  fulfllled  must  regulate  the  perform- 
ance."   Story  Confl.  of  Laws,  §  318;  Story  on  Bills,  §  159;  2  Parsons  N.  &  B.  831. 

'  Sec  Wharton  Confl.  of  Laws,  §§  698  et  scq.,  and  infra,  §  922. 


LAW  APPLICABLE  TO  INTEREST  AND  DAMAGES.  761 


SECTION  XI. 

LAW    APPLICABLE   TO    THE   CUKKENCY    OF    PAYMENT,    AND   INTEEEST   AND 

DAMAGES. 

§  016.  The  first  inquiry  is  to  ascertain  where  the  money, 
according  to  the  contract,  is  payable;^  and  then  the  proper 
rule  in  all  cases  would  seem  to  be  to  allow  that  sum  in  the 
currency  of  the  country  where  suit  is  brought  which  shall 
approximate  most  nearly  to  the  amount  to  which  tlie  party 
is  entitled  in  the  country  where  the  debt  is  payable,  calcu- 
lated by  the  real  par,  and  not  by  the  nominal  par  of  exchange.^ 
Thus,  suppose,  to  use  the  illustration  of  Story,  that  a  debt  of 
£100  sterling  is  contracted  in  England,  and  is  there  payable, 
and  afterward  a  suit  was  brought  in  the  United  States  to 
recover  the  amount,  the  par  of  exchange,  fixed  by  law,  is  to 
estimate  the  pound  sterling  at  four  dollars  and  forty-four 
cents.  But  the  rate  of  exchange  on  bills  drawn  in  the  United 
States  on  England  is  generally  at  from  eight  to  ten  per  cent, 
advance  on  the  same  amount.  And  accordingly,  in  order  to 
replace  in  England  the  amount  there  borrowed  and  there 
payal)le,  would  require  a  larger  amount  than  four  dollars  and 
forty-four  cents  for  every  pound  sterling  which  should  have 
been  there  paid.  The  judgment  should,  therefore,  be  for  an 
amount  sufficient  to  enable  the  plaintiff  to  purchase  the 
allotted  amount  of  English  currency  at  the  place  of  perform- 
ance;^ for  otherwise  the  defendant,  who  had  broken  his  con- 
tract, would  profit  by  its  breach,  and  the  plaintiff  who  had 
already  suffered  by  his  default,  would  suffer  still  further. 

'  Benneis  v.  Clements,  58  Penn.  34. 

"  Cash  V.  Kennon,  11  Ves.  314,  where  Lord  Eklon  held  that  if  a  man  agree  to 
pay  £100  in  London  on  a  certain  day,  he  ought  to  have  that  svmi  there  on  that 
day,  and  if  he  fails  in  that  contract,  wherever  the  creditor  sues  him,  the  law  of 
that  country  ought  to  give  him  just  as  much  as  he  would  have  had  if  the  con- 
tract had  been  performed.  See,  also,  Delegal  v.  Naylor,  7  Bing,  460;  Lanussc  v. 
Barker,  3  Wheat.  101 ;  Grant  v.  Healy,  8  Sum.  523;  Lee  v.  Wilcocks,  5  Serg.  & 
R.  48;  Story  on  Bills,  §  151;  Story  Coufl.  of  Laws,  §§  308-311;  Wharton  Confl. 
of  Laws,  §  514;  2  Parsons  N.  &  B.  370. 

» Ibid. 


762  THE   CONFLICT  OF   LAWS. 

§  017.  Tliis  is  the  doctrine  which  obtains  in  the  Court  of 
King's  Bench,  where,  in  an  action  for  a  debt  payable  in 
Jamaica,  but  sued  in  Enghind,  it  was  held  that  the  amount 
should  be  ascertained  by  adding  the  rate  of  exchange  to  the 
par  value,  if  above  it;  and  so,  vice  versa,  by  deducting  it 
when  the  exchange  is  below  the  par.^  And  it  is  clearly  the 
only  doctrine  consonant  with  justice.  But  in  some  of  the 
United  States,  it  is  held,  that  the  parties  can  only  recover 
according  to  the  par  of  exchange  as  established  by  law,  and 
not  according  to  the  actual  rate  of  exchange  necessary  to  remit 
the  amount  to  the  foreign  country  where  the  debt  is  payable.^ 

§  918.  Interest  and  damages. — The  rate  of  interest  which 
a  bill  of  exchange  or  projuissory  note,  or  other  contract  bears, 
when  no  rate  is  specified,  and  the  question  whether  or  not  it 
shall  bear  interest,  are  both  determinable  by  the  law  of  the 
place  where  it  is  expressly  or  impliedly  to  be  paid.^  Thus, 
if  a  note  be  made  in  Canada,  where  the  rate  of  interest  is 
six  per  cent.,  payable  in  England,  where  the  rate  is  five  per 
cent.,  the  note  will  bear  only  the  English  interest  of  five  per 
cent.^  And  so,  it  would  seem,  that  if  a  bill  were  drawn  in 
New  York  upon  London,  and  were  there  accepted  generally, 
so  that  constructively  it  would  be  payable  in  London,  and 
default  were  made  in  payment,  the  acceptor  would  be  bound 
to  pay  English  interest,  for  his  contract  is  like  that  of  the 
maker  of  a  note.'^  But  the  drawer  would  be  liable  for  New 
York  interest.^     If  no  place  of  payment  be  specified,  the  in- 

•"  Scott  V.  Bevan,  2  B:irn.  &  Ad.  78.  But  Lord  Tenterdcn  expressed  doubt  as 
to  the  correctness  of  the  judgment. 

^  ScliolJeld  V.  Day,  20  Johns  102;  Martin  v.  Franklin,  4  Johns.  125;  Adams 
V.  Cordis,  8  Pick.  280.     But  this  case  excepts  bills  of  exchange. 

="  Campbell  v.  Nichols,  33  N.  J.  (4  Vroom),  81;  Austin  v.  Imus,  23  Vt.  286; 
Amott  V.  Redfeme,  2  Car.  &  P.  88;  Montgomery  v.  Budge,  3  D<.w.  &  C.  297; 
De  Wolf  V.  John.son,  10  Wheat.  3G7;  Consequa  v.  Willings,  1  Pet.  C.  C.  225; 
Andrews  v.  Pond.  13  Pet.  65. 

*  Scofield  V.  Day,  20  Johns.  102;  see  also  Davis  v.  Coleman,  7  Tred.  424; 
Summers  v.  Mills,  21  Tex.  77;  Braynard  v.  Marshall,  8  Pick.  194;  Boyce  v.  Ed- 
wards, 4  Pet.  Ill;  Hawley  v.  Sloo,  12  La.  A.nn.  815  ;  Hunt's  Ex.  v.  Hall,  37  Ala. 
702;  Peck  v.  Mayo,  14  Vt.  33;  Thompson  v.  Po.vles,  2  Sim.  194. 

"  2  Parsons  N.  &  B.  876.  "  Gibbs  v.  Tremont,  20  E.  L.  &  Eq.  555 


LAW   APPLICABLE   TO    I^'TEEEST   AND   DAMAGES.  7()3 

strument  will  carry  interest  according  to  the  law  of  the 
place  where  the  drawing,  making,  indorsement  or  acceptance 
may  have  been  made.^ 

§  919.  Where  the  note  in  terms  bears  interest,  it  is  as 
much  a  part  of  the  debt  as  the  principal;-  and  if  the  rate  of 
interest  be  changed  by  statute  after  the  note  is  made,  it  will 
nevertheless  bear  the  rate  expressly  stipulated  for;'^  When 
interest  is  not  expressly  payable,  the  law  of  tlie  place  of  pay- 
ment, if  it  allow  interest,  silently  fixes  the  rate ;  and  though 
the  note  be  expressed  to  be  payable  "  without  interest,"  in- 
terest may  nevertheless  be  allowed  as  damages."*  The  law 
of  the  forum  will  fix  the  rate  of  interest,  unless  it  be  affirma- 
tively shown  that  a  different  law  applies.^ 

§  920.  But  the  drawer  of  a  bill  and  the  indorser  of  a  bill 
or  note  stand  upon  a  very  different  footing.  If  the  bill  be 
drawn  by  a  drawer  in  one  State  or  coiuitry,  for  a  debt  pay- 
able there,  upon  a  person  in  another  country,  and,  being  non- 
accepted,  an  action  is  brought  against  the  drawer,  the  plaint- 
iff is  only  entitled  to  the  rate  of  interest  of  the  country 
where  the  bill  w^as  drawn,  and  not  to  that  of  the  country  in 
which  he  resides  or  in  which  the  drawee  was  requested  to 
pay  it.^    This  is  on  the  ground  which  has  been  already  ex- 

'  Smith  V.  Smith,  2  Johns.  235. 

^  Fake  v.  Eddy,  15  Wend.  76;  Gordon  v.  Phelps,  7  J.  J.  Marsh,  619. 

"  Lee  V.  Davis,  1  A.  K.  Marsh.  397.        "  Healy  v.  Gorman,  3  Green  (N.  .T.),  328. 

'  Jaffray  v.  Dennis,  2  Wash.  C.  C.  253 ;  Wood  v.  Corl.  4  Mete.  203;  Aymar  v. 
Sheldon,  12  Wend.  221;  Balliugalls  v.  Gloster,  3  East,  481. 

«  Crawford  v.  Branch  Bank,  6  Ala.  N.  S.  15;  Bailey  v.  Heald.  17  Tex.  102; 
Bank  United  States  v.  United  States,  2  How.  711;  Gibbs  v.  Fremont,  20  Eug. 
L.  &  Eq.  555;  9  Exch.  25,  Alderson,  B.,  saying:  "The  general  rule  in  all  cases 
like  the  present  is,  tliat  the  lex  hci  contractus  is  to  govern  in  the  construction  of 
the  instrument,  but  that  applies  only  when  the  contract  is  not  express;  if  it  is 
special,  it  must  be  construed  according  to  the  express  terms  in  which  it  is  framed. 
Now,  a  bill  drawn  on  a  third  person,  in  discharge  of  a  present  del)t,  is,  in  truth, 
an  offer  by  the  drawer,  that  if  the  payee  will  give  time  for  payment,  he  will  give 
an  order  on  his  debtor  to  pay  a  given  sum  at  a  given  time  and  place.  The  payee 
agrees  to  accept  tl\is  order,  and  to  give  the  time,  with  a  proviso  that  if  the  ac- 
ceptor does  not  pay,  anl  he,  the  payee,  or  the  holder  of  the  bill,  gives  notice  to 
the  drawer  of  lliat  default,  tlie  drawer  sliall  pay  him  the  amount  specified  in  the 
bill,  and  lawful  interest.     This  is,  then,  the  contract  between  the  parties.     If  the 


7(11  TITE  CONFLICT  OF   LAWS. 

plained,  tliat.  the  place  where  the  drawee  or  acceptor  sliould 
pay  is  not  considered  that  at  which  tiie  drawer  or  iiulorser 
must  pay  in  the  event  of  his  default.  Their  contract  is  to 
pay,  U})on  receiving  notice  of  dislionor,  at  the  place  where 
they  respectively  entered  into  the  contract.  Tn  Vermont  it 
lias  been  held  that  the  indorser  is  liable  for  interest  according 
to  the  law  of  the  place  where  the  note  is  payable.^  It  has 
also  been  held  in  that  State,  that  where  a  farm  situated  there 

interest  be  expressly,  or  by  iiecess;\ry  implication,  specified  on  the  face  of  the 
bill,  tlien  the  interest  is  governed  by  the  terms  of  the  contract  itself;  but  if  not, 
it  seems  to  follow  the  rate  of  interest  of  the  phice  Aviiere  the  contract  is  made. 
So  if  (he  mode  of  performing  it  be  expressly  or  impliedly  specified,  as  was  the 
case  of  Rothschild  v.  Currie.  In  the  case  of  a  bill  drawn  at  A.,  it,  prima  facie, 
bears  interest  as  a  debt  at  A.  would,  if  nothing  else  appeared ;  but  if  that  bill  be 
indorsed  at  B.,  the  indorser  is  a  new  drawer,  and  it  may  be  a  question  whether 
this  indorsement  is  a  new  drawing  of  a  bill  at  B.,  or  only  a  new  drawing  of  the 
same  bill — that  is,  a  bill  expressly  made  at  A.  In  the  former  case  it  would  carry 
interest  at  the  rate  at  B. ;  in  the  latter  at  the  rate  at  A.;  and  on  this  subject  we 
find  a  difference  of  opinion  in  the  books — Mr.  Justice  Story,  in  his  Conflict  of 
Laws,  §  314,  maintaining  the  former,  and  Pardessus,  Droit  du  Commerce,  art. 
1500,  maintaining  the  latter  opinion.  But  this  case  is  a  contract  at  San  Fran- 
cisco, by  wliich  the  defendant  there  offers  to  pay  to  the  payee,  in  discharge  of  a 
debt  doe  there,  the  payment  at  Washington,  by  the  acceptor  thereof,  of  a  given 
sum.  That  sum  is  not  paid.  The  defendant's  original  liability  then  revives  on 
notice  of  dishonor  duly  given  to  him,  and  the  defendant  has  become  liable  to 
pay,  as  lie  was  liable  at  the  first.  At  first  he  was  clearly  to  have  paid  the  money 
at  San  Francisco,  and  if  he  did  not,  he  would  have  been  liable  to  pay  interest  at 
the  usual  rate  in  California  for  a  period  as  long  as  the  debt  remained  unpaid; 
and  that  is  the  amount  which  he  ought  to  pay  now.  This  point  was  expressly 
ruled  in  Allen  v.  Kemble.  It  was  also  so  ruled  in  Congan  v.  Bankes.  And  this 
is  not  to  be  left  to  the  jury,  for  it  depends  on  the  rule  of  law.  The  amount  of 
interest  at  each  place  is  to  be  so  left;  so  is  the  question  whether  any  damage  has 
been  sustained  by  non-payment  of  interest  at  all— for  these  are  questions  of  fact. 
Here  the  jury  have  found  interest  was  due,  and  that  there  was  damage  which 
ought  to  be  recovered  in  the  shape  of  interest.  They  also  have  found  what  the 
usual  rate  of  such  interest  is  at  Washington,  and  what  the  usual  rate  of  such  in- 
terest is  in  California;  but  which  rate  is  to  be  adopted  by  them  is,  so  we  think, 
a  question  purely  of  law  for  the  direction  of  the  judge  to  the  jury.  We  think 
the  direction  in  this  case  should  have  been,  that  the  California  rate  of  interest 
should  be  adopted  by  them,  inasmuch  as  the  contract  was  made  in  California; 
and  therefore  this  rule  must  be  absolute,  to  enter  the  verdict  for  the  plaintiffs, 
with  10  per  cent,  additional  interest  to  the  6  per  cent,  already  allowed." 

But,  contra,  that  drawer  is  liable  for  interest  according  to  place  of  payment. 
See  Mullen  v.  Moiris,  2  Barr,  87;  Ilanrick  v.  Andrews,  9  For.  (Ala.)  10. 

'  Peck  V.  Mayo,  14  Vt.  33. 


LAW  APrLICABLE  TO  INTEREST  AND  DAMAGES.  705 

was  sold,  and  Botes  given  in  New  York,  they  would  bear 
Vermont  interest,  as  tbe  payee  resided  there  and  the  land 
was  there  located.^ 

§  921.  The  rule  applicable  to  interest  applies  as  well  to 
what  is  distinctly  termed  "damages."  Each  party,  drawer, 
indoiser  and  acceptor,  is  liable  according  to  the  place  where 
the  bill  is  drawn,  indorsed  or  accepted.  Thus,  where  a  bill 
was  drawn  in  Barbadoes  by  a  merchant  there  upon  drawees 
in  Liverpool,  England,  and  was  indorsed  by  the  defendant 
in  Alexandria,  Vii-ginia,  and  it  appeared  that  the  damages 
allowed  in  Barbadoes  was  ten  per  cent.,  and  in  Virginia 
fifteen  per  cent.,  the  indorser's  contract  was  held  to  be  gov- 
erned l)y  Virginia  law,  and  fifteen  per  cent,  allowed.'  It 
was  implied  that  the  drawer  would  be  liable  for  damages  by 
the  law  of  Barbadoes  where  the  bill  was  drawn.  The  doc- 
trine of  the  text  on  this  subject  is  well  settled.^  It  follows 
that  the  various  parties  may  be  bound  for  different  measures 
of  damages.*  Professor  Parsons  says  "  this  seems  to  us  to  arise 
from  the  clear  rule  that  remedy  depends  upon  the  forum."  ^ 
The  subject  is  more  fully  considered  elsewhere,  in  the  Chap- 
ter on  Re-exchange  and  Damages.*'  Sureties  are  only  second- 
arily liable,  and  they  are  liable  for  what  their  principal  has 
bound  himself  Therefore,  if  the  rate  of  interest  be  legal 
in  the  State  or  country  of  the  principal  where  the  contract  is 
to  be  performed,  the  surety  wnll  be  bound  for  it,  although  in 
his  own  State  or  country  it  would  be  illegal  and  excessive.'' 

§  922.  Election  of  law  of  place  as  to  interest. — We  have 
already  seen  that  if  a  contract  is  void  where  made,  it  is  void 
everywhere ;  and  that  although  it  be  valid  where  made,  yet 

'  Austin  V.  Imus,  23  Vt.  286.  See  De  Wolf  v.  Johnson,  10  Wheat.  3G7;  Stew- 
art V.  El  lice,  2  Paige,  604. 

"  Slocum  V.  Pomery,  6  Cranch,  221. 

»  Hendricks  v.  Franklin,  4  Johns.  119;  Hicks  v.  Brown,  12  Johns.  142  ;  Hazel- 
hurst  V.  Kean,  4  Yeates,  19 ;  Prentiss  v.  Savage,  13  Mass.  20  ;  Gibbs  v.  Fremont. 
9  Exch.  25. 

*  Ibid. ;  2  Parsons  N.  &  B.  346,  372,  373;  Story  Confl.  of  Laws,  §  314. 

"  2  Parsons  N.  &  B.  343,  note  k.  '  Chapter  XLV,  vol  2. 

'  Backhouse  v.  Selden,  29  Grat.  586. 


700  THE  CONFLICT  OF   LAWS. 

if  involving  moral  turpitude  or  injury  to  another  nation  or  its 
citizens,  such  nation  will  not  recognize  or  enforce  it.  Tiiere 
are  some  contracts,  however,  which  would  be  ilh^gal  if  all  the 
parties  resided  or  contracted  either  in  the  State  where  it  is 
made  or  where  it  is  to  be  performed,  which  are  nevertheless 
I'ccognized  and  enforced,  if  valid  either  in  the  one  place  or  the 
other;  and  of  this  nature  are  contracts  to  pay  interest  at 
rates,  which,  by  the  law  of  one  place  or  the  other,  would  be 
usurious  and  void.  In  such  cases,  the  intention  of  the  par- 
ties is  eU'ectuated,  as  a  concession  to  trade  and  commerce 
between  nations ;  and  if  the  transaction  is  in  itself  not  im- 
moral, tlie  rate  of  interest  authorized  either  by  the  country 
where  the  contract  is  made  or  to  be  performed  is  allowed  to 
prevail.  Thus,  it  has  been  held  that  a  promissory  note,  made 
in  Louisiana,  bearing  ten  per  cent,  interest,  which  was  legal 
ill  that  State,  Avould  not  be  usurious,  but  valid,  although  pay- 
able in  New  York,  where  all  contracts  to  pay  more  than  seven 
j)er  cent,  interest  are  usurious.^  And  the  like  view  has  been 
recognized  and  adopted  in  numerous  cases,  and  may  be 
regarded  as  a  recognized  principle  of  English  and  American 
jurisprudence.'^ 

§  923.  In  like  manner,  although  the  rate  of  interest  be 
greater  than  that  allowed  at  the  place  where  the  contract  is 
made,  it  will  not  be  usurious  if  allowable  at  the  place  of  })ay- 
ment,  the  parties  having  the  right  of  election  as  to  the  laws 
of  the  place  by  wdiich  their  contract  is  to  be  governed.^ 

It  would  seem  that  Story  dissents  from  this  doctrine  in 

'  De  Peau  v.  Humphreys,  20  Mart.  (La.)  1. 

'  Poller  V.  Tiillman,  35  Barb.  183;  Hank  of  Georgia  v.  Lewin,  45  Barb.  340; 
Ridiards  V.  Globe  Bank,  12  Wis.  002;  Vliet  v.  Camp,  13  Wis.  198;  Berrien  v. 
Wrijiht,  26  Barb.  208;  Chapman  v.  Robertson,  6  Paige,  Ch.  627;  Edwards  on 
Bills,  18:];  Miller  v.  Tiffany,  1  Wall.  310;  Kilgore-  v.  Dempsey,  25  Ohio  St.  413. 

'  Thompson  v.  Powles,  2  Sim.  194;  Harvey  v.  Archbald,  1  Ry.  &  Moo.  184; 
Andrews  v.  Pond,  13  Pot.  65;  Chapman  v.  Robertson,  6  Paige,  627;  Van  Schaick 
V.  Edwards,  2  Johns.  Cas.  355;  where  a  note  made  in  Massachusetts  and  payable 
in  New  York  was  held  valid,  although  the  interest  by  Massachusetts  law  was 
usurious;  Jacks  v.  Nichols,  5  Barb,  38  (overruling  3  Sand.  Ch.  313,  and  affirming 
1  Seld.  178);  Healy  v.  Gorman,  3  Green  (N.  J.)  328;  Miller  v.  Tiffany,  1  Wall. 
310;  Kilgore  v.  Dempsey,  25  Ohio  St.  413. 


LAW  ai'plicabl:5  to  interest  and  damagks.        707 

his  work  on  the  Conflict  of  Laws/  but  in  that  on  Bills  of  Ex- 
change he  recognizes  it,  and  cites  with  approval  cases  which 
adopt  it;'^  and  tlie  most  approved  text  writers  generally  fol- 
low the  adjudicated  cases.^ 

Where  a  party  temporarily  in  New  York,  where  the  rate 
of  interest  is  seven  per  cent.,  made  a  note  bearing  twenty  per 
cent,  interest,  which  was  valid  by  Texas  law,  and  dated  it 
"  Matagorda,  Texas,"  it  was  held  legal  and  valid,  tlie  date 
showing  it  was  intended  to  be  governed  by  Texas  law.* 

§  924.  If  the  bill  or  note  bear  usurious  interest  both  by 
the  law  of  the  place  where  made  and  of  the  place  where  pay- 
able, the  law  of  the  place  where  made  will  govern  as  to  the 
legal  consequences  of  usuiy,  and  the  effects  imposed  by  way 
of  penalties.^  But  a  bill  or  note  cannot  be  made  payable  in 
a  particular  place  where  the  rate  of  interest  is  higher  than  at 
the  place  where  the  contract  is  made,  for  the  mere  purpose  of 
creating  a  liaV)ility  for  the  higher  rate  of  interest;  for  such 
an  arrangement  would  be  a  mere  shift  or  screen  to  avoid  the 
statutes  against  usury.^  The  doctrine  is  advanced,  however, 
that  if  the  money  is  really  obtained  for  use  at  a  particular 
place,  the  rate  of  interest  allowable  at  that  place  may  be 
charged,  although  the  bill  or  note  be  both  made  and  payable 
within  another  State.'^  This  is  certainly  carrying  comity 
very  far. 

It  was  held  at  one  time,  in  New  York,  that  if  by  the  law 
of  the  place  of  making,  and  also  of  payment,  there  be  usurious 
interest  chargeil,  the  instrument  cannot  be  negotiated  within 
another  State  where  it  is  not  usurious,  and  thus  become  valid ;  * 
but  now  the  doctrine  obtains  there,  that  if  made  or  accepted 
for  accommodation  in  one  State,  and  there  payable,  the  instru- 

'  Story  on  Conflict  of  Laws,  §  292.  "  Story  on  Bills,  §§  U8, 149. 

'  Whart.  Confl.  of  Laws,  §  507;  2  Parsons  N.  &  B.  b36.  337,  338,  378,  379; 
Edwards  on  Bills,  717,  718. 

*  Bullard  v.  Thompson,  35  Tex.  318. 

"  Andrews  v.  Pond,  13  Pet.  65;  De  Wolf  v.  Johnson,  10  Wheat,  367;  Mix  v. 
Madison  Ins.  Co.  11  Ind.  117. 

"  De  Wolf  V.  Johnson,  10  Wheat.  367. 

'  Wharton's  Conflict  of  Laws,  §  508.  «  Jewell  v.  Wright,  30  N.  Y.  260. 


708  THE   CONFLICT  or  LAWS. 

merit  may,  nevertheless,  be  negotiated  in  another  State  at  a 
rate  of  interest  not  usurious  there,  although  usurious  in  the 
State  of  tlie  accommodation  making  or  acceptance,  it  being 
presumed  that  it  was  intended  by  the  accommodation  parties 
that  tlie  instrument  might  be  so  used  by  the  party  accom- 
modated.^ But  it  makes  no  difference  that  the  I'ate  of  inter- 
est is  usurious  at  the  place  of  negotiation  if  not  so  at  the  place 
of  making  or  payment.^ 

§  925.  In  the  cases  hitherto  cited,  the  transaction  is  sup- 
posed to  be  bona  fide.  If  a  mere  shift  to  cover  usury,  it  will 
be  void,  though  otherwise  it  would  be  valid.  Thus,  where  a 
bill  was  drawn  in  New  York  payable  in  Alal)ama,  and  was 
for  an  antecedent  debt,  and  a  larger  discount  was  taken  from 
the  bill  than  allowed  by  the  law  of  either  State  for  the  sup- 
posed difference  of  exchange,  the  United  States  Supreme 
Court  considered  the  real  question  to  be  as  to  the  hona  fides 
of  the  transaction.^  It  seems  that  the  law  of  the  place  where 
the  note  is  made  will  govern  as  to  the  legal  consequences  of 
usury  when  it  is  usurious  by  the  law  of  that  place  and  by 
the  law  of  the  place  of  payment  also.'^  In  respect  to  interest 
as  well  as  to  other  liabilities,  the  place  of  delivery  controls 
the  law  of  the  contract  between  the  parties.^  Where  the  law 
of  the  place  of  payment  prohibits  corporations  from  pleading 
usui'y,  but  its  bonds  were  tainted  with  usury  by  the  law  of 
the  place  where  made,  as  well  as  by  that  of  the  place  of  pay- 
ment, it  has  been  held  that  in  a  suit  brought  in  the  State 
where  they  were  made,  usury  might  be  pleaded.^ 


'  First  National  Bank  of  N.  Y.  v.  Morris,  1  Hun,  680  (8  N.  Y.  S.  C.  R.) 
""  Hackcttstown  Nal.  Bank  v.  Ilea,  04  Barb.  178. 
»  Andrews  v.  Pond,  13  Pet.  05.  ■*  Ibid. 

'  Cook  V.  Litchfield,  5  Sand.  ?,ZQ.     See  Comr's  of  Craven   Co.  v.  A.  &  N.  C. 
R.  R.  Co.  77  N.  C.  28a. 

•  Comr's  of  Craven  Co.  v.  A.  &  N.  C.  R.  K.  Co.  77  N.  C.  289. 


E.ND    OF    VOLUME    FIRST. 


APPENDIX 

See  Text,  p.  64,  Vol.  I. 


FORMS  OF  BILLS  AND  NOTES. 

1.   USUAL  FORM  OF  BILLS. 


$500.  New  Yorl,  31  Marcli,  1876. 

On  demand  (or  at  sight — or  ten  days  after  sight — or 
tliirty  days  after  date)  please  pay  to  Johjs^  B.  Astoe,  or 
order  (or  hearer),  five  hiindred  dollars,  value  received, 
and  charge  the  same  to  my  account. 

To  Thomas  A.  Scott,   Esq., 

Philadelphia. 


2.   Form 

of  Foreign  Bill  Drawn  in  set  of  Three. 

$500. 

New  Yorh,  31  March, 

1876. 

Sixty  days  after  date,  please  pay  to  Baker, 

VooRnis 

&  Co.,  or  ordei 

,  five  hundred  dollars, — this  oui 

'  fii'si  of 

exchange,  second  and  third  not  paid. 

(^ai^el  ^io^'deU, 

To  Messrs.  T.  & 

T.    Clarl, 
Edinhurgh,  Scotland. 

See  Text,  pp.  97-100. 

3.   Usual  Form  of  Negotiable  Promissory  Note  in  England. 


£500.  London,  31  March,  1876. 

Two  months  after  date  (or  at  any  other  specified 
time),  I  promise  to  pay  to  Baring  Bros.,  or  order  (or 
bearer),  five  hundred  pounds,  value  received. 


See  Text,  pp.  5,  87, 
Vol.  L— 49 


70  ArrENDix, 


4.   Usual  Form  in  many  of  llie  States  is  same  as  above.     In  Now 
York  a  common  form  is: 


8500.  Neio  Yor\  31  Marcli,  1876. 

Value  received^  I ^romiae  to  ixiy  Wm.  Butlee  Dun- 
can, or  ordei\  jive  hundred  dollars  on  demand. 


5.  Form  of  Joint  Note. 


$500. 

New  Yor 

Ic,  31 

Marc\  1876. 

On  demand^ 
CAjf,  or  order,  fi 

we  ^yromise  to  pay  Wm.  Butler  Dun- 

ve  liundred  dollars,  value  received. 

^oi?ieuuJ 

^o'a7ic/ewcu. 

^/ 

^0, 

/c/. 

See  Text,  p.  83. 


C.  Form  of  Joint  and  Several  Note. 


$500.  New  Yorh,  31  March,  1876. 

One  month  after  date,  I  promise  to  pay  {or  we  joint- 
ly and  severally  pyromise  to  pay^  John  B.  Astoe,  or 
order,  five  hundred  dollars,  value  received. 


See  Text,  pp.  83,  84. 


APPENDIX. 


7.   Form  of  Note  iu  Common  Use  in  Indiana. 


$500.  Terre  Haute,  Iiul,  31  Marcli,  1876. 

Sixty  days  after  date,  I  promise  to  pay  to  the  order 
of  Daniel  W.  Voorhees,  at  National  State  JBanh  of 
Terre  Haute,  five  liundred  dollars,  for  value  received, 
without  any  relief  from  valuation  or  appraisement  laivs, 
with  interest  at  10  per  cent,  per  annum  after  maturity, 
and  5  per  cent,  attorney'' s  fees  if  suit  he  instituted  on  this 
note.  The  drawers  and  indorsers,  severally,  waive  pre- 
sentment for  payment,  protest  and  notice  of  protest  of 
non-payment  of  this  note. 

©#    ^.     Men. 

See  Text,  pp.  52,  55. 

8.  Form  of  Negotiable  Nottf  in  Tirginia. 

$500.  LyncJihurg,  Va.,  31  March,  1876. 

Sixty  days  after  date,  I  promise  to  pay  to  Edwaed 
S.  Gkegory,  or  order,  without  offset,  negotiable  and  pay- 
ahle  at  The  First  National  Banh  of  Lynchburg,  Virgi- 
nia (liomestead  and  all  other  exemptions  waived  by  the 
malcer  and  each  indorser^,  five  hundred  dollars,  for 
value  received. 

See  Text,  p.  80. 


ifilfllff" 

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